Friday 5 October 2012

Actual ways to fix the deficit; part 1, NHS Privitisation

The UK Deficit and national debt is on the road to hell. With record emigration and immigration the Country is losing its tax base whilst also accruing more and more long term benefit costs as the population ages.

The sad facts are that as much as Labour and Conservatives go at each other, arguing about where £3 billion goes here and there does not really make any difference. The problem with the numbers we have is in the trillions of pounds of problems. Even the annual deficit is well over £100 billion a year - more than the take in VAT for example - and that is just the overspend.

So, if we lived in a real world where people were actually allowed to say the truth rather than deny reality (we know we are not in a real world because the Euro exists and all the politicians in Europe say it will live forever), then we might come up with some radical ideas.

How my NHS would look
 In the 1980's there were some very good privatisations, in the 1990's some less good ones. But if you want one off hits to really help reduce Government debt then privatisation is the way to go. People come off the state payroll and get real jobs instead that pay real taxes, efficiencies can be delivered and saves have new businesses to invest their savings capital into. We end up with a smaller state, taking in more tax. It's a win-win.

However, in the UK lots of the good asset sales have been made, Aviation, Utilities, Telecoms, Rail. There are a few left like Roads, but the tax take is already disproportionate so its a hard sell.

There is only one standout institution left - this is the NHS. Some hospitals in the US make profits of up to 25% (somewhat egregious it sounds, but having been to some the service is great). The NHS budget is about £110 billion. A huge amount, more than is collected by national insurance. If hospitals were privatised, the interest from the private sector would be huge. The various regional or specialised businesses would raise probably over £100 billion  - maybe nearer £150 billion. This is would be a big dent in the deficit, even if we did not allow for any further rationalisation in the business.

Better yet would be to encourage a part-privatised system of insurance for those that can afford it as in France, to replace national insurance and create another new private industry that would generate more jobs and wealth.  

With better offers of healthcare, it may even be we see spending overall on healthcare continue to increase, but as the increase would be in private spend rather than state spend, the effect on the Treasury would be good rather than bad.

Of course, I can imagine people reading this are now worrying about my own mental health. there is no chance of this happening in the UK with Labour and the Tories out-doing one another in their commitment to state-sponsored penury via unsustainable health spending. It's Friday, I like humour on a Friday but this is tinged with regret that no radical solutions are currently being put forward to try to turn the Country around. It is very 1970's managed decline when we need a 1980's drive for renewal.


Anonymous said...

My own debt reduction method would be to make the royals earn their keep by creating a "Royal Idol" competition. All royals must take part on a marathon quest in a variety of talents (cooking, singing, dancing etc). The winner get the throne for the year. Money raised via public phone voting and international TV rights would put a significant dent in the debt don't you think?

Anonymous said...

The current, long-running 'Royal Idle' scheme seems to generate quite a bit of money, no?

andrew said...

I think privitisation will happen.

Not directly to save money, but because the Minister and Govt keep on endlessly getting attacked for spending too much on managers / spending money on Homeopathic hospitals / closing the local A&E / spending too little on massively expensive cancer treatments

It is a game they cannot win (labor or con).
The minister has no effective control - they can allocate money and issue dictats, but have absolutley no control over the process or outcome or whether the money is spent wisely.

So, the answer is to stop playing, get rid of the problem and outsource.

GPs are already effectively privatised - but rather than sending you the bill, they have a service contract with the govt.

This provides a model for doing the same thing at a hospital / trust level.

Many trusts have already prepared for this by installing systems that are us-based billing systems. (google for North Bristol NHS Trust Cerner Millenium Implementation to have your prejudices confirmed).

The next thing you do is hand over the definition of all the services that are to be provided to NICE (and the construction of a national price list).

This insulates you (as the health minister) from definition and delivery.

Will we as a nation bet a better service for less?
No, probably worse for more, especially if you have something multi-factoral wrong (ie you are old)

My personal recipe for inproving the NHS is based upon taking my OH in for treatment ~20 times over the last 6 years for a procedure that takes ~40m. So they could treat ~10people a day.
They usually seem to treat ~8 basically of a team of 6, one person always seemed to turn up 20-30m late.

