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juin 10th, 2011NHS Funding Crisis.
juin 2nd, 2011The National Health Service is facing a £20 billion-a-year funding black hole that will threaten its founding principles unless the Coalition?s controversial reforms are brought in to prevent it, the Health Secretary Andrew Lansley has warned in the Daily Telegraph of 2nd June.This is a sobering message but is anyone listening?
Perhaps Minette Marrin writing in the Sunday Times (minette.marrin@sundaytimes.co.uk) has it right when commenting on what she describes as the horrifying findings of the Care Quality Commission report of last week, on the frequent abusive neglect rather than care of old people in National Health Service (NHS) hospitals. She thinks that the British public has got the NHS it deserves and sees it as the fault of the British voter and the British medico-political establishment.
As the current impasse between the government and entrenched interests within the NHS indicates, reform of the NHS seems almost politically impossible due to what Ms Marrin considers the inflexible, deeply held, quasi-religious beliefs of the public about the NHS. Nigel Lawson, a former (Conservative) Chancellor of the Exchequer, is widely quoted as having once said that the NHS was the religion of the British people, which perhaps explains why Tony Blair, a former (Labour) Prime Minister has said he believed in the NHS. David Cameron, the current (Conservative) Prime Minister in the Coalition government has also said that he believes in the NHS.
However, as Ms Marrin sees it, religion can be dangerous when based only on faith and not taking due account of evidence. On one side then we have the main article of faith of the NHS quasi-religious belief system that all medical care ought to be run as a state monopoly. At the other so-called right-wing extreme, it is argued that nothing should be run by the state. In between, there are for example the health systems of France and Germany where medical care is rated better. Perhaps as Ms Marrin suggests, the lack of constructive critics or whistleblowers among NHS employees is because there is largely only one health employer in the UK i.e. the NHS.
French Health Service
mai 27th, 2011In the previous article (refer to Categories/Chairmans Blog/NHS Reform Problem in the right-hand index column) the point was made that, using the example of the French health service, which has been highly rated by the World Health Organisation (WHO), the introduction of private sector competition in the British National Health System (NHS) is not necessarily a change for the worse. The Prime Minister has also made the case that modernization is essential to save the NHS from rising costs leading to a funding gap of some £20 billion by 2015. In addition, serious concerns have now been raised by the Care Quality Commission (CQC) about the way some NHS hospitals treat elderly people. The CQC has said that three hospitals had broken the law by failing to meet essential standards of care on dignity and nutrition. We will see how the increasing number of elderly people requiring care is already of concern to the French state when we address the French health service further below.
However, the British Medical Association (BMA) representing the medical profession has already called for scrapping of the government proposed Health Bill, saying that required changes can be achieved without legislation. The Deputy Prime Minister & Liberal Democrat party leader Nick Clegg, has added a call for collaboration rather than dog-eat-dog, open competition, in the provision of health services.
Taking the standard of excellence given to the French health service by the WHO, it is instructive to look at the health and other dependency problems also facing the government in France (Les Echos Mercredi 18 Mai, 2011). The number of elderly people dependent upon state care is expected to double by 2060 (+35% by 2030). This is anticipated to result from an increase in life expectancy amongst the elderly which will be accompanied by similarly increasing problems of incapacity whether e.g. with respect to their health and/or ability to look after themselves. From 2025 the problem will worsen when the population bulge from the baby-boomer generation born at the end of WWII will begin to reach 80 years of age and require increasing care.
The French health service itself is considered by the French Health Insurance association to have worsened over the last 30 years and requires rapid structural reform. A protocol agreed on 15 October, 2009 allowed for the opening up of an optional, intermediate level of fees between the sector 1 state level and the higher sector 2 level of private practice. This applied to specialists such as surgeons, anesthetists, gynecologists & obstetricians who would in turn commit to a minimum 30% of their work being charged at the rate reimbursed to their patients by the French state social security. For their remaining work, their fees should not exceed the state social security rate by more than 50%. The association of complementary health insurance would then have encouraged its members such as not-for-profit mutuelles, health insurance companies and institutions to cover these excess charges over and above the state level, the objective being to gain the support of the great majority of practitioners to remain within this optional intermediate level of fees.
