02-07-2025
For the NHS, it's Wes or bust
Labour swept to power on a pledge to 'save the NHS'. As shadow health secretary, Wes Streeting said he would go 'further than New Labour ever did' to clear the health service's backlog and, to achieve this, he claimed old taboos would be torn up, including the use of the private sector to improve services.
Failure to clear the backlog now will be hugely politically consequential for this government. Partly because of how important the NHS is to the voting public, but more so because of the emotional resonance the service and its 'free-at-the-point-of-use' model has for Labour, both its MPs and its supporters. If the party that founded the NHS cannot save it, who can?
That is why the NHS has been mostly immune to Rachel Reeves's new austerity. At each fiscal event and budget, it has received consistent funding increases. Yet behind the headline figures lies the real question: will this money yield returns – or simply vanish into the system, absorbed by wage demands and patchwork firefighting? That is a question which the Ten Year Health Plan, published this week, seeks to answer.
The prescription it offers is a familiar one. It bears the unmistakable imprint of the former health secretary Alan Milburn, architect of Labour's early-2000s health reforms who has now returned to advise Streeting.
His tools are back: league tables and performance targets tied to executive bonuses. Foundation trusts will be empowered to meet centrally imposed benchmarks, such as the four-hour waiting time in A&E target. Structural reforms introduced while the Conservatives were in power – Integrated Care Systems and various independent watchdogs, including Healthwatch England – are being dismantled. Power is returning both to the centre and to hospital management.
There is a reasonable case to be made for this – waiting times fell dramatically during the New Labour years. The last Conservative government's lack of willingness to challenge the NHS leadership after the failed 2012 reforms allowed for hundreds of useless quangos to spring up; the 'NHS Race and Health Observatory' being chief among them. There is plenty of fat to cut.
But being more New Labour than New Labour is not a certain route to success. The fiscal context in 2001 – when Gordon Brown began to release funding for public services from the Treasury – is very different today, with Britain teetering on the verge of a sovereign debt crisis. In 2001 there had been a £15 billion surplus. Last year the deficit was almost £150 billion.
The increases in day-to-day spending that Rachel Reeves is able to offer the NHS at the expense of other departments are substantial in cost but not impact. Thanks in part to demographic pressures, the NHS needs 3 per cent increases in spending to keep the service it provides running. Doctors and nurses are already being balloted for strikes in the next year, which will end with any extra money being swallowed by wage increases. New Labour was also able to reach record levels of capital investment through the Private Finance Initiative, the use of which was vociferously defended by Milburn, who dubbed it 'the only game in town'. But Reeves's Treasury has specifically stated there is no chance of a 'PFI 2.0' taking place. In short, there isn't any money.
Can good management compensate for the absence of large-scale investment? And can targets and structural clarity deliver improvement without the 5 per cent real-terms annual increases of the early 2000s?
On the former, this question has been threaded through debates on public-sector reform since Margaret Thatcher embraced an NHS internal market in the 1980s. It divides those who argue that output follows input – hire more staff, build more hospitals, spend your way out of crisis – and those who insist that quasi-market reforms can improve efficiencies without extra money.
It was the key point of difference in Labour between the modernisers, who saw a mixture of devolution and incentives as the key for better public services, and the traditionalists, who believed that it was a question of staffing and money. Ask Tony Blair why the NHS got better in the 2000s and he would say it was the targets. Gordon Brown would say it was money.
The next four years will provide an opportunity to settle the debate. Unless Wes Streeting, a capable person whatever his perceived flaws, manages to improve the NHS substantially in the next four years – showing that only taxing and spending more can improve public services – then we will be faced with an uncomfortable truth: the NHS has no future.
If reform cannot deliver efficiencies, it is the model itself which is broken. We simply cannot sustain 3 per cent increases in real terms spending on the NHS year-on-year with an ageing population, just to keep it afloat. It is not a matter of political principles or willpower. The sums do not add up. If politicians will not be honest with the public about that, then they will have to hear it from the IMF. It really is Wes or bust.
