Letter to Neil Kinnock MP (National Health Service)

Dear Dr. Kinnock,

Thank you for your letter of 22 May about health service spending.

My letter of 15 May set out the Government's record on the NHS in full. It compares well with the record of any other Government, and it contrasts with that of the last Labour Government which cut NHS spending two years in succession, cut capital spending by over a third and saw waiting lists increase.

You made four main points. First on the question of nurses' pay, I agree that the 33 per cent increase beyond inflation since 1979 includes the Clegg award. I am not clear why you think that should not be taken into account. As a mark of its regard for nurses, the Government made a pledge during the 1979 election and honoured it by providing the means to fund in full the 21 per cent increase resulting from the first and second stages of the Clegg award.

Second, you made the point that medical progress, rising costs and the growing number of elderly people all put pressure on the health service. That is true and I readily acknowledged it in my earlier letter. But such pressures are met by a combination of increased funds and greater [end p1] efficiency. It cannot be right to ignore the contribution which cost improvement can make and will continue to make. As I pointed out, health authorities themselves plan to release £150 million (1.5 per cent of resources) for the service this year from measures designed to secure better value for money.

The ultimate test of whether the pressures have been met is not the amount of money spent but whether services have grown to meet them. Since 1978–79 hospital services have grown on average by 2.5 per cent a year. This is well above what would be required to meet demographic pressure and more than sufficient to enable advantage to be taken of the growing opportunities offered by modern medicine. The Government will continue to make more cash available to the health service. We will also continue with health authorities to look for ways of securing better value for money. We believe that the funds available from both these sources will enable the NHS to meet the pressures it faces.

Third, you again question the progress that has been made under RAWP. I am glad you recognise the importance of this redistribution. I am however very surprised that you are unable to recognise the real benefits that many Regions have gained from RAWP. The review of RAWP in no way implies any failure of the policy. On the contrary, the review stems from the very success we have had in bringing Regions much closer to their target shares of resources. It now becomes increasingly important that those targets reflect relative need as fairly as possible. That is why the review is looking at the scope for refining the formula.

Finally, you suggested that the quality of care provided by the Service is deteriorating. This suggestion runs directly against the evidence. The service now provides more treatment to more people and offers a wider range of more modern facilities; the number of coronary artery by pass grafts trebled from 3191 to 9433 between 1978 and 1983; the number of hip replacements rose from 31,100 to 43,100 and the [end p2] number of kidney transplants from 941 to 1160. More modern treatment techniques are being introduced, such as laser treatment for certain eye conditions. The quality of care is shown by the response of the people who receive it. A recent Marplan Poll carried out for the National Association of Health Authorities showed that nearly 90 per cent of those interviewed were either very satisfied or fairly satisfied with the treatment they received from both hospitals and family doctors. The NHS and its staff should take heart from such public confidence and support.

The note enclosed answers the more detailed points in your memorandum.

Yours sincerely

Margaret Thatcher [end p3] Enclosure

1. Nurses' Pay

All governments since the establishment of review bodies have reserved the right not to implement review body recommendations in full if there are “clear and compelling” reasons for not doing so. Affordability is a clear and compelling reason and one that the Government, which has ultimate responsibility for public service pay must decide upon in the light of fairness to the groups concerned but also of the implications for service levels and the interests of taxpayers. The Review Body's recommendations were paid in full within the 1985/86 financial year and thus formed the baseline of the Review Body's deliberations this year. From April 1984 (the first settlement from the Pay Review Body) to March 1986, nurses' pay rates have increased by 16.7 per cent. Over the same period the Retail Price Index rose by 10.6 per cent. So real pay rose by 5.5 per cent. The further increase of 8 per cent from 1 July 1986 at a time when inflation is at around 3 per cent represents a further significant real increase in nurses' pay.

