NHS struggles to turn cash into care
The NHS is one of the worst health systems in the western world at converting money into better care, a report by the TaxPayers' Alliance suggests.
Researchers examined data from the Organisation for Economic Co-operation and Development to compare 13 health systems, including in the UK, Canada, Australia, France and Germany, and found the UK had the lowest life expectancy and highest rates of avoidable deaths.
It showed that the NHS struggled to convert funding into more resources such as doctors, nurses, hospital beds or scanners, with two thirds of its budget swallowed up by staffing costs, including pensions.
The TaxPayers' Alliance report said: 'Without a serious improvement in productivity, the extra cash released by Rachel Reeves is unlikely to be noticed by patients.'
The NHS was handed an extra £29 billion in Labour's spending review this month and is on track to take up 50 per cent of all public spending by the end of the decade.
However, experts have warned that the money will be wasted unless the NHS can improve efficiency and productivity.
The TaxPayers' Alliance report said the UK ranked third highest out of the 13 countries in terms of how much is spent on health as a percentage of GDP. However, it only ranked 12th by the metric of converting money into resources that can help treat patients.
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The NHS also ranked 11th when it came to capital spending on new technology and hospitals. The researchers said priority 'must be given to capital investment over further expansions on staff' in order to boost productivity.
The figures showed that the NHS spends 64 per cent of its budget on staffing, far more than comparable countries such as New Zealand or Ireland, which spend 42 per cent and 33 per cent respectively.
This was largely due to generous public-sector pensions for doctors and other NHS staff. There have been calls for reforms to rebalance NHS remuneration away from pensions towards take-home pay.
Last year a report by Lord Darzi highlighted a collapse in NHS productivity in the past decade. It found that the hospital workforce had risen by 17 per cent between 2019 and 2023, yet output had not risen at nearly the same rate, which was largely due to a failure to invest in upgrading equipment and buildings.
• Darzi report: money alone can't cure what ails NHS
Darwin Friend, head of research of the TaxPayers' Alliance, said: 'Our comprehensive analysis of healthcare productivity is by no means all doom and gloom, with the NHS clearly performing well in some areas, particularly when looking at its use of existing resources.
'But it does paint a bleak picture for taxpayers, given the overwhelming evidence to suggest that the vast extra funding announced at the spending review will simply be throwing good money after bad without more fundamental and far-reaching reform.
'If the government wants to deliver on its promises, it will need to be far braver than politicians have been and consider changes previously considered unpalatable, including regional pay bargaining, the prioritisation of capital spending and a role for more insurance-based financing.
'It will also have to face down demands for increased pay, given the disproportionate amount of the NHS budget that is swallowed up by staffing.'
Kristian Niemietz, head of political economy at the Institute of Economic Affairs, said: 'In state-run health systems like the British NHS, there is often a temptation to prioritise day-to-day spending over long-term investment. Politicians know that by the time the detrimental effects become apparent, somebody else will be in charge and it will be somebody else's problem.
'The paper also shows that while the NHS cannot be described as 'underfunded', it is in a very real sense under-resourced. These are not the same thing — a pile of cash does not magically transform itself into a doctor, a nurse or an MRI scanner. The NHS is remarkably bad at converting its financial resources into medical inputs.'
The report analysed data from 13 countries: Portugal, South Korea, Norway, Germany, Spain, Australia, Ireland, Italy, Denmark, New Zealand, France, the UK and Canada.
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