Draft Budget Scrutiny 2013-14
Good morning and welcome to the 26th meeting in 2012 of the Health and Sport Committee. As usual, I remind everyone present that mobile phones and BlackBerrys should be switched off, as they can interfere with the sound system.
We have apologies from Richard Simpson. I am pleased to welcome Rhoda Grant as his substitute.
Agenda item 1 is scrutiny of the draft budget. We welcome our witnesses. Professor David Bell is adviser to the Finance Committee and Professor John McLaren is from the centre for public policy for regions at the University of Glasgow. I invite them to make opening remarks, after which we can proceed to questions.
Professor John McLaren (Centre for Public Policy for Regions)
Thanks. I want to make a few general points that are worth discussing, primarily because they are not discussed enough.
The Scottish Government’s purpose target in relation to health could be said to be to raise healthy life expectancy. That is also part of the 2020 vision for health. Around a month ago, the Office for National Statistics published figures that showed that, from 2006 to around 2009, healthy life expectancy for males in England rose by three years and fell in Scotland by a year and a half. The figure is not as bad for women, but it is still much worse here. In Wales, the figure for men rose by four years. Given that behaviour does not change that much, that suggests that our health system is not operating very well or that the data is complete rubbish, or possibly a combination of the two.
There was no analysis of that information when it came out, although raising healthy life expectancy is one of the Scottish Government’s purpose or key targets. There were no comments by any politician in the papers that I saw; indeed, I do not think that any paper even covered the matter. If that is supposed to be the top health target in Scotland and nobody pays any attention to it, we are really talking about inputs all the time—money and nurses, for example—rather than outcomes, which are perhaps more important to talk about. The issue is how we can improve healthy life expectancy. If the data is wrong, by the way, why is the target set in those terms in the first place?
On the resources side, the contribution of health and social services to gross domestic product is growing at about the half the United Kingdom rate. I am not sure why that is the case, but the difference is quite big, especially as we are talking about such a large part of economy. We also have a falling per head advantage in health spend. The figure used to be around 14 per cent, but it is now about half of that. Again, there has been no analysis of why or where that has happened.
We have productivity figures only for the UK. Those figures show no productivity growth in the health sector over a decade or so, which is not very good. We do not have figures for Scotland, but I imagine that the situation is about the same, or possibly worse.
On health system comparisons, the Organisation for Economic Co-operation and Development and the Commonwealth Fund, for example, consider that the national health service—this applies largely to the English NHS, but it probably applies to the Scottish NHS, too—is very good in terms of equity and that its efficiency is fairly good, but its outcomes, such as for life expectancy, are terrible. Why is that so? Perhaps it suggests that the emphasis on prevention that exists in other countries is not being taken forward as seriously in Scotland and the UK.
That feeds into the Christie commission’s report findings that
“a radical shift towards preventative public spending is ... essential.”
More money may have been put into preventative spending, but I certainly would not call it a “radical shift”. That issue needs to be looked at in relation to early years and other areas.
On why Scotland’s health is so relatively poor compared to the UK’s, the Scottish or Glasgow effect—-whether that is a result of alcohol misuse or anything else—is extremely important. I would be interested to know how much research money is going into looking at that issue and its importance—very little, I suspect.
That brings us to the nub of the issue. The NHS’s budget is being protected considerably and, if the situation remains the same, it will be protected until 2015-16. Over that period, if health workers’ wages are kept flat, as is the case in the rest of the public sector, that will make more than £1 billion of spending money available in the NHS. If that money is not going on staff, what is it going on? There is an opportunity to put money into new things, if staff costs are kept down. It is important, even at this stage, to consider where the best areas are for that money to go to.
Follow that, Professor Bell.
I will pick up on Professor McLaren’s first point before making some more general points.
The issue of healthy life expectancy is important because it essentially tells you how long people can expect to live with a disability or some form of chronic disease. If healthy life expectancy is not growing as fast as overall life expectancy, the length of time during which someone will experience disability of some form increases.
One of the leading UK experts in this area is Professor Carol Jagger at Newcastle University, who has previously spoken to the Finance Committee. One of her recent reports was on whether the UK’s population was getting healthier or less healthy as they aged. Her report concluded that the
“ageing of the population alone, with no alteration in the prevalence of disease”—
which basically means no change in healthy life expectancy—
“or the age-specific rates of becoming disabled, will result in a 67 per cent increase in the numbers with disability over the next 20 years. Numbers of the oldest old (those aged 85 and over) with disability will have doubled”.
That reinforces Professor McLaren’s point about healthy life expectancy.
In addition, the proportion of the older population
“experiencing one of the key diseases considered”—
which were arthritis, coronary heart disease, stroke and dementia—
“will have increased by over 40 per cent by 2025.”
