NHS in 2017: the long arm of government

BMJ 2017; 356 doi: https://doi.org/10.1136/bmj.j41 (Published 13 January 2017) Cite this as: BMJ 2017;356:j41

Click to view PDF version

Spending flow infographic - click for PDF version

Data sources

Full data + references


Read all the articles in this series on the NHS in 2017
  1. Gareth Iacobucci, senior reporter, The BMJ
  1. giacobucci{at}bmj.com

In the third article of his series, Gareth Iacobucci examines how government policies are shaping the NHS, for good and ill

Health policy across the four UK nations has been increasingly devolved since the Blair government’s reforms of the late 1990s. Unlike England, the other UK countries have not embraced provider competition, patient choice, and use of non-NHS providers.

Are their health services the better for it? Comparison is notoriously difficult because of differences in the way data are collected and measured. But a 2014 study by Bevan and colleagues found that clear differences in government policy across the four nations have made little difference to long term national trends for most of the indicators that could be compared.1

The formation of the coalition government in 2010 and the Health and Social Care Act 2012 marked a shift in centralised government control of the NHS in England, with Labour’s previous emphasis on targets and performance management marginalised by Andrew Lansley’s push to move power away from Whitehall. But since Jeremy Hunt replaced Lansley as health secretary in September 2012 he has reasserted some ministerial control, particularly with his scrutiny of hospital performance.

There is no definite consensus among policy experts about whether devolved governments exert less or more control over their NHS than England does. But devolved nations have embarked on fewer structural reforms, with Scotland the obvious counterpoint.

Further research is needed to assess how the turbulence in England caused by the 2012 reforms has affected performance compared with Scotland, which has escaped any major shake ups since 2004. As Bevan and colleagues highlighted, Scotland has “an organisational stability that is the envy of all who have suffered from the successive ‘re-disorganisations’ of the English NHS.”1

Devolution is now extending across England—in 2016 Manchester was given control of its entire £6bn (€7bn; $7.4bn) annual budget for health and social care. It is too early to determine whether this integration will deliver better health to the region’s 2.7 million inhabitants, who have historically had some of the poorest health outcomes. But the results will be a powerful litmus test for devolution.


One area of struggle that has united the whole of the UK is finance. The NHS is more than half way through the most austere decade in its history and is facing tight government funding restrictions.

In real terms, health economists estimate that the England’s total health budget will rise by £4.5bn by 2020-21, an average annual rise of just 0.9% a year between 2009-10 and 2020-21.2

This is well below the average annual real terms increase of 3.7% since the NHS was created in 1948 and much less than the 8.6% that it received between 2001-02 and 2004-05. Unless the settlement changes, NHS funding growth for the current decade will be the lowest ever.

Health funding has also flatlined in other UK countries in recent years.1 NHS funding in Wales rose by an average of 0.6% a year between 2010-11 and 2015-163 while in Scotland funding fell by 1.2% in real terms between 2010 and 2016, although it will increase by around 1% a year to 2021.4 In Northern Ireland health spending increased by 1% in 2016-17.5

At the same time, the NHS faces additional spending pressures of around 4% in real terms each year due to a mix of rising costs, an ageing population, and an increase in long term conditions.

The unprecedented slowdown in health service funding, deep cuts to social care services, and rising demand saw the combined annual deficits of NHS trusts in England triple in the past year to £2.45bn.6

Although the NHS hopes to reduce this deficit drastically by the end of 2016-17 through extra investment and regulatory pressure,7 huge underlying pressures remain, and patient care is being affected.

In March 2016 the NHS recorded the worst performance against the four hour target for patients to be seen in emergency departments and the waiting time target for planned treatment since they were introduced in 2004 and 2012 respectively.8

Some hospital trusts have been forced to shut services because of financial pressures and staff shortages.9

In the 2015 comprehensive spending review,10 the government committed to increase NHS funding by £8.4bn above inflation by 2020-21 after some persuasion from NHS England’s politically astute chief executive, Simon Stevens.11 But this settlement did not protect the Department of Health’s budget, which was cut in 2016-17 and funds areas such as medical education, training, and public health.

Pressures across the board

Pressure on the NHS is being exacerbated by cuts to social care. Adult social care budgets were cut by 9% in real terms between 2009-10 and 2014-15. This led to the number of older people accessing publicly funded social care falling by at least 26% (more than 400 000 people).12

In a survey of NHS trust finance directors by the King’s Fund think tank in October 2015, 88% said social care cuts were adversely affecting health services—for example, through delayed hospital discharges.13 The government allowed local authorities to raise council tax by 2% in 2015 to provide extra funds for social care. Although 93% of councils took up the opportunity and raised a total of £380m, a large funding gap remains.