So, just make everyone turn up on time.

hovis said...

Privatise it, and destroy its producer monopoly / supplier monopoly. I amdriven more by belief in we have sovereignty over our own bodies as much as cost cutting.

The worship of the NHS is puke making. Simply because someone had treatment in the NHS and it was a sucess does NOT mean the NHS is wonderful, simply (happily) there was a positive outcome.

Roll on a french system where insurance and decentralisation. Oh and restrict influence of big pharma a little more ok I know GSK are of our biggest companies but that doesnt mean we have to effectively subsidise their fraudulent crap.

Bill Quango MP said...

I'd scrap the military. The whole thing. Just say, sorry...that's our lot. Our services, equipment and excellent personnel are available for hire from

Well, not quite all. I'd stick a large missile base on the Falklands and keep a submarine fleet, just to annoy Argentina and force them to come to a proper sharing/drilling/refining agreement.

Our military is too big and diverse to fight a country like, Chad. Its full of equipment that is of no use in Chad. At the same time its big enough to scare the Russians. But we don't need to defend against them. If they did sail out of the Baltic and land in Hull, intent on taking over the nation, The Europeans AND the USA would stop them. They wouldn't want a sneaky enemy in the backyard.

So lets do a few decades of Japan defence policy. Someone else will save us as we are in a strategic place that can't be ignored.
That's £60bn a year {less the £10 bn that we still spend for ceremonial duty and a small airforce and a medium navy.}

I have just made 80,000 military personnel and some 300,000 civilian contractors and another 300,000 associated trades redundant. But with 1/2 the annual £50bn saving we'll find something for them to do.
And over 20 years its a huge saving. Maybe even enough to afford our health service?

CityUnslicker said...

BQ - that is my kind of thinking and so that can be part 2 next week.

Funny or not we really do need to do game changing things. I know this will really start to happen in about 2020-2030 when the demographi impact hits and the money really does run out. But then it won't be any fun as it will all feel so cataclysimically bad instead of being a forward thinking force for positive change.

Jan said...

As I was reading your piece I was thinking to myself why not just get rid of defence and then I saw Bill had suggested the very same! I wouldn't bother defending the Falklands but I would scrap silly nuclear subs etc (no-one sensible is ever going to use them) and just keep a small army to help out at events like the Olympics and floods.

I can already hear howls from gung-ho forces types and from all those who are employed by the defence industry but maybe they could turn their talents to making useful things instead.

DJK said...

Excuse me? How is replacing a tax-funded NHS with a compulsory insurance --- a tax in all but name --- funded NHS an improvement? And does anybody outside of an investment bank think that creating monopoly-rent seeking health insurers will make the country richer?

Privatisation is not a magic panacea; we have only to look at the railways to see that. (Think that Network "Not for Profit" Rail knows how to control costs? --- Think again!)

No, the problem lies in incentives not ownership. We need to create incentives that improve quality and reduce cost; the US experience shows that private profit alone is not the answer: they have easily the most expensive health care on the planet with third-world levels of infant mortality and premature death.

In the 1940s, altruism and idealism were incentive enough. Today, something more is needed. But blind profit-seeking privatisation will destroy what altruistic incentives are left in the NHS.

Which is not to say that the status quo is something to be proud of, but wishing to sell it to a rent-seeking sovereign wealth fund is just bonkers.

hovis said...

DJK the solution is not to private the monopoly that is the NHS - this is as much of the problem as capture by producer interests and the dead hand of corporatism. The HNHS cannot be reformed it is too big and has too much history and is ridiculously totemic - see teh bilge in the Olympics for starters.

Personally I favour a french system where the state insures but the providers do not have a monopoly. Of course the issue how to de-centralsie a powerful monopoly provider/monopsony employer that is the NHS and its suppliers.

BQ: Scrap trident, get tactical nukes if we must have any.

Anonymous said...

Scientific American compared health outcomes across the developed world. Spending in the USA @ 15% GDP has worse health outcomes than Japan @ 8%. UK is 10%. Spending money is not the answer but neither is privatization.