Those are massive changes that are in train and there is no reason to suspect that Scotland will be any less affected. Indeed, if the figures that the Office of National Statistics published last month are correct—there is perhaps some doubt about that—or even if we stay on the same level as far as healthy life expectancy is concerned, a huge train is coming towards our health service system.
As Professor McLaren said, we are not really talking about radical change. The King’s Fund in England is putting out regular bulletins about the English health system that say that, although some genuine improvements have been made over the past decade, it is not clear whether the system is in a fit state to deal with the additional numbers that are signalled by reports such as Professor Jagger’s.
So far I have talked about the longer term. On the size of the budget, health has been protected since devolution because the Barnett consequentials have effectively been handed straight on to the health service. However, somehow or other—the reasons are not clear, as John McLaren already alluded to—although that should imply that the spending difference between Scotland and England would stay pretty much the same, it appears that the excess of spend per person in Scotland is reducing. It is not clear why that is happening.
There is clearly a case for spend per person being higher in Scotland. The two most frequently cited reasons are the severe inequalities in health in Scotland, particularly the Glasgow effect—which John McLaren just mentioned—and the additional costs of supplying care in rural areas. Nevertheless, something strange seems to be happening as far as the statistics are concerned.
On the budget itself, there is an issue around capital transfer—the Scottish Government is trying to move money from the resource budget into the capital budget. The claim in the budget is, I think, that £700 million will be moved in the period up to 2014-15, of which £320 million appears as a single line in the health budget. It might be worth the committee finding out from the Scottish Government exactly what that means—which resource budgets are falling in order for capital budgets to rise, and which capital budgets are rising. The committee might well be interested in that area.
I have been involved in self-directed support. I am not sure whether the associated bill—the Social Care (Self-directed Support) (Scotland) Bill—has been passed yet.
It is at stage 2.
A budget is set aside for that bill. Self-directed support is quite an interesting initiative. Scotland has not moved as far as England has in relation to putting spending power in the hands of the person receiving care or health support, but self-directed support is a start. Nevertheless, the budget that has been set aside for the bill is relatively small—about £17 million out of more than £10 billion in total. The self-directed support element is small, so the bill does not suggest a massive change in how social care clients will be supported over time.
John McLaren alluded to pay, and the pay bill in the NHS in Scotland has continued to grow over time. Total staff costs for the health sector grew by 11.3 per cent between 2008 and 2011. Staff numbers grew by 1.3 per cent, so although we have had a pay freeze for some of that period, the pay bill has risen quite substantially. That may be to do with people moving between jobs, to higher-paid jobs or up pay spines and so on. However, basically the overall health service budget has grown by 11.4 per cent between 2008 and 2011 and the pay bill grew by 11.3 per cent. That cannot continue at that pace.
09:45
There does not seem to be a huge appetite for radical thinking about how we deal with the pay bill. A couple of weeks ago, Professor Alison Wolf and Andrew Oswald wrote to the Financial Times about setting pay in the public sector. They recommend that, as in Sweden, rather than setting pay at a national level—in fact for most of these wages, we are talking about the United Kingdom level—there should be more local flexibility without spending power being taken out of the local area. There would basically be a trade-off between jobs and wages in the local area, while keeping wages in line with local conditions. I am not necessarily saying that that is the solution, but if we carry on as we are, we will not be able to meet the challenges that I mentioned at the start of my remarks. That is about all that I have to say.
Thank you for those introductory remarks.
Bob Doris has our first question.
Both witnesses have said some quite challenging things. Perhaps I should start by providing a little clarity. Professor Bell mentioned the self-directed support budget. We are not here today to talk about that specifically, so I do not want to dwell on it, but the budget line in the NHS spending plans shows not the size of the self-directed support budget but what is directed from social work departments in local authorities. Spend is redirected from in-house provision to other forms of provision that people choose. It is worth putting that on the record from the start.
Professor McLaren, your evidence was really fascinating. You said that we should be looking at outcomes more than at inputs, but you then gave a series of inputs and compared Scotland with other parts of the UK. I want to clarify some of the figures that the Scottish Parliament information centre has prepared for the committee, get them on the record, and see if you recognise them as an accurate reflection of the health budget.
One thing we want to look at when we discuss the prioritisation or otherwise of the health budget is the share of the Scottish spending cake that is devoted to health. Table 4 in the SPICe briefing shows that, in the coming financial year, the overall share of Scottish spend on health alone will go from 34.4 per cent to 35 per cent. Do you recognise those figures?
I recognise the figures because I have seen the SPICe paper. Some of the figures depend on what is chosen as the base. For example, in relation to local government, the share is usually looked at from the Scottish Government’s perspective by adding in non-domestic rates income, which makes it look better. However, I am not sure that, in the table that you are looking at, the Scottish budget total includes NDRI. I suspect that it does not, and that if NDRI was included, the table would not show that increase. Generally, if health was being protected and other areas were not, I would expect its overall share to rise, but I am not sure by how much per year.
