Is the English NHS underfunded?
BMJ 1999; 318 doi: https://doi.org/10.1136/bmj.318.7182.522 (Published 20 February 1999) Cite this as: BMJ 1999;318:522
- Jennifer Dixon, fellow in policy analysisa,
- Sarah Inglis, medical studentb,
- Rudolf Klein, professorial fellowa
- Correspondence to: Dr Dixon
It has long been known that the NHS in Scotland, Wales, and Northern Ireland receives more funding per head of population than the NHS in England. 12 In 1995-6, for example, Scotland received 25% more, Wales nearly 18% extra, and Northern Ireland 5% more per capita than England. These differences have resulted largely from historical accident rather than differences in need: for the first 30 years of the NHS, public sector resources between countries were allocated on the basis of traditional arm wrestling between the Treasury and the Scottish Office, Welsh Office, and Northern Ireland Office.
In the late 1970s, the Barnett formula was introduced.3 This put the allocation of resources toScotland on a more objective footing. Similar formulas were subsequently introduced for Wales and Northern Ireland. However, these formulas applied to the growth in public funding, and they did not seriously challenge existing historical patterns. Furthermore, they were based principally on population size rather than any other measures of need. The conclusion, drawn a decade ago, that NHS funding in Scotland, Wales, and Northern Ireland is in excess of these countries' entitlement relative to need can still be argued convincingly.4
This state of affairs has an advantage—it provides a useful opportunity for natural experiment. The NHS is broadly similar in each of the four countries, but it is funded at different levels. It is inconceivable that the English NHS could receive, at a stroke, 25% more resources per capita in order to reach Scottish levels. This would require an extra £8.3 billion, more than six times the amount awarded to the NHS in 1997-8. But if it did, what does evidence from Scotland indicate that the extra funds would buy? Do the Scots get more doctors and nurses for their extra funding, or extra treatments? Are the signs of “underfunding”—lengthening waiting lists, financial crises, and public dissatisfaction with the health service —any less in Scotland?
We attempted to answer some of these questions using routinely available data.5–19 Data were analysed for the financial year 1995—6 (the most recently available data) unless otherwise indicated
Summary points
In 1995—6, the Scottish NHS received 25% more funding per capita than the English NHS, and Wales and Northern Ireland received 18% and 5% more, respectively
The Scottish NHS buys more hospital beds and staff per head and has higher rates of outpatient and inpatient activity than the English service
Scottish NHS trusts experience less financial pressure and staff have a lower workload than in England
People in England seem more dissatisfied with NHS care than do people in Scotland, Wales, or Northern Ireland
There is no obvious relation between levels of funding and the extent of public feeling that governments should spend more on health
Higher funding in Scotland, Wales, and Northern Ireland does not seem to be associated with better health outcomes
Need
Crude indicators of need in the four countries of the United Kingdom, given in table 1, show a mixed pattern. Life expectancy is lower and standardised mortality ratios are higher in Scotland, Wales, and Northern Ireland than in England.5–18 However, Scotland and Northern Ireland have fewer people in the age group that makes the heaviest demands on the healthcare system —those over 75 years. In addition, while more people reported illness in Wales and Northern Ireland, rates in England and Scotland are similar.16, 17
Funding differences
Table 2 shows total NHS and personal social services spending per capita in the four countries of the United Kingdom.5-8 Differences in total NHS expenditure per capita and in the allocations across the countries to hospital and community health services and family health services are evident. For example, in Wales a larger proportion of resources is devoted to family health services than to hospital and community health services, while the reverse is true in Scotland. However, each country classifies separate elements of expenditure differently, which limits the value of making direct comparisons below the level of total NHS expenditure. For example, in Scotland, Wales, and Northern Ireland compared with England, a considerably higher proportion of expenditure is not classified as central health services—services purchased or provided centrally. This suggests that the differences in per capita expenditure for hospital and community health services or family health services between England and the other three countries are probably larger than shown. In addition, table 2 shows that expenditure on personal social services is greater in Scotland, Wales, and Northern Irelandthan in England.
Per capita expenditure (£) on the NHS, hospital and community health services, family health services, and personal social services in England, Scotland, Wales, and Northern Ireland, 1995-65-7
What do extra funds buy?
