The Garrulous Jay – Victims Of Success

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On Wednesday the NHS celebrated its 75th birthday. It is one of the country’s most cherished institutions, providing “healthcare services that are free for all at the point of delivery”. But this week’s landmark has been accompanied by dire warnings that its future is in peril.

The world and the UK have changed profoundly since Aneurin Bevin launched the NHS at Park Hospital in Manchester on the 5th July 1948.

Back the then UK population was about 50 million. Today it is just under 68 million, an increase of 35%. (Source: ONS)

A male born in 1948 could expect to live to age 76, and a female to age 80. Today the figures are 87 and 90 respectively. (Source: ONS)

These changes in life expectancy have been underpinned by huge improvements in medical science and technology. It is remarkable that the NHS is older than the discovery of DNA by Watson, Crick & Franklin in 1953.

But all of this progress has come at a cost…literally.

As healthcare has become increasingly more sophisticated, it has also become more expensive. Today the Department of Health and Social Care’s budget is just under £190 billion, up from £135 billion a decade ago: a real-terms increase of 40%. (Source: BMA analysis of government data)

In order to meet this demand the NHS has grown, and today it employs around 1.26 million FTE staff (source: The King’s Fund), making is the fifth largest employer in the world according to some estimates.

At the same time, improving healthcare leading to rising longevity has also driven up the cost of the State Pension. This was £110 billion in 2022/23 (source: DWP, OBR) compared to £44 billion 20 years ago.

In other words, the combined cost of Health and Social Care and the State Pension is around £300 billion and rising. Income Tax is the single largest source of Government revenues at £225bn.

The country is therefore a victim of its own success. Our expectations of how the State should look after us both when we’re unwell and in our old age have remained the same or risen as living standards, healthcare costs, longevity and the overall population have all increased.

This is the dilemma politicians of all parties face when in office, and I suspect it calls for fundamental and frankly unpopular change.

Businesses sometimes find themselves in a similar situation. Buoyed by a combination what has driven their historic success, and the way they have always worked in the past, they shy away from taking the tough decisions that will secure their future longevity and growth.

It can sometimes take an external shock to change this, or the courage of a new management team alive the threat of ‘business as usual’. But both can and do sometimes come too late.

Whatever happens in the future, I expect that 75 years from now both the NHS and the State Pension will look very different from those that we have today.