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Queen’s Speech - Debate (4th Day)

Part of the debate – in the House of Lords at 4:24 pm on 9th January 2020.

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Photo of Lord Davies of Stamford Lord Davies of Stamford Labour 4:24 pm, 9th January 2020

My Lords, the health service is obviously in crisis at the present time. The number of doctors and nurses is 10% below establishment. People are waiting more than two or three weeks to see their GP, which negates the very concept of general practice. Waiting times are increasing across the piece, and it now seems that the last Labour Government’s achievement in getting maximum waiting times down to 18 weeks is a long-distant memory.

When an organisation is in a crisis of this kind, I have always believed that the first thing to do is to decide whether what you are dealing with is temporary or perhaps contingent and is susceptible to solution by simple measures of some kind, including possibly throwing a lot of money at it or whether it is a problem of a longer-term, structural nature, in which case you may have to rethink the way things have been done or even the existence of long-standing and much loved institutions. I fear that the present situation of the NHS falls into the second category.

There are four fundamental contradictions at the heart of the NHS. First, every time any normal organisation that produces goods or services for the public delivers a service or increases its turnover, it gets more money. In the case of the NHS, it is the other way around: every time it delivers a service, it has less money, so we start off with a major conflict of interest—a major, perverse incentive—and what we have is in fact a rationing system rather than a health service. The second and fairly obvious contradiction is this: we all know that the cost of medicine is increasing fast because of medical technology improvements, better pharmaceuticals and so forth, and that morbidity rises with longevity. The population is living longer, so we need to have health expenditure at a rate which keeps up with those two pressures. In fact, we have it constrained within public expenditure, which fiscal policy requires should be kept down as a proportion of GDP, otherwise we will never repay any of our debts. That is a very serious contradiction.

Another contradiction is that as people get richer, they naturally want to spend more money, not less, on healthcare, just as they want to spend more money on financial services or tourism and less of their income on potatoes or bread. That is known in technical terms as income elasticity of demand for healthcare services, and is considerably more than unity. We are artificially frustrating and holding back people desire to spend more money on healthcare by channelling all the expenditure through the health service and the public expenditure system, as we do at present. That is not a sensible thing to be doing for the country.

Finally, there seem to be a lot of perverse incentives in the system but very few genuine, positive incentives. I believe that you could get considerable increases in productivity and output in the primary sector—in general practice—by remunerating doctors on a fee-per-service basis. I suggest that anybody who does not like that revolutionary suggestion spends a few hours of their time going into a general practice, declaring symptoms which obviously need medical attention and noting down how long it takes to see the doctor and what sort of reception one gets anyway by going into that surgery. Then they should get hold of a dog, go to the nearest vet and compare the reception they get there and the time they wait for it to be treated. That would be an instructive experiment; I have done it myself.

One could develop many other ideas if one had time. There are various mechanisms through which we could fund healthcare outside the public expenditure system. It is done very effectively on the continent—in France, Germany, the Netherlands and so forth—by health funds. There are something like 1,200 Krankenkassen in Germany; in France there is one large organisation, the Sécurité sociale. Of course, the continentals have 70 years’ experience of a system which is universal and compulsory. It covers everybody, as the health system does in this country, and at the same time, it has considerable popular support in those countries. I have to say that the health outcomes in those countries are considerably better in survival rates for cancer, cardiac victims, stroke victims and so forth.

It is time to look around at ideas of that sort, particularly ideas which have been tested and de-risked over time. We need to be brave enough to go in for some original thinking here. We owe it to future generations to make sure we do not have a health service that goes from one crisis to another, and simply repeats history indefinitely. That would not at all be a responsible attitude for our generation to have towards this priceless asset, which looks after the health of the nation.