There is some uncertainty about the size of resource transfers from the health sector to the local government sector, which is essentially what Bob Doris alluded to when he mentioned self-directed support. That money—it is more than £300 million—effectively goes into the health budget but then the health boards transfer it to local authorities. That is interesting, partly because, in cash terms, the share has been pretty stable during the past four years or so.
When we look at the detail, as SPICe has done, there is no clear logic in the share of the budget that moves from a health board to a local authority. We would expect the health boards to be compensating the local authorities for care of the elderly, because care of the elderly, in general, is a joint responsibility and how it is split up is always subject to some debate. However, the health boards with the oldest populations do not seem to be the ones that transfer the most to the local authorities. It is not very easy to get a handle on that area.
What is going on in Highland makes the situation even more complex. There, the health board has taken on the entire budget for care of the elderly in exchange for the local authority doing all the stuff to do with children. How will that be accounted for? How will we know whether that has been a success? I am sure that the health board and the local authority have come to some agreement about that. There must be some indicators that they have devised that will suggest to them whether that has been a useful change in how they deal with such problems.
I broadly agree with the numbers, but there are issues—not massive ones; they are mostly around the edge—that make the situation a little more complex.
That was quite a comprehensive answer to what I thought would be a yes/no question. Thank you. I will try to be more focused in my next question.
There are two other stats that I want to put on the record before I come to my substantive question, which is about outcomes rather than inputs. The SPICe briefing tells us that £1.1 billion in Barnett consequentials vis-à-vis the UK spend has gone into the health budget since 2010. That is a priority that we are tracking through this process and it seems to have been met. The SPICe briefing also tells us that health boards will receive a 3 per cent cash increase in the coming financial year, which comes to a 0.5 per cent cash increase if we apply the 2.5 per cent deflator. Please do not respond to that. I just wanted to put those figures on the record.
I mentioned Professor McLaren’s evidence in my opening question because I was fascinated by the ONS stats from 2009 on healthy life expectancy in England and Scotland. Healthy life expectancy increased by three years in England but went down by one and a half years in Scotland. By and large, the health improvement, efficiency, access and treatment targets and the national indicators for the health service in Scotland seem to be being met. Whether we are talking about the 62-day referral-to-treatment target for the NHS, the 31-day decision to treat to first treatment target for cancer or the alcohol brief interventions, positive things seem to be happening.
When would Professor McLaren or Professor Bell expect us to be able to see progress in the ONS stats? Given that the health budget is being prioritised—it is not just being protected; it has had a small uplift, while other budgets have been cut—we are keen to see improvement. When should we start to see improvement? How should we analyse that as a committee?
We will not make much progress today if the questions—or, indeed, the answers—are very long. I have a growing list of people who want to ask questions.
I do not think that you will necessarily see much improvement. I think that the data on the fall in healthy life expectancy is a bit dodgy, but why have your main target based on data that, to my mind, has always been a bit dodgy? That is the case not just in the UK, but in other countries. This is not really about the health system, which I think is probably fairly equitable and reasonably efficient—that is what most of the international studies suggest about the NHS. It is more about lifestyles, behavioural patterns and stuff like that, which more money is being put into.
The Christie commission’s main point was that a radical shift, whether in early years intervention or other preventative measures, was needed to get better lifestyle outcomes. Indeed, as other systems make clear, that is what drives healthy life expectancy. International studies demonstrate that it is not necessarily about money; even Scandinavian countries can have very similar life expectancy outcomes with very different cash inputs.
Again, it all comes down to the debate about what the national health service gets—which is a hell of a lot compared with what the other bits get—and how that money is moved around will be more important in pushing forward the healthy life expectancy issue.
There are different levels of outcome. For a start, there are outcomes associated with the health service, and you can drive efficiency in, for example, waiting times by ensuring people with cancer are seen quickly and so on. However, none of that will be reflected in healthy life expectancy data for some time to come.
That said, another piece of research shows that, of 16 high-income nations, the UK has the second highest rate of mortality that is amenable to health care. We might be getting more efficient at meeting certain targets, but clearly we could be doing some stuff better.
I would imagine that the USA was the last in that list.
Yes.
The USA is always last on these lists by a country mile, which means that we are effectively next to it.
A really interesting thing that is happening in the US is that life expectancy is falling among poorer whites—it is a bit like what happened in Russia after the fall of the Berlin wall. Over the past two or three years, life expectancy has been falling because of obesity, heart disease and so on. That has hardly ever happened in a high-income nation in the past 50 years.