However, the net result by 2010 is that the excess fees charged and not reimbursed by the social security already represent ?2.5 billion (17% of total specialist fees) and the average excess charged has reached 54%, compared with 52% in 2009 and ???25% in 1990. The Health Insurance association, therefore, considers the current market for health services a sham in which the main aim of resetting the tariff structure seems to be only to produce fees increasingly in excess of the social security level. Further, the data for 2010 shows that within certain areas of expertise the great majority of new practitioners have opted for the private sector 2 :
? 87% of new surgeons
? 82% of gynecologists
? 66% of anesthetists
On average 58% of the medical profession (excluding general practitioners) have chosen sector 2 in 2010. For surgeons, their excess fees already represent 32% of their total remuneration. Over the last 10 years the most rapid progression within sector 2 has been observed amongst anesthetists and radiographers even though for the latter this only represents 14% of their total practitioners. There is also a regional effect with the average excess fees of private surgeons already reaching 150% above the state level in Paris & its surrounding areas, 110% in the Rhone region and 90% in Alsace.
The question for the Coalition government in the UK is whether it can rely on the BMA to do any better amongst its members to secure change on a voluntary basis i.e. through collaboration and not legislation?
NHS Reform Problem
mai 17th, 2011In the previous article on this blog (refer Categories/Chairman?s Blog/Constitutional Reform in the right-hand index column), we quoted the point made by Bill Emmott , writing in The Times, that before proposing a solution first define the problem that must be solved. The reform of the NHS (see also Categories/Chairmans Blog/NHS Reforms in the right-hand index column) proposed by the government is another case and point.
Polls show that satisfaction levels with the NHS amongst those who use it are currently the highest they have been in recent times. This makes it difficult for people to understand the actual problem that requires this government reform as a solution. It is also a matter of people in general being resistant to change preferring instead e.g. to be grateful to wait in the queue for health care available to all, rather than taking a risk on a change for the worse. This is despite the World Health Organisation (WHO) concluding that France and Holland offer a much better health service through a mixed system of public, private and charitable funding.
The non-profit-making, health insurance companies (Mutuelles) in France, provide insurance complementary to that of the State social security and are often are set up for particular professions e.g. students, teachers etc. Since they then cater for a much larger segment of the population over which to spread their risk than the private insurance schemes of the UK, their charges are proportionally lower and more widely affordable. Private sector competition in the NHS is not necessarily by definition then a change for the worse. Nor should there be necessarily a great fear encouraged by political opportunists, of ending up with something akin to the American health system which supposedly would refuse to treat someone too poor to pay for life saving treatment. President Obama has also already used up a lot of political capital to ensure improved access to health insurance for poorer people.
The Prime Minister has added authority from his successful No campaign in the Referendum on The Alternative Vote (AV) but here it was easier to lobby against change, and indeed also essential if reports are true that the Conservatives had concluded that they would lose out under a system of AV, with significantly more Liberal Democrats likely to give their second preference vote to Labour than to the Conservative party. He now has to convince the public that not only is the NHS safe under a Conservative?led government but that improvements are also necessary and can be implemented while still ring-fencing its finances against the current budget cuts. As it is, with professional staff associations and unions accusing the Health Secretary of trying to destroy the NHS or privatize the NHS, his reform bill has been halted and a consultation process is underway to find allies in the medical profession but likely to result in heavily diluted legislation (as also was the case with President Obama who finally had to compromise).
Yesterday, the Prime Minister was already making the case that modernization was crucial to save the NHS from rising costs that pointed to a £20 billion funding gap by 2015. The only option as he put it, is to change and modernize the NHS, to make it more efficient and more effective, and to focus more on prevention, on health, not just sickness. These are fine words but there are still quite raw memories passed down of what it was like before the advent of the NHS for those who could not afford to pay for treatment and this fuels fears of a similar outcome in the future. However, there are still major problems to be resolved such as the increasing costs of treating the elderly as this proportion of the population continues to expand with improving life expectancy. It is also not acceptable in a developed country in Europe that people are forced to pay privately just to get an appointment with a GP or a dentist within a reasonable time or that for non-emergency treatment they can wait months to see a specialist, for the results of medical tests or for a follow-up operation, indeed for the latter in the past sometimes years.
Constitutional Reform
mai 12th, 2011According to Bill Emmott writing in The Times, Monday 9th of May (Memo on Reform), a difficulty facing all advocates of constitutional reform is that without some crisis facing the country it is difficult to convince people that there is a constitutional problem that needs to be solved.
