“This is the year we roll up our sleeves and reform the NHS”, said the Prime Minister in a speech earlier this week. Keir Starmer outlined his government’s plans to reduce NHS waiting lists after the latest figures showed the massive strain the organisation faces over the winter.
How will the government’s plans work? How will they be received by healthcare workers, patients and the wider voting public? And is there a case for stronger action ahead of publishing the upcoming ten-year strategy to turn around the NHS? This week's New Economy Brief explores the complexities of what could be a make-or-break moment for this government's ambitions.
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Labour has made reducing NHS waiting lists a key part of its plan for government. It was elected on a manifesto promise to ‘build an NHS fit for the future’, and improving the health service is one of its five Missions for government. And only last month the Prime Minister announced new milestones to help track the government’s progress, including a pledge to end hospital backlogs. It's not hard to see why. Over seven million people are currently waiting for tests, treatments and procedures from NHS England. To combat this, this week the government has set out a plan to make sure 92% of patients wait less than 18 weeks for their treatment (up from 56% at the moment).
The Elective Reform Plan will increase funding for community diagnostic centres – 170 of which exist across England and offer people diagnostic tests without the need to go to hospital – so they can operate for 12 hours a day, 7 days a week. (Elective care is non-emergency treatment that is planned in advance.) The government will also open 14 new surgical hubs within existing hospitals, and expand three more. It hopes that this will lead to nearly half a million more patient appointments every year. The plan is accompanied by a variety of other reforms to improve patient choice, convenience and standards of care.
Will it work? The British Medical Association (BMA) welcomed the plans but said that the government needs to address “chronic burnout” if it wants to cut waiting lists. The King’s Fund, a healthcare think tank, also welcomed the announcement, but warned that the 18-week referral-to-treatment target shouldn’t be the only measure of progress when wait times for GP appointments and ambulances are also key. The Liberal Democrats have attacked the plan for “putting hip replacements over heart attacks.”
The economic case for improving public health is clear: a healthier workforce is a more productive workforce, which increases growth, boosts tax revenue and reduces strain on public services.The Institute for Public Policy Research’s (IPPR) Commission on Health and Prosperity last year concluded that better health can reduce the UK’s record economic inactivity due to sickness, increase productivity by reducing sick days, increase earnings and reduce funding pressures on the NHS. Similarly, the BMA regards health as “essential to prosperity” and sustainable economic growth. Specifically, IPPR’s Dr Annie Williamson and Dr Parth Patel have modelled the economic benefits of reducing NHS elective waiting lists, finding that increasing elective activity by 30% from 2019 levels by 2025 could deliver £73bn in economic benefits, such as growing the economy by £18bn over five years. It would also save £14bn for the government as more people return to work, increase their hours or do more work that benefits others, such as childcare.
Though the plans to speed up diagnostics and save time are welcome, they are only part of the challenge in the NHS. Ultimately, it will require more money to compensate for more than a decade of austerity. The Independent Investigation of the National Health Service in England, led by surgeon, independent peer and former health minister Professor Lord Darzi, concluded in September last year that an important driver of declining NHS performance was austerity and underinvestment. Official papers from NHS trust board meetings and warnings from Matthew Taylor, Chief Executive of the NHS Confederation, have shown that hospital infrastructure is so run down that it is putting patients and staff at risk. The Darzi report highlighted a £37bn capital spending shortfall over the last 15 years, noting that this funding could have prevented the NHS’s maintenance backlog of over £11.6bn, as well as being used to modernise technology and equipment and pay for new hospitals. (For a demonstration of the effects of underinvestment in capital on NHS productivity, read this.)
To its credit, the government gave the NHS £25bn in additional spending at the Autumn 2024 Budget. And there are other problems in the NHS, like management capacity, which require other solutions beyond more funding. Starmer’s speech also foreshadowed the government’s interest in using the “almost unlimited power” of Artificial Intelligence “to cut waste, speed things up and save lives”. (Look out for a future New Economy Brief analysing proposals to implement AI across public services.)
But… Another root cause of declining performance is shortages of key staff in certain fields (e.g. radiology, district nursing), with the NHS struggling to attract and retain the skilled people needed to service the needs of an aging population. Improving the pay and working conditions of an increasingly overstretched workforce are central to maintaining and improving performance, argues Patricia Marquis, Executive Director for Royal College of Nursing (RCN) England: “Investing in nursing staff, who give the largest part of patient care in every part of the NHS, is the single best way to transform patients' experience.”