We compared what, in broad terms, NHS funds were used to buy in 1995-6 across the four countries.5–8 Key basic indicators were selected and grouped in terms of inputs (such as number of staff, number of beds), activity (such as inpatient admission rates), and outcomes (such as waiting times, levels of public satisfaction,16 and the extent of financial stress in hospitals). Basic inputs and activity indicators are given in tables 3 and 4
Inputs: hospital beds and staffing in the NHS per 1000 population in relation to country, 1995-65-8
Beds and staff
In 1995—6, Northern Ireland and Wales had more, and Scotland appreciably more, hospital beds available per capita than England (table 3). Fewer beds were allocated to acute specialties in these three countries than in England, suggesting that the excess beds were in non-acute specialties such as geriatrics, maternity services, and mental illness and handicap. The number of hospital nurses closely mirrored the pattern for beds. There were small differences in the numbers of hospital doctors and general practitioners (table 3).
Activity
The relatively high number of beds available in Scotland does not seem to be associated with a lower bed occupancy rate relative to the other three countries, as shown in table 4 Unfortunately, information on the average length of stay in hospital wasnot comparable across the four countries. The increased beds and staff seemed to be associated with higher rates of inpatient and outpatient activity in Scotland, although outpatient activity was also associated with a higher proportion of return appointments. The crude workload per hospital doctor, nurse, and general practitioner was lower in Scotland, Wales, and Northern Ireland than in England
Procedure rates
We also examined rates for a few common surgical procedures (table 5).5–818 For most, only small differences in rates were seen. The exceptions were extracapsular extraction of lens, varicosevein treatment, and coronary artery bypass grafting. How far rates for these specific treatments reflect differences in need, availability of supply, diagnostic coding, or local purchasing priorities is unclear.
Waiting
Table 6 shows some broad indicators of the outcome of NHS expenditure—the proportion of the population waiting for elective surgery, waiting times, and levels of public satisfaction with the NHS.5–81819 Proportionately fewer people were on a waiting list for inpatient or day case care in Scotland. Routine data on the number of patients waiting for outpatient appointments were not available for England and Scotland, but the proportions of the population waiting in Wales and Northern Ireland were similar. However, there were greater differences in waiting times across the fourcountries. The proportion of patients waiting more than 3 months for an outpatient appointment in England was roughly half that in Wales and Northern Ireland. For elective inpatient or day case treatments, fewer of those on the waiting list in Scotland and Wales than in England and Northern Ireland had waited more than six months.
Patient satisfaction
Satisfaction was generally lowest for all services in England, particularly for inpatient and outpatient care.19 This may reflect the higher workload per doctor and nurse in England that was suggested in table 4. Differences between the other three countries were generally small
Financial targets
Finally, we tried to get an impression of the extent of the “financial crisis” in the NHS in the four countries.12–15 For health authorities (or health boards in Scotland), we identified the extent to which revenue expenditure had exceeded revenue income. For NHS trusts, we looked at the proportion achieving each of three centrally required financial targets—breaking even (revenue expenditure not exceeding income); achieving a 6% rate of return on assets; and operating within a predetermined external financing limit. We then used data to gauge public opinion on whether the government should increase taxation in order to spend more on health, education, and social benefits.19 The results are shown in table 7
Income and expenditure of health authorities and health boards, financial performance of NHS trusts in respect of three financial targets in 1995-6, and public opinion about level of expenditure on NHS in relation to country12-15 19
Expenditure exceeded income for health authorities and health boards in all four countries (table 7). In all countries, the deficits were less than 1% of income, although the percentage deficit was largest in England. More NHS trusts in Scotland achieved each of the three financial targets. With regard to public opinion, there was no obvious relation between the amount spent on health care and the extent to which the public thought that the government should raise more taxes to pay for health, education, and social benefits
Discussion
Comparing data
It has long been recognised that a comparison of the performance of the four countries of the United Kingdom offers opportunities to identify the impact of differences in funding levels in whatare otherwise similar healthcare systems.20 Our study goes some way to explain why those opportunities have not been exploited—data on NHS activity may not becomparable across the four countries and interpreting the differences observed is not a straightforward task.
The problems involved in generating comparable data are a reminder that in the United Kingdom the NHS is, in practice, a confederation of four health systems. It proved difficult, for example, to obtain such basic data as the level of spending on the NHS in Northern Ireland, since health and social services budgets are merged. Data on waiting times are collected differently in Scotland and England, and routine information on the average length of stay in hospital refers to admissions (or finished consultant episodes in England) in different groups of specialties across the four countries. There has been no policy initiative to encourage consistent data recording across the NHS in the four countries—rather, diversity seems to have been championed. If national means the United Kingdom, there does not seem to be a national NHS. In many respects, therefore, devolution is a fact before the event.