Thank you very much. I will come back in later, convener.
We have all had notice.
My question follows on quite neatly from your responses to the previous questions. Both of you have talked about making a radical shift in expenditure towards preventative spend and have suggested that we are not seeing that. What, from your perspective, would such a radical shift look like?
I do not think that I said that, although I generally agree with the point. The chief medical officer has an interesting take on this issue that relates to place and the use of assets. Prevention does not necessarily mean spending on the health service; it can mean spending that affects people’s behaviours, which might mean spending more in deprived areas. As we have suggested, the problem with such an approach is that the time before any significant improvements emerge extends well beyond the length of a parliamentary session. Unfortunately, that is the bottom line. We know that other countries spend more on prevention, but simply saying that we need a radical shift towards prevention is like talking about motherhood and apple pie. Everyone agrees with it but no one is absolutely certain what it means, which forms of prevention will give better outcomes 10 years or 20 years hence and so on. Nevertheless, the chief medical officer’s comments are worthy of serious consideration.
10:00
We both gave evidence last year on early years interventions. I think that there was a fund in the budget last year, which is continuing this year. That is welcome but it does not change the focus away from treating illness to preventing it in the first place. Early years goes much wider than health—it encompasses education, law and order and so on—but it would have a big impact on health as well, and health is probably one of the key drivers. Early years is probably the best place to start, because it would have the greatest impact. It may not be exactly in the committee’s remit, but it is partly in your remit. It is an important issue that needs to be driven by a number of committees.
Lifestyle, for example smoking and drinking, is important. I could give an enormously long answer here, but I will not. A big issue in Scotland is alcohol. To my mind, the analysis of alcohol statistics is extremely poor. There is an alcohol problem in Scotland, but by and large it is not the one that is described and discussed in Scotland.
Sports facilities are another issue. They are getting better, but it is not that long ago that the number of swimming pools in Scotland was abysmal. More could be put into sports facilities.
There is still the unknown issue of the Scotland effect, which I think is being looked at by the Glasgow Centre for Population Health. The centre and others should be given a lot more time and money to push that forward and understand what is causing the Scotland effect. Hopefully, that can then be addressed directly rather than indirectly, because at the moment we are trying to guess what the problem is.
To reinforce what David Bell said, once problems are this stubborn they are extremely difficult to overcome and can be very costly to overcome. A study that was carried out in the US estimated that to get severely deprived children up to the educational average would require nine times the average budget to be spent on each child. That is America; this is Britain, so it is slightly different, but that gives some idea of the scale of differential spending that can be needed to overcome these problems.
Professor Bell talked about the shifts from resource to capital. Audit Scotland did a report recently that spoke about a £1 billion repair backlog in the NHS. Obviously, if we shifted money towards capital in the NHS and dealt with some of that backlog, that would not so much free up resource as mean that resource spend was not being used on, for example, buildings that required significant maintenance and were therefore a drain on the resource budget. We talk about the resource budget reducing because money is being shifted to capital, but that shift to capital may mean that we do not need to spend some of the resource that we were otherwise spending and wasting.
I completely agree. I think of capital spend as increasing the ability of the economy in general to supply goods and services. Specifically, when we are talking about public services, we may be spending capital to save money on the resource budget in the short term and the long term. Even with things such as energy efficiency, additional capital spend may have a short-term resource cost but a better outcome in the long run.
I think that we are all on the same page. We are here again, where we were last year with the budget and the spending review. The Government said that we needed a decisive shift towards prevention, greater integration, and better partnership and collaboration. The committee said that that should be a priority and that we should be looking at the change fund to help to do that. We had concerns about how we could follow the process, because we could not really scrutinise the health board budgets.
To stop us going backwards, as you described it earlier, you seem to be suggesting that the issue is not just the process—it is about having clear objectives about what we want to do. I think that we are all on the page about a shift to prevention, greater collaboration and integration. The committee and the Government are very interested in how we push forward in those areas. Are you saying that it is not enough simply to shift the budgets, and that we need to be clearer in our objectives?
I think that some shift of budget is required, but I suppose that I am saying that it requires more a shift of mindset. For example, if in the great public statements and publications that are made everyone says that healthy life expectancy is what we are aiming for but they then completely ignore the published figures showing that the issue is actually declining in Scotland, what is the point in aiming for that as a purpose? You are interested not in healthy life expectancy—I mean not you personally, but you collectively—but in ensuring, for political purposes, that the NHS gets its Barnett consequentials and that the number of nurses or police is kept at a certain level. However, those are inputs, not outcomes. I understand that it is easier to do that because the press are more interested in such things and it is easier to discuss them, but that does not take us back to the headline or principal outcomes that you are really looking for.
