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Editor's blog 22 April 2009: Budget airline politics, or business-class planning?

”We will protect our investment in schools and hospitals” – Chancellor Alastair Darling

Good afternoon. I have again been away - apologies if you missed me. I have missed me too.

I hope you have seen new Maynard Doctrine, and perhaps elsewhere been checking out the start of the estimable Sally Gainsbury's blog at HSJ. Sally, and of course Nick Timmins of the FT will be the best sources for budget analysis as it affects health, I would suggest.

This blog will be updated slightly piecemeal - I am having to catch up everywhere -but I will be back with the promised review of The Hospital. But check this US-related fun out: http://www.youtube.com/watch?v=aitvFZTOrp4&feature=player_embedded

Big numbers and taxing times
The projected deficit of £175 billion is a big number. The main surprise of the Budget was not the sin taxes or the return of the fuel duty escalator, but the political return of the 50 pence tax rate on people earning over £150,000. The secondary surprise was a heroic assumption about economic growth restarting (and restarting well) by the turn of the year.

As all commentators noted, this breaks a manifesto commitment (much as was done on  university tuition fees). But 50 pence is interesting. It is politically a big call that says "we, the Government, have a right to half of what you earn".

As the Institute for Fiscal Studies has repeatedly pointed out, the macroeconomics of top rate tax increases are not enormous (although a fair few NHS FT chief executives and regulators will pay it). It is a political calculation far more than an economic one.

The reintroduction of the fuel duty regulator will have far more revenue impact, and of course impact on traqnsport costs for everybody - "hardworking families" (am I alone in wanting to be an "easy-working family"?); businesses big and small; and of courser the NHS.

Where will the economic growth come from? The sums under discussion to stimulate the building and manufacturing sectors will make relatively tiny difference. They are Elastoplast economics - more symbolism than stimulus.

It will not be coming from a resurgence in the banking sector. The Ponzi-pyramid era of economic mirages through securitisation, CDOs and other such delights is a busted flush, provided regulations reformed as has been promised. The not-very-good Financial Services Authority has had the dubious and unlikely pleasure of making the defunct Healthcare Commission look - how can I put this? Less bad? That's about right.

The tax revenue from mega-bonuses is gone. It flattered the public finances while it lasted, but it is not likely to come back. It will not come back to the same degree.

A tightening belt; not a noose
Even if Chancellor Darling's economic forecast is better than the markets' responses suggest (and we know how wrong markets have been), public spending will slow to a trickle. This may not be entirely a bad thing, as it will concentrate minds wonderfully on how to really increase productivity and assess the cost-effectiveness of things in a much more real way.

As The Economist recently asserted in its healthcare special issue editorial 'Fixing healthcare', 'this is an industry which has largely managed to escape even basic cost-benefit analysis".

The DH has rushed out a release showing how it is contributing £2.3bn in additional savings, as part of £5bn efficiencies in spending across the public sector in 2010/11. The Department's revenue budget for 2010-11 is adjusted from £104.6bn to £102.3bn, but spending will nevertheless rise by 18% in this Spending Review period 2007/08 - 2010/11.

PCTs' allocations for the financial year are deemed to be safe ... well, maybe. Watch this space to see whether SHAs decide that some pooling becomes necessary if acute admission costs keep rising. As Sally Gainsbury's pre-budget HSJ blog pointed out, there is some scope for financial trickery that is difficult for non-experts to spot.

Most interestingly, the release notes that "the Department will release back to HM Treasury its centrally held contingency. This contingency was created at the time of the 2007 Comprehensive Spending Review to provide a buffer against potential cost pressures and financial turbulence. However, the excellent financial management in the NHS - with a surplus of over £ 1.7bn in 2008/09 - mean these centrally held contingencies can now be safely returned". It also confirms the announcement from December last year that the NHS can spend £800 million of the financial £1.7 billion accumulated surplus.

The means of efficiency savings announced in the release are, of course, all things already in progress. The illusion appears to be fostered that this is to ba a 'no pain, all gain' impact on the NHS.

How true is this. How much efficiency savings really ensue? To choose a micro-level example from the neglected field of practice-based commissioning, one of the real forward-thinkers in the field, while discussing Freed-Up Resources (FURs), recently confided that "locally, we haven't seen a hair of FURs". Efficiency is so often asserted, and so rarely proved or sustained.

This Budget feels different, and not only because of the big numbers announced. It doubles or trebles the need for focus on delivery, variations in outcomes and getting healthcare upstream. When Nick Timmins is telling us that interest on Government debt will rise to nearly £3 bilion next financial year, his claim that this is a moment to reappraise the role of the state is an observation we would be unwise to take lightly.

The Hospital on Channel 4 - unreality TV
Last night, I had the dubious pleasure of seeing the final episode of Channel 4’s The Hospital. What a depressing programme it is.

It is not merely depressing because it has thus far featured the impact of alcohol abuse (programme 1) and teenage pregnancy (programme 2) on the NHS. These socio-medical problems are very real, and not to be underestimated. They are, however, scarcely a surprise to anybody who has spent any time living in or even reading about British society over the past generation.

No, the programme is mainly depressing because of its silly and terminally Daily Mail editorialisations – “the NHS is under attack”. No. The NHS is not under attack. Soldiers in Afghanistan are “under attack”. A newspaper seller walking near the G20 demonstration was “under attack”. With ten years of massive financial growth, and significant pay improvements for most groups, the NHS is very definitely not under attack

Not to mention its assertions that these issues are “bringing the NHS to its knees”, despite the complete lack of evidence it presented of this being the case. It also generalises magnificently that teenage mothers’ bodies are not ready for giving birth – citing one consultant obstetrician. It would be surprising if this were the consensus of the entire profession.

‘The Hospital’ carefully selected ill-educated poor people to follow. In the A&E alcohol episode, we saw no trace of the older middle class, white-collar binge drinkers whose cirrhosis will be likely to cost the NHS at least as much as an A&E attendance for intoxication.

You can only aspire to the enviable certainty apparent in director Monica Garnsey’s approach that she can accurately judge the difference between the ‘deserving poor’ and the ‘idle poor’.

The final episode on obesity and gastric banding proved no more likely to get near the root causes of obesity (culture, diet, education and poor self-control, among others) as the first two enlightened our understanding of alcohol abuse and teenage pregnancy.

It may have served some dubious purgative purpose for the NHS clinicians and consultants (and some of their rants were indeed quite funny and accurate). At the same time, they felt slightly like hearing a politician say, "this electorate don't like my policies and programmes. Get me another electorate."