ConLib Government to Give NHS GP's £80 Billion Blank Cheque

By: Nadeem_Walayat

The ConLib government appears hell bent on repeating Labours 2003 GP Contracts mistake by effectively giving GP's a blank cheque that is expected to result in huge pay rises as GP's take money meant for improving patient healthcare to reward themselves for working less hours.

The ConLib government proposes to scale back the role of strategic health authorities and local trusts that currently act as weak checks and balances on the level of GP performance, though as illustrated in the recent article (NHS Choose Your GP Consultation ) tend to waste years on public consultations, without actually acting to make healthcare improving implementations, still did provide for some weak pressure on GP's to attempt to perform.

The Health Secretary Andrew Lansley believes GPs are best placed to understand patients' needs and to decide where money should be spent by funneling as much as £80 billion of the annual NHS budget to groups of GP practices to decide what healthcare services would be purchased for their patients, however the last Labour government tried a similar exercise of empowering GP's that resulted in the exact opposite outcome of that which was intended.

Labour GP Contracts and MP Expenses Lesson

When Labour came to power in 1997 average MP pay was £43,722 against average NHS GP pay of £44,000, so both were inline with one another at that time. However as the above graph clearly illustrates in 2003 something started to go seriously wrong with GP Pay which took off into the stratosphere as GP's decided to award themselves pay hikes of more than 30% per annum at tax payers expense that has lifted average GP pay to £130,000 per annum against £64,000 for MP's.

How could this happen, unfortunately this was as a consequence of the now infamous GP contracts where to be blunt greedy GP's hoodwinked gullible incompetent Labour government health ministers into signing upto contracts which were meant to deliver greater value for money for the tax payer but were designed to do the opposite and resulted in GP's pay doubling whilst at the same time cutting back on hours worked. This was not only a total fiasco for the nations health and finances but also ignited jealousy amongst MP's that directly led to the adoption of the policy of claiming expenses to the maximum so as to fill the ever widening gap between MP's and NHS GP's, as MP's could NOT get away with awarding themselves pay hikes of 30% per annum without losing their seats at the next general election in response to voter outcry, therefore across the board systematic abuse of expenses started to take place which basically means real average MP pay is currently approx £98,000 per annum.

NHS GP's Ignore Poor Patients Symptoms

The National Audit Office recently reported a picture of a widening gap in life expectancy between affluent and deprived areas of the country of more than 10 years as a consequence of GP's in deprived areas effectively ignoring the symptoms of their poor patients which results in less resources being plowed into high disease prevalence deprived areas in favour of more resources being directed to low disease prevalence affluent areas which reflects a failure of the GP's to do their jobs.

Department of Health - Tackling inequalities in life expectancy in areas with the worst health and deprivation

GP's provide the main access point to healthcare and are crucial to providing care to the neediest groups. The main lever for rewarding their activity is the Quality and Outcomes Framework which was introduced in 2004. However, it does not provide enough of an incentive to target GPs attention on the neediest groups. GPs can achieve full payment of the additional income available under this framework without covering the entire practice population and as a result the hardest to reach and most in need groups may not be helped through this framework. In addition, until 2009, payments were scaled in such a way that areas with high disease prevalence, often concentrated in deprived areas, received less remuneration per patient than those with low prevalence, and payments to practices did not fully reflect the level of illness in the practice population. By 2011, payments are expected to fully reflect the level of need with consequent redistribution of payments between practices.

NHS Bankrupting Britain

The country is currently running an annual £156 billion budget deficit i.e. the government spends £156 billion a YEAR more than it earns in revenue which is contributing to towards igniting Britains inflationary debt spiral, that risks accelerating trend towards an hyper inflationary bust leaving savers with worthless paper and the economy in ruins, i.e. bankrupt unless urgent action is taken to bridge the gap.

The NHS budget under Labour has grown from £40 billion in 1997 to £121 billion for the last financial year. NHS budgets increasing in line with inflation (CPI) would have seen the budget under a Conservative regime rise to stand at £51.6 billion, and probably nearer £60 billion to allow for an ageing population. So the Labour government is in effect spending an extra £60 billion a year, more than double that which the Conservative would be spending on the NHS.

Against this extra spending instead of Brit's experiencing the impact from effectively paying for TWO NHS's, the NHS is experiencing year in year out loss in productivity, i.e. the more the government spends on the NHS the LESS output the NHS delivers as more tax payer funds disappear into the NHS black hole. In theory this suggests that the NHS budget could in-effect be halved to £60 billion and still deliver a functional health service that the the country can afford. Off course that is not going to happen, but still a mere 10% cut in the NHS budget would contribute some £12 billion of annual savings.

The government's annual budget deficit is running at £156 billion a year or at 23% of the total budget i.e. the the governments total revenues are £520 billion against estimated expenditure of £676 billion, hence a deficit of £156 billion added to the national debt known as the Public Sector Net Debt (PSND) currently standing at about £850 billion, though excluding the hidden tax payer liabilities that extend to several more trillions of pounds. Nevertheless £850 billion of debt costs about £35 billion in interest per year to service, as the debt grows so does the cost of servicing the debt, more so as the supply of government bonds increases then so will the market demand ever higher interest rates to buy this flood of debt which illustrates why running anywhere near an £156 billion annual budget deficit is NOT sustainable that the ConLIb government intends to reduce to £20 billion by 2015-16, though as the in depth analysis (29 Jun 2010 - UK ConLib Government to Use INFLATION Stealth Tax to Erode Value of Public Debt ) pointed out is unlikely to be achieved because the ConLib government has tied one arm behind its back by stating that they will continue to increase the two largest areas of government spending, the NHS and Pensions which amount to 1/3rd of total government spending.

NHS Competition Solution

The only answer to the NHS GP and Hospital delivery crisis is in greater competition between surgeries and hospitals which ultimately means privatisation, as the existing system of no real competition means the incompetent are rewarded with more resources in the face of inability to delivery whilst those that excel are punished with less resources so as to pull all services down towards the under performing mean.

The only way excellence can be rewarded and act is the goal to be achieved is if competition drives out the incompetent GP surgeries as they lose patients and resources to the better run GP surgeries which can only happen in a private system of healthcare delivery, where patients would in effect be handed NHS credit cards to enable them to buy healthcare at ANY health facility whether NHS run or private.

Given the actual performance of the NHS, I would imagine that closing 20% of the worst performing NHS Hospitals and GP Surgeries would result in IMPROVED life expectancy for patients as well as contributing £24 billion of annual savings to help towards reducing the £156 billion annual budget deficit.

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By Nadeem Walayat

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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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