What does Brexit mean for the NHS?

28 June 2016

I had a first conversation on this theme yesterday on a panel with @RoyLilley and others. Roy has kindly asked me to speak with him at the HealthPlusCare conference on Thursday which will be great.

I’ll update this blog after the conference. First points today:

The referendum will change politics. Some people yesterday thought that the referendum result will be scrapped, or simply ignored by Parliament. That can’t be right given that the UK is a proud democracy. Many things may happen now, from General Elections to second referendums. But whatever happens, the result on 23 June will be reflected in politics going forwards.

There won’t be much chance to increase public spending, including on the NHS. In fact the Fitch downgrade of the UK credit rating predicts a “negative impact” on UK “public finances” as well as “economic growth”. The full Fitch paragraph is below. S&P also identified a “risk to … fiscal … performance” in its rating.  It will be very hard for the Treasury to reject this analysis.

The dividend to the NHS from leaving the EU may therefore be less than intended. I’m sure that a Leave government would want to spend more on the NHS, as it promised in the campaign. But the chance of spending a lot more money, such as £5 billion a year as Chris Grayling said on Monday, seems difficult given the worsening public finances predicted above.

This would be a big problem if the NHS did not have a reform plan. But it does. The Five Year Forward View is there. It already says that the NHS can weather tight public finances by changing the way it operates.

The pace and scale of change has to accelerate. The ideas in the Forward View have to happen much more quickly, such as the development of primary care, out-of-hospital care and social care to take the pressure off acute hospitals. And the Government and/or NHS England need to address some structural questions fast, so that areas or regions can take the big decisions that affect a number of NHS organisations at the same time. That means commissioners covering bigger populations and including social care. It means bigger providers. It also means a political debate that stops talking about the NHS in terms of “hospitals” or “more clinical staff”.

Extract: Fitch Downgrades the United Kingdom to ‘AA’; Outlook Negative

“Weaker economic growth will adversely affect tax revenue and the budget deficit and require the government to implement additional fiscal consolidation measures to prevent it missing its fiscal targets. We expect the general government deficit to average 3.6 per cent of GDP over the next three years, compared with 2.8 per cent in our prior ‘Remain’ base case. This implies that the general government debt ratio will continue rising over the forecast horizon, reaching 91 per cent of GDP in 2017, compared with the debt ratio stabilising previously. Public sector indebtedness remains among the highest of ‘AA’ and ‘AAA’ range sovereigns. At the same time, the long average maturity of public debt almost exclusively GBP-denominated and low interest service burden imply a higher level of debt tolerance than many high-rated peers.”

Andrew Haldenby, Director, Reform

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