This then explains in a way the heavy defeat of the Yes campaign for the Alternative Vote (AV) in the referendum of last Thursday (Refer also to articles under Categories/Chairmans Blog/Alternative Vote in the right-hand index column). Here the difficulty in presenting a case for electoral reform was that the need for governments to be properly representative of the people as argued by the Liberal Democrats, seems to have already been met by the existing first-past-the-post voting system, which resulted in a Coalition government consisting of two parties supported by more than 50% of the voters in the 2010 national election. As indicated by the referendum results, an AV system that then just results in a coalition containing more Liberal Democrats than now seems not worth changing the voting system for the vast majority of people.
Having lost the AV referendum, therefore, Nick Clegg the Liberal Democrat party leader and Deputy Prime Minister, should tread carefully with his proposals for direct election by Proportional Representation (PR) to the House of Lords, possibly the biggest constitutional and cultural anachronism in the country but the latter by itself not sufficient argument for change. He would do better instead to make the case for a stronger check on the House of Commons, by a legitimate, elected and stronger Upper House.
Electing peers to the House of Lords could then change the balance of power in Parliament with PR in turn making the Lord essentially more representative of the people and, therefore, more legitimate than the Commons, the latter currently unchecked by any constitutional role for the Head of State (The Monarch) and little restrained by the current House of Lords (notwithstanding e.g. the 11th May rejection by Peers of the Government Bill for Elected Police Commissioners).
In a similar way, Alex Salmon with his Scottish Nationalist Party (SNP) now a governing majority in the Scottish Parliament, should think carefully about what problem he is aiming to solve with his plans for a referendum on Scottish independence from the UK, given that most Scots seem currently against it, they can fly the Scottish flag when they want, have a strong sense of national identity, control e.g. their own health care, legal and education systems and could not have afforded the recent British taxpayer-funded bail-out of their major banks i.e. RBS and HBOS.
Budget: Aims & Achievements.
mai 4th, 2011To support MPs debating the Finance Bill (developed from the Budget) in the House of Commons on the 3rd May, and to establish a system of monitoring yearly progress towards improving the longer term growth prospects for the UK economy, the Treasury Select Committee has established certain criteria. Such criteria include:
? Fairness
? Growth
? Competition
? Certainty & Simplicity
? Stability
? Practicality & Coherence.
Tax experts from the professional associations and institutes for accountancy and taxation were then invited to evaluate the Budget against the above criteria which are considered important for good tax policy.
Now the Chancellor in his Budget has emphasised his twin aims of e.g. ensuring fairness in taxation and encouraging growth in the economy and the tax experts in general support the cut in corporation tax, the increase in entrepreneur tax relief and the limiting of tax haven status for foreign subsidiaries of UK multinationals.
However, the increased tax burden on middle-income (£40,000 – £50,000) households when also withdrawing their tax credits and child benefits is viewed as unfairly taxing them (The Squeezed Middle?) proportionally more than those on higher incomes. Again, the surprise windfall tax on North Sea oil companies although considered simple and clear does not on the other hand support the need for tax policy stability and growth in the economy. The unexpectedness of the tax rise could also impact competiveness. In addition, the changing level of the bank levy, the latest change in force from 1st January, adds instability and uncertainty to the long term tax regime as far as the banks are concerned. Further, to reduce capital allowances to offset the effects of corporation tax cuts on the overall tax take, introduces incoherence within the business tax system when this also results in e.g. unincorporated businesses being penalised by this capital allowance reduction.
It will be interesting to see if the Treasury Select Committee succeeds in this Budget monitoring role which is similar to the Congressional Budget Office in the USA but without proportionally similar resources.
Alternative Vote (AV): Coalition Tensions
avril 26th, 2011The upcoming May 5th Referendum on the Alternative Vote was always bound to create major tensions between the Conservative & Liberal Democrat governing Coalition partners, the two parties in fundamental disagreement over the Yes/No referendum issue which leaves no room for compromise. The rather lacklustre campaigns of both sides up to now have suddenly burst into life with each attacking the other, whilst still seemingly not exactly engaging with the possibly even more confused voting public, whose turnout in turn could remain at the normally low levels of the local council elections taking place at the same time.
Certainly the No campaign claim of only Papua New Guinea, Fiji and Australia using the AV system could be considered misleading when at the same time this fails to mention the around 30 countries, including France with its presidential elections, that use the 2-round (run-off) system which is a variant of AV. Also the additional costs associated with electronic counting and validation of the successive rounds of counts required for AV, might only be necessary if final results were still expected on the Friday after the 10pm Thursday closure of polling stations. Otherwise, the current manual counting system could suffice if results were instead declared over the weekend, with additional costs involved only from the increased counting staff hours involved. This of course tends to contradict the assertion of the Chancellor, George Osborne, and which is also disputed by the Energy Secretary, Chris Huhne, that expensive new machines will be needed to count the votes in an election under AV.