To make that shift, one change that is needed is the mindset in the debate, but money also needs to be freed up. There is perhaps an opportunity to change that funding at the minute because, although budgets are tight, health does not have a tight budget. If the money that David Bell described earlier had not gone into wages, there would have been at least £0.5 billion free to go into other things, which could have included prevention. I do not know who is getting the extra money in the health service—perhaps doctors or perhaps everybody—but if they were getting the same deals as the people in local government, an awful lot of extra money could be spent on the shift into those other areas.
So the shift does not happen. Although we as a committee and the Government are saying that we need more integration and more prevention, where are the indicators within the budget that there is a determination to make that happen in the change agenda, the preventive agenda and the integration agenda? Where is the shift in the budget that we are looking for at a local level between the health boards and local government? Where is that at a Government level?
One thing to say about boards is that they are allocated money according to a formula, which moves at a glacial pace. The changes in the formula just do not happen very fast at all. That means that, by and large, there are pretty much fixed relative-sized budgets across health boards. Is that a good thing? If there are clearly developing problems that are not picked up in the formula, some health boards will find their cost envelope easier to deal with than others will. All the boards are meant to be under equal pressure because the formula allocates accurately as a measure of the resource pressure, but it is not always clear that that is the case.
I will take a supplementary on this from Gil Paterson before we move to Nanette Milne’s question.
On preventative spending, is there not a kind of contradiction in terms? How can I put it? Is not the barrier to preventative spending in this room? Is it not the political class that causes that because of the very thing that Professor Bell said? Do we perhaps need a covenant among the parties that, if we identify that we should move forward with preventative spending, we should not be focusing all the time on the headline numbers of nurses or doctors or whatever? We can spend the money only once, so if we spend it on preventative spending, clearly we cannot spend it elsewhere. Therefore, my question to Professor McLaren is: do you have any models from elsewhere where the power of the political class united has been used to drive forward with preventative spending? I do not think that we do that very well here.
I apologise to Nanette Milne, but before she asks her question I will take another supplementary question on preventative spend from Drew Smith. I ask the witnesses to respond to both supplementaries before we move on to Nanette Milne’s questions.
I apologise to Nanette Milne. My question is brief.
Professor McLaren made a specific plea on research funding around the Glasgow effect, which I would certainly support. However, do we need a much greater understanding of what preventative spend is before we analyse a lot of this stuff? It seems to me that almost anything can be defined as preventative spend by people who are seeking for us to spend money in their area. Is there a budgetary need for us to spend more on trying to understand what preventative spend is before we then analyse whether or not we have it?
There is a definition issue. I am sure that the NHS could claim that it should still get all the money because it has all these preventative things, but I suspect that many of the things that it talks about are like providing job training when someone is 16 rather than putting in the money in the early years. They are a help, but the returns are an awful lot lower than they would be if the work was done at an earlier age. Again, those are things that go outside not only the NHS budget but the health budget as a whole. It is important to get that right.
On examples of preventative spend, I hope that I have a good knowledge of economics and finance, but I do not know an awful lot about health. I do not go into the details as I am not a health economist. It is disappointing that we still do not have many academics or think tanks looking at Scotland specifically and coming up with ideas. In London one cannot move for think tanks, certainly around Westminster, but in Scotland there is a lack of people with more information than I have who can help you with these things. I can take you part of the way, but because this is not my specialist area I only have certain examples.
The OECD and the Commonwealth Fund do some good work in the area, so they should be able to give you some good guidance.
On what preventative spend is, my mother always fed me cod liver oil. Was that preventative spend? I do not know. Maybe it was and maybe it was not. She certainly did it with the best of intentions, but that is the difficulty that we are up against with this stuff.
If I can put in a little advert for some work that we are doing with some universities, we were approached by the national institute on aging in the US to put in an application for a study of older people in Scotland that would follow them through time. There are many such studies around the world. Scotland is the only part of northern Europe that does not have such a study. Only by following people through time can we see the beneficial effect of interventions that might have happened 10 years ago. We will hear shortly whether that study will get off the ground, but we have applied to the national institute on aging in Washington to start the process.
My first question is about freeing up cash. As you probably know, we recently took evidence on prescribing and the drugs issue. The drugs that are available to the NHS are under intense scrutiny via the Scottish Medicines Consortium and area drug and therapeutic committees. A whole lot of scrutiny goes on there, but it came out in our evidence session that the same scrutiny is not applied to other procedures within the NHS. Having come through the NHS, I know that some procedures were the flavour of the month 10 years ago, but they can fade into the background while others come through. Is any meaningful research being done on the cost effectiveness of some of the procedures that take place within the NHS, particularly in the acute sector? If not, should there be such research?
Secondly, health boards are asked to make savings year on year. Is that a sustainable approach to the budget?