2. Staffing

We estimate that under half of the 62,900 increase in nursing staff in the NHS in Great Britain is attributable to the reduction in nurses' working week in 1980. Thus, even after allowing for this adjustment, there are well over 30,000 extra nurses in the NHS since we came into office. Furthermore, and contrary to your statement, the figures for 1984 and 1985, respectively 486,000 and 490,900, show that this rate of increase is continuing. Further increases are shown in health authority plans for 1986.

Figures for numbers of nurses' hours actually worked are not collected centrally. [end p4]

3. Patients Treated

You are right, of course, that the 800,000 increase in in-patient cases treated since 1979 derives from the deaths and discharges figures which count readmission separately. You are quite wrong, however, if you are suggesting that these figures do not point to a real and substantial increase in the numbers of patients treated. All the evidence is that more patients are being treated than ever before. For instance, between 1978 and 1984 day cases rose by 340,000, an increase of 60 per cent. Those cases are not affected by the qualifications you suggest for in-patient cases. It is also true that between 1978 and 1984 the average length of stay was reduced. That, in fact, is an achievement, a tangible sign of greater efficiency of which the doctors and nurses in the health service can be proud.

4. Waiting Lists

You suggest that waiting lists between 1974 and September 1978 were consistently lower than waiting lists under any Government since 1979. Waiting lists by themselves are only a partial indicator. But you must accept that in the course of the last Labour Government waiting lists rose by almost quarter of a million to the highest ever point in March 1979. They are now 90,000 lower than that. We recognise of course that they are still too high, particularly in some areas and some specialties. But before criticising you should compare the record of the last Labour Government with our own achievements.

There are two points of detail in your memorandum which should not be allowed to remain on the record. First, as has been repeatedly stated in Parliamentary replies, there has been no significant change in the way waiting list statistics have been collected under this Government. Before 1979 the guidance to health authorities made it clear that returns should not include day cases. In 1979 this instruction was simply repeated. There was no “revised method of calculation” [end p5] for the waiting list statistics as at September 1985. The Department of Health asked authorities to make sure that people appearing on waiting lists were actually requiring the treatment for which they had originally been entered. Of course many health authorities already did that to varying extents. It is ludicrous to suggest, as you seem to be doing, that people not actually needing treatment should appear on waiting lists.

You are right to say that waiting time is what matters most to the individual patient. Despite the increasing numbers of patients coming forward for treatment the median waiting time for acute in-patient cases in 1984 was seven weeks and that has varied little since the early 1970s. You will also recall, of course, that some 50 per cent of all hospital admissions are immediate. (The methodology of the BMA survey of out-patient waiting times on which you relied was seriously flawed.)

5. Efficiency

Your partial quotation from the Comptroller and Auditor General's recent report on value for money is misleading. The thrust of the report in fact supports our view that genuine improvements in efficiency are being made and still more should be made. More representative quotations would include the following:

“Although it is unrealistic to expect all authorities to examine all potential sources of cost improvements simultaneously, it seems likely that larger savings could be achieved if all authorities tackled the search for cost improvements with equal vigour” .

“The quality of the plans, the supporting data, and even the amounts offered for saving could be improved upon if authorities generally were to attempt to develop a systematic approach to VFM.”

[end p6]

“NAO findings underline the Department's own view that further cost improvements are available.”

6. Rawp

You mentioned that pockets of need can exist within Regions, whatever their standing under national RAWP. We, of course, acknowledge this and expect Regions to take account in their plans of the special problems of inner cities and other special needs. But the level of funding is not the only, or even the most important, point at issue. Often the need is to change the pattern of services. Many inner city districts have an excess of acute hospital provision, built to serve a much larger late 19th or early 20th century population which has long since dispersed. At the same time, services needed in those districts by today's population—good primary care services and local services for the elderly, and for mentally ill and mentally handicapped people—may well be lacking. The right course will often be to rationalise local acute hospitals in the inner city, increase acute services elsewhere in areas of population growth, and concentrate on improving local services in the inner city. Management of change is not easy—it will not be possible to meet every need, or make improvements as quickly as everyone might wish—but there are clear benefits to be had.