Prospect of further strikes? The RCN estimates that more than 32,000 student nurses in England – "enough to fill every nursing vacancy” – could drop out of their courses by 2029, mainly because of low pay. This analysis was conducted just after the government proposed a 2.8% pay uplift for English nurses – an offer the RCN rejected in December as “an insult to workers, harmful for patients and counterproductive to rebuilding the NHS”. The BBC reports that some "unions are raising the prospect of renewed strike action unless the government is willing to stump up more cash". The TUC's Paul Nowak said "If you are serious about repairing and renewing our public services, you have to be serious about public service pay.” (For context, nurses lost a cumulative £37,000 between 2010 and 2023 as a result of below-inflation pay increases.)
Waiting for the 10-Year Health Plan. Responding to a question about how the government plans to fix the staffing crisis immediately after the speech, Starmer suggested more detail will come in their future plans. The government is due to publish a 10-Year Health Plan in the Spring, which will involve a major nationwide public and staff consultation to inform long-term vision for reform and break the cycle of short term promises that don't deliver. (Staffing challenges are due to be addressed in a separate workforce plan). Meanwhile the Health Secretary Wes Streeting has repeatedly stressed the government’s “heavy emphasis on reform, not just investment”. IPPR’s Dr Annie Williamson and Victor Adebowale have suggested that, in the meantime, the NHS should not wait for the 10-Year Plan, but “get on with reform aligned with the government’s three shifts: towards prevention, digital, and community-based care.” This should be accompanied by a sustained increase in “local staff engagement” and “local empowerment” to increase morale and trust.
Health and the NHS are priorities for voters, and the government is already thinking about the next general election. This week's speech once again showed how much is riding on whether the government can deliver improvements to the NHS and demonstrate that “politics can be a force for good”, in Starmer’s words. Yet in a recent survey by NHS Providers, 71% of NHS trust leaders and and 100% of acute specialist trust and ambulance trust responders thought it was unlikely that the NHS will be able to meet the standards for wait times set out in its constitution over the next five years. The challenges facing the government – and the NHS – are huge.
Life expectancy targets. The government’s health mission is currently to “improve healthy life expectancy for all and halve the gap in healthy life expectancy between different regions of England”. IPPR and other experts like Lord Darzi argue that this should form the basis for cross-government and cross-sectoral collaboration between employers, civil society and more, comparable to the government’s approach to net zero (e.g. to increase life expectancy by 10 years by 2055). The impact of all public spending and investment decisions on health could then be assessed at every fiscal event through an expanded health index, which could be measured by a new body modelled on the Climate Change Committee.
Good growth and partnerships. To deliver on its growth agenda, Labour must ensure it does not repeat the mistakes of the past over public-private partnerships, says Mariana Mazzucato. She argues that conditions must be applied to ensure any public-private partnerships are “mission-aligned” and won’t result in the state overpaying for poor private sector performance.
What’s next for interest rate cuts? As inflation continues to rise after dipping below 2% in September 2024, speculation is rife over what the Bank of England’s Monetary Policy Committee will do about interest rates. Geoff Tily of the TUC argues that with an ongoing “severe and endless real pay crisis, keeping rates up when inflation is basically back at ‘target’ now risks making a bad policy worse.”
The case for adaptive inflation targeting. The increasing prominence of climate-related inflationary supply shocks means central banks should consider adaptive inflation targeting (‘adaptive IT’) according to LSE’s Centre for Economic Transition Expertise (CETEx). Adaptive IT could allow monetary policy makers to look at a longer term horizon, target inflation more flexibly and take better account of climate risks.
Impacts of Brexit. A new paper from LSE’s Centre for Economic Performance (CEP) finds that the Trade and Cooperation Agreement (TCA) “reduced total goods exports from the UK by an estimated £27bn (or 6.4 per cent) in 2022”. The study, which used data from over 100,000 companies, also found that 14% of firms that previously traded with the EU stopped doing so after the TCA came into effect in 2021.
Imagining a sustainable transport system. A new report by the New Economics Foundation (NEF) calls for a long-term strategy for sustainable transport which better connects services, urgently decarbonises, improves access across the whole transport system, engages the public and regulates in the public interest.
A ‘doom loop’ of climate change and geopolitical instability. We are at risk of a worsening “doom loop” between inaction on climate change and geopolitical instability, according to Laurie Laybourn and James Dyke. They argue that this poses a “derailment risk” in which the world cannot stick to the path of phasing out fossil fuels and avoid the worst climate outcomes.