10:15
My immediate response to the first part of your question is that the Information Services Division provides a huge amount of information about costs but it seems to stop at a certain point.
I was thinking more in relation to outcomes.
The information is not linked to outcomes, which means that we cannot, for example, find out what different procedures cost in different hospitals. Moreover, there is not much analysis of what are sometimes very big differences in the costs of procedures across different health boards or indeed different hospitals. That might be perfectly explainable, but it seems a bit odd.
It strikes me that we are talking about huge amounts of money—
Absolutely.
—and it might be quite meaningful if we could find out just how effective that spending has been.
I agree with David Bell’s point about the ISD. A couple of years ago, I looked into Scottish health statistics and concluded that there was a great need for more analysis. Various people would tell me, “We’ve got all this data”; they might have had it—and indeed might have printed it—but they were not really analysing it. The same thing happens with the Scottish economy. The figures are published but they are not really analysed to find out what is happening underneath.
People always say that the NHS needs more money because its costs rise faster than inflation. That might be true but interestingly—this applies partly to the NHS in Scotland and partly to the UK as whole—that is not because of the cost of drugs but because of the cost of the staff, which has been well above inflation for over a decade now. According to figures from SPICe that were published last year, over the past decade or so other non-staff costs have largely risen below the level of inflation. That suggests that, apart from staff costs, the NHS is being quite efficient. Indeed, I hope that that is the case. However, as far as I can see, the figures have not been brought together to allow people to see what various boards do, where they can learn from and so on and to make cross-savings from that.
As for efficiency savings, my view has always been that you can say what you like about them and they will always be delivered, but they are pretty much meaningless. Indeed, that is what most national audit offices say. People will always find a way of saying this or that and you will not be able to prove it one way or the other. It is better to forget them—I do not think that people pay that much attention to them anyway.
With a lot of health stuff—indeed, with public services in general—it is quite difficult to look at cost effectiveness or the productivity of, say, a teacher or nurse versus the productivity of someone in manufacturing. Some progress has been made in health, but only at a UK level; I do not think that there are any Scottish figures yet. The fact that it is difficult simply means that we need to put in more effort if we are to have a better understanding of what we are doing and how well we are doing it.
To put this in context, I note that between 2008 and 2011 the primary care drugs budget went up by 6.3 per cent against an overall rise of 11.4 per cent. That reinforces John McLaren’s point that wage costs are driving up overall costs. That is not to say that it might not be possible to make further savings in the drugs budget; indeed, public health people have suggested to me that drugs are not necessarily being used all that efficiently or properly, and something more could be done in that respect.
You both touched on the costs of the ageing population to the NHS. What impact is it having now and how will it increase year on year? Is that impact simply a result of an ageing population or a result of an ageing population that does not have good health?
The fastest growth among age groups in the population is in the so-called oldest old—people who are aged 85 and above, who are very likely to be disabled and so will need some kind of intervention.
The one area in which living healthily might not make much difference is dementia, which poses the biggest challenge to the health service for the next couple of decades. The number of the oldest old is increasing most rapidly because of the baby boom. There has been something of an increase over time until now, but the increase in the number of the oldest old people will accelerate as the baby boomers hit their eighties. We might be into the next decade before the full effect is felt, but there is no doubt that it is coming, unless some form of intervention, particularly to assist with dementia, is found. So far, there has been no success in finding a medical intervention for that disease. Once people get above the age of 90, the incidence of dementia is around 40 per cent.
On the cost of ageing, there will be a phoney war for a while, and it will kick in with a vengeance in the 2020s. We are already seeing it in some countries. Japan and Italy will hit the problem earlier, but we will get there eventually.
We kind of knew that the pensions thing was coming, but we did not do anything about it, and now we are struggling with it. We know that the ageing population is coming; if we do nothing about it, it will hit us. We need to plan for something like that well in advance, but I am not sure that any of the UK countries are necessarily addressing the issue properly.
Good prevention spend and policies will not necessarily save any money because people will still be getting older and the time that they need to spend in hospital and other healthcare will grow with that. However, if we do not have good prevention methods, the unhealthy part of life expectancy will grow longer and the problem will be even worse. That is why prevention is very important, even if it does not save money.
I am concerned about the care for the elderly element of the budget in Scotland. The idea has been suggested that self-directed support is a good way of going forward because it is more cost efficient. Some countries have gone further than the UK on that; I think that the Netherlands and a few other countries are going with the idea. However, we are sort of stalling on it in Scotland. Some people do not like the idea, but if we do not go with self-directed care, we need to know what to go with, because the current system cannot be sustained. It is too expensive.
