Devolution, what devolution?

19 January 2017

Public finances are unsustainable. That was the verdict of the Office for Budget Responsibility, this week. Relative to GDP, debt will have doubled by the middle of the century, with the NHS forecast to consume 12.6 per cent of GDP in 2066-67. In addition, the past few weeks have seen hospitals facing challenging situations as beds being occupied by those not receiving acute care prevent others from accessing them. The inefficiency of the current system is a key driver of long-term financial pressures.

Many have said that greater integration and moving care into the community are the cornerstones of creating a more efficient and effective service. A report published by Reform yesterday, however, argues creating integrated public services when government is so centralised is difficult as Whitehall is unlikely to dissolve these siloes. Instead, policymakers can look to local bodies to coordinate working better in their areas.

Despite the Government’s commitment to devolution, the UK has one of the highest central spends in the OECD, being more centralised than Spain, Italy, Germany, the US and Canada. In terms of healthcare, Reform found that 66 per cent of CCG spend in England goes to trusts and foundation trusts, whose priorities are determined centrally by the Department of Health and NHS Improvement (previously Monitor). For one interviewee for the paper, this meant that CCG leaders were “not commissioners”.

The consequences of a highly-centralised system are seen, too, in variation in healthcare outcomes. As Reform’s report explains, this is down to the fact that environmental factors, including location and social networks, affect health more than individual circumstances, such as smoking and obesity. The variation is stark. In Liverpool, the rate of mortality from cancer is 356 per 100,000 compared to the City of London where the rate is 120 per 100,000. And it is not just cancer where healthcare outcomes vary. The one-size-fits-all approach is not working.

Centralised commissioning is a missed opportunity to deliver tailored services, both in terms of designing services around local needs and in terms of integrating commissioning to provide user-centred services. Where devolved commissioning has taken place, it has delivered services better-tailored to the local area. Early evidence from devolved employment-services commissioners in Greater Manchester points to better working relations between providers and commissioners. Similarly, Salford is seeing promising results in reducing the readmission of elderly patients to hospital by improving the interactions between their GPs and acute care.

However, local commissioners are not yet equipped to take on this task. They need to develop the skills to design complex contracts and not simply replicate central models at a local level. They also need strong leadership and better data.

This week the OBR proposed tax increases equivalent to doubling VAT, increasing income tax and national insurance by a third or reducing public spending to salvage the situation. It could also consider that the gains to be made from reform deliver better value for money.

Elaine Fischer, Research Assistant, Reform

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