Interpreting differences
It is difficult to interpret the meaning of differences between countries. The main reason is the relation between level of need and level of funding; for example, it is not clear how far differences in need (as in table 1) “justify” funding differences (see table 2). If they did, there would be no reason to expect noticeable variations in overall performance. Thus, for example, the NHS in Scotland might be expected to be under the same sort of pressures as the NHS in England, despite having 25% more funding. In practice, the evidence suggests that the available indicators of need do not explain fully the differences in funding. Other factors such as productivity of the workforce, the existing supply of facilities, and differences in NHS priorities between countries are also likely to drive differences in performance.
In an examination of what the extra funds across the three countries buy, another fundamental conceptual problem arises. What should the currency of assessment be? One traditional approach has been to turn indicators of need into indicators of outcomefor example, life expectancy and morbidity. Thus, we might conclude that the NHS in England does better with fewer resources than the other countries. But this assumes a direct relation between the level of expenditure on health care and the health of the population, and international evidence shows that there is no such relation.21 There may be a stronger relation between the extent of public satisfaction (as an outcome indicator) and levels of funding (see table 6), as has been shown across some European Union countries.22 The lack of a strong relation in the United Kingdom is consistent with the view that opinion is shaped as much by the media as by personal experience.23 To the extent that British citizens are exposed to broadly the same media, their opinions of the NHS might also be expected to converge.
Differences in inputs and activity
Without unambiguous outcome indicators for assessing the performance of the NHS, there remain the indicators of input and activity. In discussing the evidence bearing on these, it is helpful to distinguish their impact on providers and consumers. In the case of providers, table 4 suggests that doctors and nurses in Scotland, Wales, and Northern Ireland seem to be under less pressure (or are less productive) than their counterparts in England. There are more non-acute beds, greater funding of the hospital sector in Scotland, and, others have argued, more resistance to shifting care from hospitals to community care.24 Similarly, NHS trusts outside England seem to be under less financial pressure (see table 7). Whether less pressure on staff or finances translates into higher quality care—for example, more time devoted to individual patients, better staff morale, or better outcomes—cannot be answered by the available data
Evidence on the impact of differential funding on consumers is more ambiguous. If rates of inpatient admissions, day cases, and outpatient appointments are taken as indicators of accessibility, then Scotland clearly scores over England, though Wales and Northern Ireland do not. The data on waiting lists and times show a similar pattern, though here any confident conclusion is inhibited by problems of comparability. Operation rates show a confused pattern, as we have seen. However, variations in rates for specific procedures are probably influenced more by differences in purchasing priorities than overall levels of funding.
Interestingly, differences in public satisfaction with the NHS mirror relative levels of funding, while the public appetite for raising taxes and spending more on the NHS does not. This may reflect a stronger collectivist ethos in support of the NHS in Scotland, Northern Ireland, and Wales relative to England (see table 7). Greater freedoms allowed by devolution may reinforce this, and wider funding differentials may emerge even if the Barnett formula is revised.325
Conclusions
A comparison of the four countries of the United Kingdom based on the evidence available does not enable us to determine whether the NHS in England is underfunded relative to the other countries. Funding the English NHS at the same level as the Scottish NHS would certainly make life easier for providers, and might relieve fiscal stress. Beyond that, however, only an indeterminate answer can be given. The existing evidence, as far as it bears on the experience of consumers and the impact on the population's health, is open to different interpretations. It could be argued that the Scottish “providers” are less productive. For the extra funding they have more non-acute beds, staff under less pressure, and more return outpatient appointments. This evidence could be used equally well by a Scottish assembly to argue for cutting healthcare expenditure—on the grounds that greater health gains could be secured by spending more on social services or housing, or to encourage greater NHS productivity—as by advocates of a larger budget for the NHS in England
Acknowledgments
We thank Tony Harrison, Nick Mays, Jo Ann Mulligan, Maria Evandrou, staff in the Department of Health and Social Services in Northern Ireland, John Halsall, Richard Hamblin, David Heald, John Wyn Owen, Christine Robson, and an anonymous reviewer for help and advice.
Funding: None
Competing interest: None