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Leader: Ring-fencing the NHS is only making matters worse

20 July 2013

9:00 AM

20 July 2013

9:00 AM

According to popular wisdom on the left — and even among some in the Conservative party — this ought to have been a tough week for the government. On Monday, the new £26,000 cap on benefits came into effect and with it a new principle: that no one on welfare should receive more than the average working family. Such a move, it was said, would expose the Conservatives to what is supposed to be their weak point: that they are the ‘nasty party’ who care about money, not people.

Yet something remarkable has happened. Iain Duncan Smith’s welfare cap is turning out to be not just the boldest but the most popular reform undertaken by this government. Rather than being punished in the opinion polls, the Tories appear to have been rewarded: the latest ICM survey puts them on a level pegging with Labour. A YouGov poll finds that 79 per cent favour the latest welfare reform. Amongst Labour supporters it is 71 per cent — in spite of Ed Miliband’s making a great stand against it.

The public reaction to the benefits cap turns recent political theory on its head. Ever since the 1997 election debacle, many Conservatives have been under the impression that in order to win office it is necessary for them to avoid doing or saying anything which might conceivably be interpreted as kicking away the crutches of the poor and the ill, such as cutting spending on any public service. Hence the promise to freeze spending on schools and hospitals, and the panicked reaction by the Conservative leader Michael Howard when a candidate in the 2005 election, Danny Kruger, talked of ‘creative destruction’ in the NHS (by which he meant undertaking serious reform to make it work better, not dismantling it).

Certainly it is damaging to any party to give the impression they do not care about people. But the popularity of the benefits cap suggests that the public now accepts what many on the right have been arguing for years: that caring and spending money are not the same. It suggests that most people accept Iain Duncan Smith’s assertion that trapping people in welfare by being over-generous with payments is cruel rather than kind. And that we have ended up creating some of the most expensive poverty in the world.


Conversely, the coalition’s decision to ‘protect’ the NHS from cuts by ring-fencing the health budget has paid few dividends — either politically or in terms of service. Week by week the gap between the fabled NHS, as depicted a year ago this week in the Olympic opening ceremony, and the reality grows wider. This week Sir Bruce Keogh’s report into failing hospitals shows once and for all that Mid Staffs was not a one-off. Cases of poor care in the NHS abound, and scandalous abuse has flourished in an environment where the service was stuffed full of cash and protected from cuts.

Stories of patients left starving and dehydrated in the middle of hospital wards cannot be stopped simply by throwing money at the NHS. Its budget has more than doubled since 1997. But any fool can spend money; the point is to spend it well. Gordon Brown did the former, without ever mastering the latter. His great aim was to increase the UK’s per capita spending on health to the European average, but he never stopped to ask himself what he actually wished to achieve with the money.

The NHS cash was never an end in itself. Much of the money was wasted, sucked into pay rises and poorly negotiated PFI hospital contracts. One example of waste which came to light this week is that the NHS is paying £89 for cod liver oil capsules which can be bought for £3.50 in a high street chemist. Only a purblind bureaucracy can do this. The NHS is not ‘protected’, as David Cameron likes to say, just because its budget is not falling. Too many of its hospitals are at the mercy of a dysfunctional bureaucratic elite — and the result is loss of lives, not just of money.

So there is no reason why the NHS should be immune from the economies which are having to be made in other areas of government spending. Quite the reverse: reducing the NHS budget would concentrate minds on reducing waste and increasing productivity, resulting in better overall service. That is exactly what has happened with the police service, where crime has fallen in spite of police budgets and numbers being cut.

On schools, too, the link between greater spending and performance has been debunked. A recent report by Deloitte, commissioned by the government but published with very little attention drawn to it, revealed that annual spending per pupil in English schools varies between £4,500 and £10,000. Yet, remarkably, there is zero correlation between spending per pupil and pupil performance. This will be the case as long as bad teachers cost the same as good ones.

There is a very clear lesson from the first three years of the coalition: that cuts need not mean a diminution in public services. On the contrary, you can cut public expenditure and improve services at the same time by being  smarter about how the money is actually spent.

It is a shame that this truth is only now dawning on the Tories, who are cutting spending at a glacial pace and dragging out the pain. But exploding the myth that more cash means better performance could blow Labour’s claim to be the caring party, the party of public service, clean out of the electoral water.


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