The Cabinet Secretaries' Notebooks (CAB 195/7)

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National Health Service

National Health Service

A.B. 

Genl. obsers.
Diffy. of fitting civil & admve opn into annual budgeting, when shd. take 3/4 yrs. to show its shape. Diff. to take it up by roots annually.
350.000 people & various professions, not all friendly. Vol. hospitals worked on fraudulent balance sheets to attract subscriptions - no
knowledge of hosp. finance. L.a.'s kept no separate hosp. 
a/c's:  mixed up with general adminve expenses.
Whole health world in process of reviewg. salaries.
Financg. of vol. hospitals was brkg. down. Unknown addl. figure wd. have had to be found in any event.
Had to submit first Estimates v. all these unknown factors. E.g. salaries of specialists not fixed even yet.
Ty. cut those estimates - that led to first Supplementary.
Figures for 2nd yr's Estimates had to be submd by Hospital Bds., w'in 6 wks. of taking office. V. diff. for them, with new staff &  no previous experience to guide them. T. asked for cut of £28 m.
We sought economies.  M'while I had begun series of opns to reduce fees of eye-men, chemists & dentists. Not much room for sums not v. large in reln to totals. [21.5, 25.5, …]  £88 m in all for these 3.
Dentists - soured public opinion by behaviour. Cdn't have got their co-opn at lower fees. Allowed them to misbehave to get atmosph.
for cut - now cutting 40% net, from 1/6. Don't get full benefit this year. Opticians: 20% cut accepted. Chemists:  small cut for bottles. In full year this will give £13 m. saving on the £88 m.  Assumg. use of services stays as at now. Tho' I wd. believe demand will fall, as old needs are satisfied.
Adminn - remarkable figures. Adding all admve expenses together:
HQ at M/H., Dental & Hosp. Bds. etc., = 2.1% in E. & Wales, or around £5. and 3.5% in Scotland. Not scope for big money savings here. 10/11.000 volunteers is explann of low costs.
Dental, optical & pharmaceutical: not much room for economies.  
Backlog is only hope. Statute forbids me to make a charge, even if I thought it advisable. Alternative therefore = reduce service.
Hospitals. 54% of total cost is for wages & salaries. Nurses increase £7 m. p.a. since Estimate - widely welcomed. 50.000 beds closed. Another £8 m. to bring x of these into use. Of £28 m. Ty. cut, 25 m. was to fall on hospitals. Have re-examined Bds. estimates. Salutary for them to learn need to justify estimates.
Revision indicates that they under-estimated. Expendre will be greater because underestimation of needs. Far fr. makg. £25 m. cut, we shall have to find more money still or reduce services.
Examples: Bristol.  £118.000 cut demanded. Wd mean closing some Dpts.
E. Anglia.  £3.822.000: cut 167.000.  Wd close 8/900 beds.
Revised £3.924.000.
This takes a/c. of some economies - but net increase overall.
Can "improved" Health Service begin by closing beds & reducing services?
Must find more money or make a charge.
Objns to a charge.  
  a) Surrender. Political debacle.
  b)  Adminve cost wd. be enormous.  Hosp. beds wd. give biggest yield. Wd involve means test: almoners etc.  Wdn't reduce social cost:  wd. only relieve Budget at expense of sufferers.
Ty. diffy: w'in 2 yrs., two v. large Supplementaries. But can be met by argument of new & unknown service.
Must face a big increase of cost over what we thght. But common fate of all Social Services. True of educn & housing. Demand is much greater than we thought.
Must avoid destroying good will which N.H. Service has created  for Labour Party.
Figures don't show incalculable benefits to population.
Only 2 courses:  cut the Service or find the money.

A.W. 

In Scotl. signs of recession in demand on teeth & eyes.
Economies in prescriptns etc. But big money is in salaries & hospitals.
Spens Rpts have bumped up specialists fees. Can be met in part by reducg. real specialisation:  tendency has gone too wide.
Politically calamitous to infringe principle of free service. Wd be better even to increase N.I. contn.
Before war £25 m. spent in Scotland for what will now cost £34 m.
But preventable disease cost £300 m. pre-war (G.B.) & some of this must be off-set.
In the main, Sc. story is same as English.
Service is appreciated & in the main is not abused.
Special Sc. diffy (because rising incidence of t.b.) is cutting back hosp. services.

P.M. 

Any evce of unnecessary prescription or unnecessarily expensive ones?

A.W. 

Yes:  some - especially the latter. Dangers also where drs. are prescribing what are in effect foods.
Shall in the end bring doctors to book on this.
But not big money.

A.B. 

£11 m. p.a. on drugs in E. & W.  And £13 m. to chemists for services.
Arranging for drs. to hold small stocks of e.g. bandages & aspirin.
Also prohibiting prescription of "foods".
Identifying cheaper drugs to exclude fashionable costly drugs.

R.S.C. 

What Supplementary this year?

A.B. 

As only £6 m. out of £13 m. (this year) fr. dentists etc.;  & as no large saving on hospitals & £7 m. more for nurses;  in region of £52 m. for E. & W.

A.W. 

About £5 m. for Scotland.