After the government’s failure to commit extra funding to social care or the NHS in its 2016 autumn statement, leaders have warned that patient care is increasingly at risk.14

Public health budgets in England are also under threat following their transfer from the NHS to local government in 201315—as discussed in the previous article.16 As part of wider reductions to local government budgets, public health was cut by 6% in 2015 and faces further reductions of 3.9% a year on average over the next five years.17

Funding for NHS mental health trusts has also reduced by an estimated 8% in real terms between 2010 and 2015 as more money has been sucked into the acute care sector.18 This has had damaging implications for care and patient safety.

The Care Quality Commission’s report on crisis care in England19 found only 14% of people who experienced a mental health crisis thought that the care they received provided the right response and helped to resolve their crisis. Because of a lack of available inpatient beds, some patients have been sent hundreds of miles from home for care.20

The government has pledged to invest almost an additional £1bn in mental health over the next five years21—this money can’t come soon enough.

General practice has seen its share of NHS funding shrink from 11% of the total NHS budget in 2005-06 to 8.4% in 2013-1422 and is close to breaking point. The government has acknowledged this and committed to increase funding by £2.4bn annually by 2020.23 Crucially, this includes a £500m national “turnaround” package to help struggling practices ease workload pressures.

Growing consensus?

Consensus is growing among healthcare leaders that the overall funding settlement will leave the NHS struggling to maintain current levels of service, let alone fund new initiatives such as seven day working.2

The UK spent 9.8% of its gross domestic product (GDP) on healthcare in 2015, just below the EU weighted average of 9.9%.24 The UK’s ranking was boosted by recent adjustments to international accounting conventions, which now include social care spending alongside healthcare. To demonstrate, the health economist John Appleby applied the changes to 2014 figures and calculated that the UK’s proportion of overall GDP spent on healthcare increased from 8.7% to 9.9% as a result.25

But, as Appleby points out, the accounting changes do not represent any material change in actual spending and financial pressures “remain a reality.”

The most recent British Social Attitudes Survey26 shows that an increasing number of people are concerned about NHS funding but views differ on how this should be tackled. In the survey, 24% of participants supported a hypothecated NHS tax, while 17% thought it would be acceptable to pay more to the NHS through current taxes. But a further 24% said the NHS should live within its budget.

If warnings of an economic downturn after Britain’s vote to leave the EU27 prove accurate, health economists predict that the only ways the NHS will receive additional funding over the next few years will be through a higher fiscal deficit, higher taxes, or cuts to other areas of public spending.28 The government’s decision to abandon its target to restore public finances to a surplus by 202029 suggests that the first option could be used.

But with experts warning that patient care may deteriorate with current levels of funding,30 the government must be open with the public about the choices people face and the consequences if extra money is not forthcoming.

Efficiency savings

The government’s commitment to increase NHS funding by £8.4bn above inflation by 2020-21 was designed to help bridge the NHS’s projected funding gap of £30bn.31 But in return, the NHS must deliver a daunting £22bn programme of efficiency savings through a combination of productivity measures, cost control, new models of delivering care that focus on community-based care, and better prevention.32

Experts have warned that these targets will be difficult to meet,2 particularly given that efficiency gains from low hanging fruit such as management cuts and ongoing staff pay freezes have been “all but exhausted.”33 Service reconfigurations have been identified as a key mechanism for delivering savings while also improving quality. Leaders from across the NHS, social care, and local government have been asked to work together to develop 44 sustainability and transformation plans (STPs)34 which leaders hope will deliver efficiencies and better care.32 But proposals that include closing services and reducing hospital beds will be difficult to sell to the public, and local councils have voiced concerns about a lack of transparency in the plans.35

What is more, a 2014 evidence review from researchers at the King’s Fund suggested that moving more care into the community may not deliver substantial savings.36 It did, however, find that some improvements in quality could be achieved through reconfigurations, largely in specialist services.

Workforce pressures and morale

The government has also been bearing down on staffing costs to help reduce deficits and imposed a cap on NHS trusts’ spending on agency staff from November 2015 onwards. But trusts are being forced to breach this37 to protect patient safety and face a precarious balancing act between maintaining quality of care and maintaining financial control.