All this also means a gradual shift in emphasis from healthcare towards social care, because a lot of the issues around dementia are associated with social care, and we have a completely different funding model for social care. As far as personal care is concerned, it is almost like the NHS, but other forms of care are not. If someone goes into a care home, they have to cover £160 a week of the free personal care and nursing care elements, but the cost is between £500 and £600 a week: that difference still has to be met. Scotland is no different from the rest of the UK; people lose their wealth relatively rapidly if they have a long stay in care. The Dilnot report looked into that and suggested that there should be a £35,000 total cap on social care spend. That would also affect Scotland. We cannot assume that, somehow or other, free personal care has sorted all that. It has not.
Professor McLaren and Gil Paterson alluded to how we deal with all this when budgets will be reducing into the future. Less money will be available. How can we achieve the change that we need to achieve rather than the change that we can achieve by aiming at the easy targets that we all go for?
As we have said on a number of occasions, you do not have a declining budget; you have a rapidly increasing budget in the NHS, which is part of the health budget. If you do not spend that on wages, then you have a lot of money, probably up to 2016-17, to put into other things. If you keep the same model as you currently have, the money will just go into the same areas as it did previously. However, the political debate by all parties is still about the full Barnett consequentials for the NHS going to the NHS, but you will not change things if that is the case. If you say that the money will go to health as a whole and it goes either into the social care side for the elderly or into more prevention—or a bit of both—there is a chance of changing things in that way. However, you must get hold of the wages issue to do that. You are, however, on the tail end of the wages issue, because most other parts of the public sector have already taken their wage cuts or freezes. You will have to ask the health sector to do that in the future, but it would have been easier to do it at the beginning.
Just to follow on from that, the workforce is critical to delivery of enhanced services, if that is what we are doing. We are trying to do that against a likely situation of pay restraint for a number of years, so there is a huge problem of incentivising and energising the workforce in order to deliver the services. I think that some work is going on around that from NHS Education for Scotland. I have certainly been at discussions at which there was talk of a public services college in Scotland so that there would be more cross-fertilisation across the different parts of the public sector. Unless we get radical thinking about how the workforce is organised, none of that will happen. It is already a huge problem and it cannot be taken forward unless you take the workforce with you.
Are any countries embarking on, or trying to do, similar things with models of preventative spend, and which it would be worth the committee’s while to have a look at?
I am not sure whether any country is embarking on such action, but I know that the Scandinavian countries and Holland spend higher proportions of their overall spend on preventative spend. That may be a quirk of the statistics in how spend is calculated and so on, but there might be models in northern Europe that would be worth examining to see how those countries implement preventative spend. We know that those countries have better outcomes in terms of, for example, longer survival times after cancer. They do better in a range of health interventions—not necessarily with massively higher spend, but through using different models. The NHS is not mirrored exactly anywhere else. It is therefore worth your while having a look at what others are doing.
A lot of countries are starting to look at the issue. Incidentally, a lot of countries are not protecting health spend. For example, the Welsh Government is not and the Irish Government is certainly not, mainly through its workforce. However, Ireland’s allocation system was pretty crap, to be honest, which the Irish accepted. They got the Economic and Social Research Institute to do a major piece of work—there are many volumes of it—on examples from around the world and how they could reconfigure what they do, given their extremely difficult circumstances. It is definitely worth looking at that work.
The Welsh considered a different system, using the Welsh health survey, which is different from any other health surveys in the UK in that it used a different way of looking at the allocation. Again, that is probably worth having a look at, although the Welsh have suspended it for political reasons because it was going to reallocate too much—which can never happen.
Last year or the year before, the OECD did a major piece of work that looked at the efficiency of different countries. It worked out that if most countries were to follow best practice, they could improve life expectancy by a couple of years. I suppose that that could be translated into cost improvements as well. In the UK’s case—which generally means England—life expectancy has risen by three years, so there is obviously a lot of efficiency. The OECD deemed that the most efficient countries are Australia, Korea, Japan and Switzerland. The Commonwealth Fund and others will know of other areas that see greater efficiency. There are examples around. It is always difficult to translate the example of one country into your own country, but lessons can still be learned from the work that has been done.
10:30
We discussed the rapidly ageing population and how we manage that in terms of health and social care. Professor McLaren commented on a rapidly increasing health budget being a political priority that casts a shadow over other areas of the budget. With an increase in health and social care on the horizon, I am looking at the budget lines. In 2010-11—we do not have the figure for what will happen in the coming financial year—there was a transfer of £360 million from NHS boards to social work departments in local authorities. I am not sure how that annual figure is arrived at, and I am not sure what scrutiny there is of whether each local authority makes best use of that money: £360 million is a large input. For example, NHS Greater Glasgow and Clyde gives £120 million to social work services in local authorities. Glasgow alone gets £72 million of that. Has any work been done on how that figure is arrived at and how well the local authorities spend it? If so, could you point the committee in the direction of that work, as it would be very helpful to see it? If not, what kind of questions would you seek to ask? When we examine the health board budget, it is quite right that we ensure that every pound of that budget is spent well, even if that is within local authorities.