However, both sides need to appear to aggressively differentiate themselves from each other within the Coalition, to appease their traditional voters whilst accepting that it is in the interests of neither party for the Coalition to collapse after 5th May. With their tough deficit reduction programme, the Conservatives need the 5 years of a fixed term parliament to allow time for sacrifices now to make way for later benefits in the mind of the electorate. Similarly, the Liberal Democrats know that a general election now would lead to heavy losses and they need a 5-year plan for recovery of their identity, to prove that they are not only distinct from both Labour and the Conservatives but also fit to govern.
Banks: Costs versus Benefits.
avril 21st, 2011The previous Labour Chancellor, Alistair Darling, having experienced first-hand the recent crisis in the banking sector during his three years in office, agreed that it made sense for the banks to hold more capital (10% tier one capital ratio) and to formally ring-fence off the riskier investment banking operations, as recommended by the Interim Report of the Independent Commission on Banking and Competition (see also Categories/Chairman?s Blog/Interim Report ? Banks in the right-hand index column of this Blog). However, he did not seem convinced that such a rational approach to the problem of protecting the retail operations of the banks, would be sufficient to prevent the collapse in market confidence and resulting irrational sense of panic in the financial markets that occurred last time around or could occur in the future.
There is also the issue raised by the Commission, of the costs versus benefits of having large British banks such as HSBC, Barclays and Royal Bank of Scotland (RBS) based in the UK. The Interim Report claims that such large banks benefit from an implicit state subsidy of more than £10 billion a year by being headquartered in the UK since investors assume that a British government via the taxpayer will always bail them out in a financial crisis. Since the banks dispute this claim, they could decide to move if they find the new banking regulations too onerous and this will impact the British economy.
The Commission, however, views the City of London as representing far more than a few large, British banks and has found no conclusive evidence that they enhance the role of London as a leading international centre for financial services. Indeed, historically the growth of the City has been driven more by its openness to foreign companies and their success in entering the financial markets there. Needless to say, our major banks do not necessarily see it that way!
Our banks contribute to the British economy via tax receipts (to the tune of £53.4 billion in 2009/10) and employment. However, around 60% of this tax paid can be traced to domestic operations such as retail banking, which would still remain in the UK and employ the same people, even if the bank head office was moved offshore, the British-based profits still being taxed in the UK under international tax law.
Even investment banking would apparently not be that much impacted since British banks only account for around 10% of fees earned globally. Tougher regulations applied to British banks would not apply to major players such as Deutsche Bank, UBS, Credit Suisse, Morgan Stanley, JP Morgan or Goldman Sachs. They employ thousands in the City of London and around half of taxes from investment banking come from that paid on bonuses and salaries there. These major foreign banks have also chosen the City of London because it still offers one of the best environments for banking, with its knowhow and cluster of supporting services, the convenient time zone positioning between the USA and Asia, together with traditionally a stable tax regime (which British governments should never forget even with the current budget difficulties).
That said, market sentiment as illustrated in the opening paragraph of this article, can be a most irrational thing and for a major British bank to move its head office to New York or Asia, could have a negative impact on the City of London.
Interim Report:Banks & Competition
avril 13th, 2011The interim report on Banks & Competition was issued this week by the Independent Commission set up by the government. It was immediately criticized as not going far enough by some. A comment received here on our Blog (see Chairman?s Blog/Categories/Bankers & Bonuses in the right-hand index column) also called it a complete whitewash! In contrast, the head of this Independent Commission, Sir John Vickers, denied claims that the banks would be driven offshore if his recommendations were implemented. He said that the banking system would instead be made safer and more competition encouraged by e.g. separating into independent subsidiaries a ring-fenced, systemic part which is not allowed to fail i.e. retail banking operations, and the other investment bank part which can fail. The dominant retail market position of Lloyds would also be reduced by their selling off of more high street branches.
A spokesperson for Metro Bank, a recent entrant and independent competitor in the banking market, was not impressed and viewed the recommendation for Lloyds to sell off more branches as pretty limited competition-wise. More was needed to promote competition and the proposals did not go far enough e.g. the regulatory process could be made easier whilst still protecting the consumer of course. Making it easier for customers to switch their accounts between banks would also encourage more competition.