The reliance on agency staff is down to a shortage of trained doctors in the UK. With only 2.8 trained doctors per 1000 population, the UK ranks below European counterparts such as Germany (4.1) and the average for countries in the Organisation for Economic Cooperation and Development (3.5).

General practice is overwhelmed by demand38 and struggling to retain39 and recruit new doctors, with UK GPs being the most stressed in Europe.40

Hospitals are struggling to fill gaps in rotas 41 and are also warning of an exodus of doctors.42

The government has pledged to train up to 1500 more doctors every year in England, including an extra 5000 GPs.43 But the policy is unlikely to increase the numbers for at least a decade and will do little to ease the immediate pressures on the workforce and boost flagging morale.

This is particularly true given that the government wants to focus on training “home grown” doctors to replace doctors recruited from overseas, who currently make up 25% of the medical workforce.

With workforce planning in disarray, the House of Commons public accounts committee has advised the health secretary to urgently review NHS clinical staffing in England after warning that there had been “no coherent attempt” to assess the headcount implications of the government’s proposal for seven day services.44

Within this context, the government’s bitter and protracted industrial dispute with junior doctors as part of its quest for seven day working—which led to the first strikes by the UK medical profession in 40 years—has been particularly damaging.4546

Some, including The BMJ’s editor in chief, Fiona Godlee, argued that it was a battle that Hunt didn’t need to wage given that clinicians were already making progress towards a seven day NHS before the government’s heavy handed intervention.47

The government began a phased imposition of the new contract in October 2016, and though junior doctors suspended their planned industrial action in September, much resentment remains.

The dispute may have centred on the proposed new contract, but the malaise among junior doctors has been caused by a far wider range of factors, including rota gaps, poor workforce planning in the NHS, and a feeling of not being supported in their often challenging roles.

Hunt may have been retained in his post by Britain’s new prime minister, Theresa May, but he faces an uphill battle to restore morale in the profession and his reputation among staff.4849

Helping hospitals to provide rotas that reflect the fact that doctors have families and lives outside of work would be an important starting point for tackling low morale.

The disgruntlement among the workforce is not confined to junior doctors working in hospitals. Many GPs feel at breaking point, and the promised £500m for struggling practices and the new national service specification for an occupational health service for GPs must be delivered as soon as possible.

The government recently announced plans to replace NHS bursaries for nursing and midwifery in England with tuition fees from 1 August 2017. Ministers argue that the move will create extra training places, but the royal colleges fear that the sizeable debts that students will now incur could affect numbers and worsen the NHS’s staffing crisis.50

Burden of regulation

UK doctors have regularly cited excessive regulation and paperwork as reasons for their low morale and desire to leave the profession.515253

In addition to their annual appraisals, doctors must be revalidated once every five years by the General Medical Council.

UK healthcare providers face inspections from quality bodies (the Care Quality Commission in England, Healthcare Improvement in Scotland, Healthcare Inspectorate in Wales, and the Regulation and Quality Improvement Authority in Northern Ireland). And in England, doctors and trusts also face scrutiny from NHS England and clinical commissioning groups (CCGs), additional monitoring from local health and wellbeing boards and Healthwatch groups, and sector-wide financial monitoring from NHS Improvement, which has exercised its powers to place dozens of struggling trusts in “special measures.”

I will explore how effective regulation has been at driving up quality in the next article in this series.

Lansley’s “monster”

Despite a promise of no top-down reorganisation of the NHS in its 2010 election manifesto, the Conservative led coalition unleashed a dense and complicated piece of legislation within months of forming a government.

In his book documenting the political row that engulfed the reforms, the former Financial Times journalist Nick Timmins called it “the most controversial piece of NHS legislation in more than two decades” and “arguably the biggest restructuring [the NHS] had seen in its 63-year history.” 54

Labelled “Lansley’s monster” by The BMJ’s editors in a critical editorial,55 the act abolished two layers of NHS management (strategic health authorities and primary care trusts) at considerable cost. These were replaced by clinical commissioning groups led by GPs and a new set of national bodies (NHS England, Public Health England, and Health Education England) to relieve the Department of Health from much of the day to day running of the NHS.

The act also enshrined rules to promote competition to provide services in the NHS and required commissioners to tender many healthcare services on the open market.