Also related to that is the housing budget. The amount of suitable housing for elderly disabled people is far short of what it should be.
SPICe has examined transfers and I have had a go at it. The situation is not very transparent and I know of no substantial investigation into how transfers happen. Bob Doris is absolutely right. NHS Greater Glasgow and Clyde, for example, transfers 6 per cent of its budget into social work, whereas NHS Borders—where, you would think, the proportion should be higher, because it has an older population—transfers only 1.5 per cent. There are big variations among local authorities and there is not much clarity about how transfer happens. It comes from negotiations between chief executives of health boards and chief executives of local authorities and very little is known about the process. It is a very important issue, because we are not scrutinising the whole budget if some of it is going off into another area of responsibility.
What we said in the Crawford Beveridge report about the need for health and social care budgets to be more intertwined is correct. I guess that that is what the Government is trying to achieve and what all parties want to achieve. If a political commitment is being given to maintain the NHS, in real spending terms, the integration of health and social care budgets will not really work. As Beveridge said, the whole health budget cannot be protected, because it is enormous. The Government should not protect any of it; it should just give health boards what they need. Perhaps money is not needed for ageing so much now and would be better spent up front on other things. Perhaps money will be needed later, when the effects of the ageing population kick in.
The health budget is huge—about a third of the total budget—and it is not broken down and analysed very much. Members should look at how the tourism, Scottish Enterprise or schools budgets are analysed, for example. Much more could be done by Audit Scotland, ISD Scotland or whoever so that we can find things out. For example, as we have both said before, if the relative health spending advantage of Scotland versus the UK has fallen from 14 to 8 per cent in two or three years and nobody has looked at that or bothered to find out why it has happened, perhaps you have too much money.
With the integration of health and social care, how we scrutinise will become increasingly important. The two things that are necessary are a single accountable officer in charge of the integrated services and a single budget. Is there a need for Parliament to scrutinise that single budget as a focus rather than looking separately at local authority and NHS budgets, as we go forward?
That certainly makes absolute sense to me. If health and social care are to go together administratively, scrutiny of them must also be combined.
It is clear that one reason why health boards are taking that approach is to save costs. The average in-patient cost for a week in a hospital is about £2,700, but if the person can be cared for in a care home, the cost will be £500 to £600. Therefore, it is clear that there will be substantial savings if it is suitable for a person to be cared for in a local authority care home. It is about getting people into accommodation that suits them and is most appropriate for them, which may often mean their being nearer home. We might want to have people back in the community for all kinds of reasons.
There would be a better quality of life for them, as well.
Yes.
There are no other questions on that issue.
I am looking beyond the witnesses at our witnesses for the round-table discussion. That is a reminder that this is the Health and Sport Committee.
I think that the Scottish Parliament information centre briefing says that there are no specific indicators or targets for sport in the budget. Do the witnesses want to comment on that before they leave? Given the preventative strategies, all the enthusiasm about how we can push forward here after the Olympics and the commitment all around, should we be concerned that there are no targets or indicators for sport in the budget?
There are big issues to do with any large sporting event, such as how it affects the health of the country as a whole, how much it is for elites, and how much carries over. That probably applies to the Olympics, as well. It is rather disappointing that the Olympic stadium will probably be turned into a place for fans of West Ham—I have been there a few times—to go along to and do whatever they do there. There is an opportunity to make a national centre; something like that could be done with the Commonwealth games.
On the other side, if we do not look at what is basically public relations guff from some economists, about the benefits of big sporting events, but look instead at the decent work that is done, we will see that there can be many pitfalls. Many sporting events do not make any money; rather, they lose quite a lot of money in the long run, and the money that is spent on them could have been much better spent in other areas. Nobody ever looks at what all the Olympics money could have been spent on. Obviously, the Commonwealth games are not on the same scale, but there is still an opportunity to be a bit more hard headed about what will come out at the other end that will benefit Scotland in the longer term.
It seems to me that the big sporting events are probably largely irrelevant to the prevention agenda. It is a matter of getting very young people across the board to participate in sport, and it seems to me that there are good models in Scotland. Clubgolf does very well in trying to expose young kids to golf before they leave primary school, and that sort of thing seems to me to be admirable.
That helps to set the scene. There has been a bit of light relief from the sobering and challenging evidence that you have provided to us. I hope that we will find that evidence useful in shaping our work programme and budget scrutiny. Thank you both very much for your attendance and evidence.
I briefly suspend the meeting. We will set up for the round-table session.
10:39
Meeting suspended.
10:45
On resuming—