Despite RBS (Royal Bank of Scotland) being said at the time of the banking crisis as 2 hours away from a complete collapse, the ideas of the Commission on how to protect the high street banks stopped short of recommending a complete split-up and they chose ring-fencing of the retail part instead. A commentator then saw the problem as the devil in the detail i.e. in getting the firewall in the right place to ensure nothing in terms of a financial contagion could get through from the more at risk investment subsidiary. In addition, protecting the UK-based retail services part of the banks would not be enough to protect them from their global operations. Metro Bank again saw separating the banks as also bad for business with fire-walls and ring-fencing of independent subsidiaries requiring the holding of more capital e.g. in the investment arm if formerly supported by the retail deposits. However, to completely split the banks apart could itself be a bad thing when taking the example of the HBOS (Halifax & Bank of Scotland) merger which was a bad deal at the time and would remain so despite selling off more branches to encourage competition.
A spokesperson for the CBI (Confederation of British Industry) said that they and Business in general were determined to keep the major banks head-quartered in the UK, noting that HSBC had been talking about moving their HQ abroad for some 30 years now. The challenge for the banks now is that not only are they being asked to up their lending levels to businesses but also to up their capital bases.
It will be interesting to see what results from the next 6 months of consultation now foreseen to take place with all interested parties before the final report is issued and whether the final recommendations are implemented.
Referendum on the Alternative Vote (AV)
avril 5th, 2011THE ALTERNATIVE VOTE
I don?t believe their argument so why will I still vote no?
As one of the few members of British Conservatives in Paris who is allowed to vote in next month?s referendum, I have looked at all the arguments with attention. The principal one expressed in the Conservative No to AV campaign is that AV is an unfair system that gives some people more votes than others. But does it? Certainly not in my view.
The way the AV system works is that voters rank the candidates in order of their preference. So in the first count, the equivalent to the first round in French elections, everybody?s vote is counted once. If one candidate has more than 50% of the votes, he is elected just as he would be under the current first-past-the post system. If no candidate achieves that, then the candidate with least votes is eliminated and his votes are allocated to the second preference of his voters. Is that unfair, does it mean that that his supporters have voted twice while supporters of the other candidates can only vote once?
I do not think so. In the second round, votes from every elector, except those who voted for the eliminated candidate and did not express any further preferences, are counted. So every elector who wishes votes in the second round and all their votes are counted. The effect is just like the second round of an election in France, where those whose first choice is still in contention vote, presumably, for that candidate again and those who first choice did not get through to the second round have to chose someone else. Is that unfair, does it give the latter voters more votes than the former?
Of course the differences between the proposed AV system and the second round system used here, is that in France there are only two rounds and, in between them, there is a period for further campaigning and for the negotiation of electoral pacts. In the UK under AV the electoral rounds continue, with the lowest scoring candidate being eliminated each time, until one candidate has secured at least 50% of the votes still being cast. It seems to me that one could make out a good case for arguing that the AV system proposed for the UK would be fairer and better than the two round system used here, in that the results would be known more quickly and the electors under AV would get more choice.
What could be regarded as unfair is the fact that, under the present system, unless one votes in a marginal constituency, one?s vote is, effectively, wasted. I could vote Conservative in a constituency like Bolsover, and a Labour supporter could vote where I lived in Esher and Walton, but in either case we might just as well have stayed at home. AV would resolve that.
But I will, even so, vote no. Why?
Well I have to admit that there are other arguments advanced by the no campaign that have more validity than the one discussed above. There is the expense, although one could argue that democracy is above price. There is the delay in obtaining the result; that of course could be obviated by the use of electronic voting terminals, but American voters, at least in the State of Ohio, have learned the disadvantages of that.
I will vote no for a different reason, and one that I am disappointed, although not at all surprised, to find ignored on the No to AV website. Those who vote yes, will be voting for a step into the unknown. We do not know how the AV system would work out in practice. We do not know whether it would result in a more, or a less, proportional election result; I have seen both argued. We do not know which party would benefit, whether it would be the Conservatives, Labour or Lib Dem. We do not know whether it would give us better or worse governments. But were the country to vote yes, it would probably be an irrevocable step. MPs elected under such a new system and owing their seats to it, are most unlikely to agree to revert to the former one even if the country in general thought the results a disaster.
Had we been offered the chance to vote for a change to AV with the assurance that, after two AV general elections, there would be a second referendum giving us the opportunity of returning to first-past-the-post, I would have voted yes. And sometimes I wonder if that is why we were not given that option.
Robin Baker