Extra billions for NHS might not help patients, economists warn

Spending on the health service is rising so fast it could end up going into the pockets of doctors and nurses rather than on improving services for patients, health economists warned yesterday.

NHS funding, due to rise by 60 per cent in real terms over the next seven years, was outstripping the health service's capacity to spend it effectively.

Although the extra cash was badly needed, targets set by the Government for extra staff over the next seven years accounted for less than half of the money, leaving an "unexplained gap", a report from the Office of Health Economics (OHE) said.

"If spending is growing faster than capacity, this implies rising costs," it said.

The findings suggest that ministers' worst nightmares about the huge quantities of extra cash being poured into the NHS may yet be realised, with the funding failing to have a substantial impact.

OHE, a health service think-tank funded by the pharmaceutical industry, said in the report that health spending was rising more rapidly than in Britain's European neighbours and was on course to beat the EU average, fulfilling Tony Blair's promise made in February 2000.

This year total health spending will account for 7.8 per cent of GDP, rising to 9.4 per cent by 2007-08.

"The UK is catching up rapidly in this regard relative to France, Germany and the US," the report, OHE Compendium of Health Statistics, 14th edition, said.

However, France has twice as many GPs, twice as many hospital beds and more nurses than the UK. Even with the extra spending there was little prospect of closing that staffing gap, Jon Sussex, associated director of OHE, said.

"More money is great, but the question is how fast can it be spent, because what we want is more and better health care, not more expensive health care," he said.

NHS pay and prices had historically risen by 2 per cent more than inflation, but over the next seven years the gap between the number of staff to be paid and the money available to pay them was much bigger, he said. An extra 15,000 doctors (consultants and GPs) and 35,000 more nurses are planned by 2007-08, but this is only slightly more than the extra staff recruited in the past seven years, when spending rose by half as much.

"If we match French levels of income, we will be spending it on fewer doctors and fewer hospital beds," Mr Sussex said. "The Government says the extra cash will go on improved IT and new treatments but there is a worrying inflationary gap. It may go on more pay."

Adrian Towse, director of OHE, said the rate of spending growth planned for the NHS was closely in line with that recommended by the Wanless report, published with the Budget in the spring, but the targets for staff growth were well below those set out by Wanless.

That report, which looked at the demands on the NHS over the next 20 years, said an extra 62,000 doctors would be needed, most of them by 2010. The Government responded by setting a target of 15,000 extra doctors by 2008.

Mr Towse said: "The Government accepted the expenditure figures in Wanless but the plans for staff fall far below the targets."

NHS managers say that, despite the extra billions that have gone into the NHS, most of the money has been spent on meeting specific targets such as cutting waiting lists and dealing with the huge backlog of maintenance, which does not expand services but makes the experience of using the NHS better for patients.