R.S.C.

Diffy: we had no basis for decision in favour of free service.
We took risk: we are all responsible for it.
Balance in Budget £14 m. Demand for £57 m. for this Suppl. knocks one right out. If I had known I shd. have had to propose increased taxation. I am therefore in gt. diffy. esp. because statement (appd by Cab.) tht. there wd. be no Supplies.
Agree we can't cut hospital services down at this stage in Party's fortunes.
Ques: a)  Is this £57 m. inevitable?
          b)  Are checks on expendre adequate?
Machinery for controllg. expendre is novel.  Bd. have no finances: no "own pocket" to encourage thrift as in grant-aided l.a. services.
Bd. are volunteers - not same fear of the sack.  Can't surcharge them. Thus, no means of insistg. upon economy. Expre controlled by people with no responsibility of finding any part of the money. System must be watched.  Dependant [at this stage: A.B.] on goodwill of Bds. for ensuring due economy.
Must be sure it's a good enough system of controllg. expre of order of £350 m. and more.
Thus a) How can I square this with my Budget?
          b) Is new expre essential?
          c) Is system of control adequate?
Cab. must consider.  M'while recommend putting pressure continuously to get w'in Estimate figure.  Say nothg. yet of Supplementaries. Make it as diff. as possible to get more money - as means of forcing economies. But give M/H. assurance that we don't intend to solve this by drastic cuts in hospital services.

A. 

No substantial alternative, in the end, but to pay. Can't close beds.
But two comments:-
(i) Spens Rpt.  V. expensive scheme.  Junior clinicians - extravagant. Cd junior grades rates be reviewed? Must cost a lot in aggregate.
(ii) Delay in getting on with clinics.  That is approach to real economy.

A.B. 

Agreed. Tho' too expensive to start it now.

H.M.

Not surprised at all this.
Always thought 2 difficulties:-
  a) Hospitals, taken over & put under Bds., wd. spend & spend & Ty. & Miny cdn't control them.  Respons. for financial control must be with M/Health because the Bds. have no financial responsibility whatever.  Know from L.C.C. experience how much hospitals can spend and what pressure they can bring by agitation.
Problem of public adminn.
  b) Decided to have one apptd day.  Tremendous task.
Adminvely much better to have brought it in by stages. 
2-3 years wd. not have bn. too much.
Allegations are widespread, but no names are given.
G.p.'s are prescribing recklessly.
Congestion of services, causing discontent. e.g. Moorfields.  Delay of 2 months in getting specs. (precision worker)
Spens Report.  Was it brought to Ministers for approval?

A.W. 

Decided to accept recommns in advance & so announced.

H.M. 

Was that line approved by Cabinet?
Ramp over abdominal belts for women. G.P. certificates, for cosmetic reasons. Too many surgical boots etc.
Invitation (much feeling aroused) to foreigners. Leaflet advertising the service. This surely shd. have come to Ministers. Offering  facilities to visitors is a ques. of principle.
Is also in danger of turning an asset to our political disadvantage.
Can always prove things are necessary?  When do we consider what we can afford?
Ty. will get it again over services remaing. in l.a. control.
Hope Health Centres won't be extravagantly done.  Frightened by Stoke Newington plans - £350.000 or so.  For l.a. expre will or may automatically involve Ty. charge.
Can we check up on abuses?  E.g. by Social Survey.
Shd. have periodical reviews & reports. 

A.B. 

        i) Foreigners.  a)  Leaflet prepd last year to provide informn for e.g. sailors. Finds its way into visitors' hands. Always assumed foreigners wd. have advantage of Service. We seek reciprocity - M/N.I. are concldg. agreemts. for it. Assumg. they stayed 1 month & made comparable use of service, it wd. cost 1%. Cdn't exclude foreigners w'out perpetuating identity card.
       ii) Prescribing.  Can be tackled by disciplinary methods. Recently approved fine of £250 for dentist.  Bound to be some bad cases - are they representative?
      iii) Opticians. Some misbehave. Only long-term cure is to get all on salaried basis. Abuse is due to fact tht. Service is operated by
private enterprise operators.
      iv) Belts. Only thro' hospitals on recommn of specialist.  If latter recommends wrongly, it's a matter for professional judgment.
       v) One apptd day:  necessary to bring hostile professions into line.
Need for a dramatic change.

H.D. 

Supported R.S.C. view.
Hope A.B. won't abandon pressure to secure economy whenever and  wherever it can be secured.
Nervous of adminve overheads. Even small percentage = large sums  of money.
Much talk among Govt. supporters.
Tho' a new method of financial control, had hoped we shd. get comparative costings methods.

A.B. 

Can't get them yet.

C.J. 

Bulk purchase of appliances?

A.B. 

Doing it already. See Appendix.

G.T. 

    a) Repercussions - esp. on l.a.'s.  Disturbed by effect of Spens Rpt.   in Universities & l.a. services.  Must get these earnings in right relation - reducg. dentists' earnings etc.
    b) Financial control.  Method must be different.  But we must find one - urgently.

Taken from C.M. 37(49) - Meeting held on 23 May 1949.