What Labour’s Victory Could Mean For Britain’s National Health Service

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The Labour Party in Britain won an historic landslide election on July 4th, ending 14 years of Conservative Party rule. One of the new Labour government’s major goals is to revive the National Health Service by cutting wait times for diagnoses and treatments and boosting population health outcomes. But restoring the NHS to a more functionally optimal state faces uphill challenges, not least of which will be funding at a time when the economy is weak and the government has pledged no new tax hikes.

The NHS is a system of publicly (tax) funded healthcare services throughout the four nations of the United Kingdom that provides care to all residents free at the point of delivery. The NHS was the first-of-its-kind health system in 1948 to be founded on the principle of universal free access. Ability to pay no longer stood in the way of British residents getting medically necessary healthcare. Inequalities in care provision, which had long plagued the British health system, narrowed considerably.

The NHS is still very popular among the British public, according to a 2023 comprehensive survey in which 72% of respondents said the health system is “crucial to British society” and that “everything should be done to maintain it.” However, 77% believe the NHS isn’t prepared to meet the increasing health demands of an ageing population. And, 51% opined the NHS isn’t ready to keep up with new medical technologies to improve patient care.

For decades the NHS has been beset by problems, many of which can be attributed to it being a comparatively cash-strapped system. The U.K. spends less per capita on healthcare than most of its peers. Taking the relative prices between countries into account, at $5,493 in 2022, per capita annual healthcare spending in Britain is less than half of expenditures in the U.S., $12,555, Peterson-KFF analysis indicates.

Severe budget constraints have led to record numbers of patients—7.7 million people—on waiting lists for diagnoses and treatment. Additionally, relatively poor remuneration for (junior) doctors and staff has left the system with chronic unresolved pay disputes and labor shortages.

An increasing number of people opt for care in private clinics and hospitals to avoid long waits. Figures tracking the use of private healthcare in 2023 show record numbers of procedures worth £4 ($5.1) billion, often in the form of diagnostic screenings and elective surgeries.

Nonetheless, private medical insurance only covers about 10% of the population. As such, the private sector still doesn’t play a substantial role. The vast majority of citizens and residents rely on the NHS for care.

Prior to the election, the Labour Party unveiled a new “Fit for the Future Fund” which promised to provide the NHS with state-of-the-art equipment in order to help cut waiting times. Labour pledged to furnish an additional 40,000 operations, scans (screenings) and appointments a week in England by introducing more weekend services, as well as turning to the private sector where needed. As part of its mission to “put the NHS back on its feet again,” Labour proposed a £1.1 ($1.4) billion package to recruit and train more nursing staff.

Prime Minister Keir Starmer faces a daunting task of reducing wait times and improving health service quality and outcomes, as the U.K. economy isn’t growing, which means the country will find it difficult to procure the cash it needs to rebuild the NHS.

During the election campaign, Labour said the money would come from cracking down on a loophole in the tax system, namely non-domiciled tax arrangements for persons who live in the U.K. but are not settled permanently. They currently only pay U.K. tax on money made in the country, and can avoid paying it on their foreign income, which allows wealthy individuals living in Britain to elect the lower-tax country as their formal domicile. Research from the London School of Economics suggests that eliminating the special exception could yield the government £3.2 ($4.1) billion annually.

Besides increased spending, the incoming government intends to make structure changes to the existing healthcare model. Then shadow Health Secretary, Wes Streeting, warned in April that the NHS would get no additional funding without what he called “major surgery” or reform.

Specifically, Streeting emphasized the importance of the NHS shifting away from an acute care model geared towards late diagnosis and treatment, to one in which there’s more focus on disease prevention and chronic care management delivered at the local level.

The Labour Party’s manifesto states the NHS “needs to move to a Neighborhood Health Service, with more care delivered in local communities to spot problems earlier. To achieve this, we must over time shift resources to primary care and community services.” Here, the objective is to have the NHS become not merely a “sickness service, but able to prevent ill health in the first place.”

The newly elected government’s ambitious plan to turn around the NHS will inevitably face challenges. Yet there’s consensus across the U.K.’s political spectrum that reform is necessary. In a post-election speech, former Conservative Health Secretary Jeremy Hunt encouraged the Labour government to “use their majority to make much-needed reforms to the NHS in a way that is sometimes difficult for Conservative governments to do.”

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