The NHS "ethos" (i.e. monopoly) has been successful at keeping GP wage costs down through crowding out the alternative markets. Privatise it and see the costs soar and outcomes get poorer. It's one area where socialism in its purest form has worked - not that I'm suggesting it works everywhere. Just like capitalization/privatization.


Thud said...

Unless somebody here has a crystal ball we can never know just what our armed forces will be needed for. Once the skills of our forces are lost they can not be recovered in any needed timescale as the days of untrained conscript armies are past.

hovis said...

Anon: It would be interesting to see the criteria they defined outcomes.

I agree it is not only spending but delivery, which gets us back to the French model (an insurance system) - 11.9% of gdp but ranked No1 in the world copanred toour 18th speniding 9.6% GDP on health.

I still say break up the NHS for everyiones benefit and while we're at it break we can go union bashing and break the BMA, simply because its a middle class union doesnt make it any use.

hovis said...

ok apologies for the spelling those figures are from the WHO btw.

john miller said...

If we include the infamous "consultants" so beloved of Whitehall, I bet the total number of employees of the NHS is probably about 2 million. The satchel holders, that detritus washed up on the shores of incompetence, must number about 1.5 million.

These people, unlike the elderly and genteel folk of the Countryside Alliance, would do really, really bad ultra violence to protect their position.

But ironically, there would still be enough clinicians to tend the wounded.

Electro-Kevin said...

So if we privatise the NHS will that mean that we'll have to pay for our treatment privately ?

Will taxation come down to make up for any loss of access to health services ?

I have a rather different answer:

Limit the NHS to essential/life saving treatments only. Reduce its activities drastically. All the other treatments to be funded by charity or insurances. Or have I just described privatisation in other words. In which case I agree. We can't afford it.

We also need to be considering Dignitas - not just for economies but for the very fact that we treat terminally ill and aged people worse than we do our dogs.

Personally I do not want my mind to outstay my body nor my body to outstay my mind on this planet.

PS, In 'polite' company we are most definitely not allowed to state the obvious on emigration/immigration.

We will go broke because of this madness.

PPS, Armed services.

Specialist units such as the SAS/SBS require a large pool of 'apprentices' to draw from. I'd say the Royal Marines are pretty essential too.

Don't imagine that we can maintain these small 'stinger' type regiments without supplying the manpower from ordinary regiments.

Even if we stuck within our own shore lines for the next hundred years we'd still need these.

Electro-Kevin said...

PPPS, The NHS is to the Labour Party what tractor plants were to the Communists.

Its primary function (even above health care) is to terrify the public into accepting leftism.

Anonymous said...

I'm with EK on this particularly: if the NHS (that we have paid for once) gets scrapped and we are asked to pay again via fees or insurance, do the government also scrap N.I. and the jobs tax employers N.I. ? The "New nhs" should be a locally focused, emergency and minor injury,free at the point of use

Graeme said...

why not take an idea from the ancient Athenians and encourage the wealthy to sponsor battleships? We might also be reminded by the idea of philanthropy - eg William Morris built a substantial block of Guy's Hospital, London - before nthe NHS came along to save us all from disease. We should cosy up to the oligarchs so they do not spend their money on stupid things such as chavball - why would anyone pay millions of pounds to encourage someone from a foreign county to misbehave on a grass field in Chelsea if they could have the everlasting gratitude of the British people for funding a hospital?

Anonymous said...

The BBC and the NHS are the last two public-sector sacred cows that need to be sent to the abattoir.

Both should be broken up and privatised.

That should be followed by the closure and selling-off of useless State-owned property, such as the London Assembly building, most other newly-built town-halls, and the Department of International Development.

Mark Williams said...

Privatisation worked well where government owned companies that sold directly to the porivate sector were liberated from government controls and support. The good ones (BA/BT/BE/BG/BP etc) prospered while the weak ones (BL/BS) were restructured.

The bad privatisations were the ones that never really left government control because they were still bound to government by a combination of regulation and subsidy, so that privatisations like BR ended up looking like a sophisticated form of outsourcing.

The problem with the NHS is that it will still require vast amounts of subsidy (the sickest are generally the poorest) so any privatisation is likely to be a disaster.