Dear Mr. Kinnock,
Thank you for your further letter of 22 July about the level of NHS expenditure.
In whatever terms expenditure is expressed the crucial measure of its worth is the level of health service activity which it will sustain. As you well know the health service is treating significantly more patients than in previous years. In other words the service is, through increased funding and improved efficiency responding to the rising real demand to which you refer. It is also supporting a larger, better paid workforce. This simple relationship between inputs and outputs is one which you continue to ignore.
You miss the same point in making comparisons with the proportions of GDP devoted to health care in other countries. The OECD average of public spending on health does not tell you anything about the range or level of services which that spending will purchase. On most accepted measures of health outputs the United Kingdom compares favourably with other countries including those who spend a higher proportion of their national income on health than we do. It is also the case that some of these countries do not spend at a higher rate from choice. Both France and West Germany for example are anxious to reduce health spending. It is now acknowledged that we get better value for our money in the health service than do many other countries: that means more health care for a similar expenditure than elsewhere. [end p1]
So far as the new clinical grading structure for nurses is concerned, the cost was estimated at the time of the Review Body awards at £803 million, and that is the amount which has been made available to the health authorities. The Review Body said that the actual cost might well differ from their estimates, but contrary to your assertion, they did not offer any view as to whether the estimate would prove too high or too low. It is still not possible to say whether the estimate will be exceeded nor, if it were, by how much. The Department of Health has asked all Regions to scrutinise Districts' provisional grading assessments, and to provide Regional analyses by 5 September. These will be looked at in the Department to ensure consistency and fairness. Only then will a firm estimate of cost be possible. No purpose is served by hypothetical speculation in the absence of firm information. Yours sincerely Margaret Thatcher