Dear Nicholas
I am replying to the petition which you presented on 15 December on behalf of consultants and junior doctors in the National Health Service about the financial position of health authorities.
The petition expresses alarm about reductions in service arising from financial cutbacks. There have been no cuts in the funds available to health authorities, either in cash or real terms. Nevertheless insofar as this financial year is concerned monitoring arrangements have revealed a shortfall in income that could only be eliminated by short term measures that could not improve health care or efficiency. We have decided, therefore, as Tony Newton announced on 16 December, to increase health authorities' cash allocations by almost £90 million.
To the extent that the health service itself contributes to people living longer, continues to be innovative in the treatments and services available and increases its capacity to treat ever increasing numbers of patients, it generates additional demand. No government could ever provide a blank cheque to meet such a rising tide of demand. And these problems are not unique to the UK. The Government has sought to strike a good balance between the twin objectives of improving services while containing costs. National Health Service staff continue to play an effective part by their significant contribution to the record levels of activity. [end p1]
The call for health spending to be linked directly to growth in GDP overlooks the fact that health spending has grown faster than GDP. This Government has increased public expenditure on health to 5.5 per cent of GDP in 1986 compared with 4.8 per cent in 1979. Our present plans for government spending to 1990–91 hold the share at a broadly constant level. But, when receipts from charges, land sales and income generation schemes are included, total expenditure will be higher. The fact remains that at any level of expenditure health authorities will still be faced with difficult choices between competing service priorities and doctors will still have, as they have always had, to make decisions on the relative needs of individual patients.
I do not believe that the answers to these difficult choices are to be found simply in increasing expenditure. We must continue to look for ways of further increasing the value for money for each pound spent and in planning for growth in existing services and development of new ones at a pace which the economy and the tax payer can afford.
Yours sincerely
Margaret