Health Funding – Cash injection an emergency

The new health teams in the Scottish parliament and Welsh assemblyd are beginning work against a background of high expectation of real improvement in the quality of healthcare. But, despite the flow of new health money to Scotland and Wales, they will have their work cut out trying to make a difference.

Health was one of the central policy issues in the campaigns for the first elections to the Scottish parliament and the Welsh assembly. And it will continue to be one of the dominant themes in the political landscape of Scotland and Wales after devolution.

Despite spending more per head on health than England, both countries have acute public health problems. Nowhere is this more strikingly seen than in the comparative death rates of the two countries.

Wales, for example, spends around £200 more per head on health than England, yet life expectancy in Wales is some three to four years shorter than most of its European neighbours. In some areas of the South Wales valleys, it is about five years fewer than in some other parts of the principality. Jane Hutt, the Welsh health and social services secretary, and Susan Deacon, Scotland’s minister for health and community care, will find it an uphill struggle to make a distinctive contribution against this background.

Tom Jones, the health spokesman for ACCA, says that they need to make their mark quickly.

‘The health brief is probably the most popular of all. But the new health teams need to make an impact quickly so I think we can expect some big changes,’ he says. They need to make significant improvements to the health service – and be seen to do so. But how long it will take to make a difference, or precisely what they need to do to make a difference, is still clouded in doubt.

Although the political will to enhance the NHS is there, real improvement could prove difficult. ‘Scotland and Wales already spend more per head than England but they are no healthier,’ says Jones.

‘The question they might consider is why should they spend more if this is the case. Maybe they will decide they do need to spend more.’

More money is already pouring into the countries’ health services. Under plans set out last year by Whitehall, Scotland’s NHS will receive an extra £1.8bn between 1999 and 2002. Wales will get an additional £1bn over the same three years.

But will this be enough? It is estimated that the principality’s health service was £50m in debt at the end of the 1998/1999 financial year. While financial difficulties are not as great in Scotland – health boards there reported a £7.8m deficit in 1997/1998 – they should still worry the new parliament.

Health service managers’ body, the NHS Confederation, believes the deficits need to be tackled before politicians begin to target cash at health improvement measures. To raise the cash, the Scots could increase income tax by up to 3p in the pound but Jones thinks this is unlikely. ‘I doubt if the Scottish parliament will want to carry out a fundraising exercise, so it will probably redirect existing funds from other areas, such as roads.’

The Welsh assembly does not have the luxury of tax-varying powers. ‘In Wales, money is also going to have to come from other areas. It has traditionally had a lot of investment in roads and transport, so I think there is some scope to switch money around,’ Jones says.

Capital investment could offer politicians an opportunity to grab the headlines. Cash is urgently needed to fund new buildings and to implement Information for Health, the NHS IT strategy. New hospital buildings, computers and new medical equipment always attract local media interest.

But where will the new health ministers find the money to invest in new buildings and equipment? ‘They could go about this in different ways – maybe they could extend the capital base for these projects,’ says Jones. ‘Over the last five years there has been a big raid on capital resources. If they try to put that right it would make an enormous difference to the pace of change. But it could take a year or so to get round to that.’

Private finance is an alternative to public funds but it could be politically difficult. ‘Some of the politicians in the SNP and Plaid Cymru are not keen on the Private Finance Initiative. The first five major PFI hospitals had a bed reduction of 28%. People will not want to be associated with that. I do not think PFI will be abandoned but I think it will be put in a better balance,’ says Jones.

Since April, the health services in Scotland and Wales have new structures, with greater power given to GPs to commission care for their patients.

GP fundholding has been abolished and the internal market abandoned in favour of what health chiefs hope will be a less bureaucratic, more cooperative system. With so much recent upheaval, ministers may be reluctant to introduce further structural reform.

There are some suggestions that health and social services could be merged to create a more integrated system but Jones argues this will not lead to a better service. Each has its own culture, so the barriers to closer working would remain.

While health managers support the greater democratic control which the new assemblies will bring, they are worried that they will also introduce an element of unpredictability. MSPs and Welsh AMs will be keen to influence the health service in their constituencies and, privately, some managers are worried about greater political interference.

There is much uncertainty as to how the health service will look in each country two years from now. ‘We do not know how things are going to pan out,’ says one NHS accountant.

‘There is an awful long way to go. The consensus was to get the new structures in place by 1 April, then work out how the new system will operate over the following 18 months.’

The political changes will have a great impact on the NHS in Scotland and Wales. Undoubtedly, the NHS in both countries will see additional spending over and above that already planned.

But will patients get a better service?

‘If you look at the culture of the two countries there is a strong, social democratic culture which you can match to a country like Denmark. The Danes are not going down the PFI route and their spending decisions are made at a local level but they still have the same problems,’ says Jones.

‘Waiting lists are shorter but they are still a problem.’

In Scotland and Wales decisions will be based on local priorities but voters may not necessarily get better care.

Heather Cameron is president of the Association of Chartered Certified Accountants in Scotland.

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