Lansley was eventually replaced by Hunt in 2012 in an attempt to take the political sting out of the reforms, as senior Tories attempted to wash their hands of a piece of legislation which they described as “their worst mistake” in government.56

Given that the act’s introduction coincided with the tightest funding squeeze in the NHS’s history, the King’s Fund’s assessment in 2015 that it had proved “both damaging and distracting” 57 was a damning one for the government.

“Although it is not possible to demonstrate a causal relationship with NHS performance, it seems likely that the massive organisational changes that resulted from the reforms contributed to widespread financial distress and failure to hit key targets for patient care,” the fund concluded.

From competition to integration

While Lansley’s reforms were condemned as “a bloody awful train crash” by one NHS chief executive,58 the creation of NHS England as a semi-autonomous national body at least allowed the NHS some control over how to disentangle itself from the wreckage.

NHS England, though at times tested by Hunt’s more hands-on methods, has managed to maintain a degree of distance from government when making the case on issues such as funding59 and the NHS five year plan.

England hasn’t yet joined Scotland and Wales in abolishing the internal split between purchasers and providers of healthcare, but competition and markets have been replaced by collaboration and integration as the primary vehicles of reform, with the Five Year Forward View setting out plans to develop new models of integrated care.32

But the evidence of previous attempts to integrate services suggests that achieving its aims (better health, better patient care, and improved efficiency) will be difficult and take longer than politicians expect.

A systematic review of integrated care initiatives by Australian researchers in 2006 suggested that most schemes had not succeeded in reducing costs,60 while a 2012 evaluation of integrated care pilot schemes in England found small reductions in overall costs but no fall in emergency admissions.61

Role of private sector

As the King’s Fund62 and others have highlighted, renewed efforts to foster collaboration between health and care providers do not sit comfortably with the 2012 Act’s requirement for commissioners to tender many services on the open market.

The expansion of competition in the English NHS over the past 15 years has led to an increasing proportion of the NHS’s budget being spent on private sector providers.

This began with the Labour government’s NHS Plan 2000,63 which first embedded choice in the service and enlisted private sector providers to improve access and bring down waiting times through the introduction of independent sector treatment centres.64

These delivered mixed results. The centres were found to be “not a significant factor” in reducing waiting times for elective procedures when compared with the introduction of targets for NHS hospitals.65 But a joint report from the Audit Commission and Healthcare Commission66 provided some anecdotal evidence that competition from the centres was “a useful tool” for helping NHS trusts to change clinical behaviour and practice.

On quality, research suggests that elective surgery outcomes at treatment centres were at least as good as in the NHS, although patients were found to be “slightly healthier and had less severe conditions than those undergoing surgery in NHS providers.”67

Efficiency was more questionable; private companies were paid an estimated £500m for treatment that never took place because of the block contracts awarded by the government.68

There is little evidence that market reforms have had any appreciable effect on the NHS’s performance in England compared with that in Scotland, Wales, and Northern Ireland, which pursued non-market based policies.2 With this in mind, the recent shift away from choice and competition may mark a realisation that the NHS in England cannot afford excessive capacity with financial margins so tight.

The proportion of the NHS budget in England spent on private providers has increased steadily but incrementally in recent years, rising from 4.4% in 2009-10 to 7.6% in 2015-16.6469

Large contracts continue to be awarded to private providers, an example being Virgin Care’s recent £700m deal to provide community services in Bath and Somerset.70

But recent withdrawals of private companies holding high profile contracts in Hinchingbrooke70 and Staffordshire 71 have cast doubt over the private sector’s appetite to take sole responsibility for holding larger and higher risk NHS contracts in the current financial climate.

The Health Foundation’s chief economist, Anita Charlesworth, told The BMJ that the growth in private sector involvement in running acute and community NHS services may slow down because of financial pressures and less competitive tendering.

The future

Whether political decisions are driven by pragmatism or ideology, governments will always have a huge influence over the NHS given that it consumes £120bn of public money every year. But there are fine lines between oversight and accountability and interference and micromanagement. While healthcare leaders must look to Whitehall to support the NHS financially, can politicians resist the urge to impose any further grand shake-ups from on high?

History suggests that this is unlikely, but with the NHS under more strain than ever before, now would be a timely moment to heed the lessons that structural reorganisations imposed by politicians have distracted the NHS from pursuing greater goals such as quality of care and productivity.


  • Feature, doi: 10.1136/bmj.j92
  • Competing interests: I have read and understood BMJ policy on declaration of interests and have no relevant interests to declare.

  • Provenance and peer review: Commissioned; not externally peer reviewed.


View Abstract

Sign in

Log in through your institution