Memo to Andrew Lansley - How to save the Health Bill without changing it

The response to mounting opposition to the NHS Bill is not yet meeting the required standard. The concerns are far deeper than either political manoeuvring or self-preservation by empire-builders, although there are obviously elements of both. Before doing anything further if you stop and analyse the resistance you will find a common thread. It is that no-one understands how the reforms will actually get the NHS to a better place, and it is therefore causing fear rather than excitement. In effect it appears to be the fiddling while Rome burns. I have spoken to several GPs involved in new clinical commissioning groups who can see the logic in some of the arrangements but fear the funding will not support the needs of their patients and alongside that existing NHS commissioners are saying that the changes will do nothing to re-position the service to cope in 10 or more years time, that will need hard cash.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) has a full chapter on the NHS because of it's importance to us and your reforms may well drive efficiency but they have two glaring omissions. Firstly, they do not show how they are compatible with the future financial strains which demographics alone will place on healthcare and the funding of it. This leads GPs especially to be wary of being the gatekeepers of insufficient funding and as a result being the ones to tell patients that they will be left to die. Secondly, the reforms fail to demonstrate how they will protect the NHS against lowest common denominator services which will result from a totally free any willing provider system.

What is needed therefore is a sub-bill which enshrines the role of community-led social enterprise in the NHS and does so within a framework which ensures open competition whilst supporting the funding model through reinvestment of profit. Secondly, you need to address the whole system that funds health, pensions and social care from current day taxation. This system frightens the life out of me and will break at some point, leaving us like Greece. No amount of reform or doing more for less can save a system in which twice as many people need help as those paying for it and that is where we are headed.

The Green Paper talks at length about this issue but in a nutshell you can save the bill by two relatively simple actions, which it will be easy and beneficial for the coalition to support:

1. Commit to a system of competition in which all outputs are measured, not just the financial, and in which the state seeks a return of profit from providers. This will ensure that social enterprise becomes the main delivery vehicle for our healthcare and avoid the danger of back door privatisation.

2. Commit to a new system of funding, on a whole of life basis, which will guarantee that a standard set of treatments and social/pension benefits are available nationally to all those eligible. 

This will not only help financially, it will help voters to believe in your full support for the NHS and also help those inside it to believe that the reforms will not simply be used to squeeze the NHS to save cash. These are not nice to have bolt ons, they will save your Bill. They will underpin the modernisation of the NHS as well as transform the financial position of the country.

Memo to Dave

Rarely can an economic situation have been so complicated. The newspaper scarelines range from "negative GDP growth could signal further recession" from "NHS reform will prevent efficiencies" to "UK debt hits £1trillion". People take this at face value and assume that we are in a real mess. And of course we are, but not for the obvious reasons. There are several factors that are seemingly ignored and these are taking our eye off the ball.

For example, shrinkage in an inflationary economy is much worse than in a stable one - to remain level the economy ought to grow by an amount equivalent to inflation. But GDP is an appalling measure of the national economy and recession is a scary term, which people rightly associate with sometimes desperate personal straits. 'National debt' is government debt. Because of these factors the absolute depth or otherwise of a recession, the wealth or otherwise of the nation and real scale of our problems cannot be measured by GDP or national debt alone. It is as accurate as saying that the NHS cannot reorganise itself and save money at the same time. It might lack the strategic capability to do so, but businesses on the scale of Ford and IBM have managed it, so it is not impossible.

Which brings me to my main point. Nothing at the moment is quite as it seems. The system of capitalism that we have is miles from being fair or sustainable and the supposedly free market is a free-for-all if you have enough capital. The facts and figures that we see published every day are misleading and politics is too deeply tribal to separate essential actions for the nation from essential actions to ensure re-election.

The UK and its population, people and businesses, were too irresponsible in the 'boom' and the truth is that the bust is worse than we imagine. Total indebtedness in the UK is far worse than £1trillion and far worse than just about all of our neighbours. It gets harder to repay debt as income shrinks and that is why recession will not go away. But surely repaying debt, clearing the decks and providing a basis for future investment is a good thing? It is, but it doesn't feel good because of the flawed measures and statistics that we allow to be published. The only alternatives to this debt repayment, or de-leveraging, are to wait for inflation to erode the real value of the debt or to borrow our way into another bubble and hope that this time real earnings emerge. Neither of these are attractive in an age when we face unaffordable pensions and healthcare and a near-wrecked planet hosting an ever more war-like civilisation.

One of the key recommendations of the Unofficial Big Society Green Paper (£12.99 from www.bigsoocietygreenpaper.org) is that we urgently need better measures of debt, wealth and investment. The Green Paper lays out a clear way to measure the right things and create a national balance sheet. It is essential that this includes the total debt of all of us and estimates our assets. When we invest in things, perhaps Crossrail, this can be added to our assets and depreciated as in any business. When we repay debt we can clearly see it happening and can feel good about it.

My own best guess is that the real economy, the parts that most of the population take part in, has shrunk by as much as 10% pa since 2009, but that the net movements in debt and assets have largely offset this. I do not have access to sufficient detail in the numbers to be able to perform these calculations in detail but you might find it very helpful if one of George's team was to do this. At the moment to most people it feels as if we are spiralling downward. We might be. Some real numbers which evidence the scale of the problem that we face and the progress that we are making could be just what is needed to convince business to begin investing again.

Memo to Treasury

Steve Richards' excellent R4  David Cameron documentary - on iPlayer at http://www.bbc.co.uk/iplayer/episode/b01946pr/David_Camerons_Big_Idea_Episode_1/ - began to explore the internal blocks in government to the development of the Big Society. It struck me just how little the Treasury had put into the concept, both in terms of support and ideas. On reflection this is partly due to the lack of formal policy behind the concept, but it also suggests that the Treasury could be more pro-active in devising ways to support one of the PM's flagship pledges.

In the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) I have tried to be as inventive as possible in examining the potential for a truly big Big Society to take on a life of its own. I struggle to see the point of thousands of independent social enterprises, especially in the NHS, where it seems to be more of a backward step to a network of charitable foundations. I do however see the point of social enterprise and can also see that it has the power to energise and engage the wider population, something the Big Society is missing.

I would strongly suggest therefore that you look at ways of using social enterprise to build solid foundations for the Big Society. The Green Paper suggests a complete overhaul of taxation, pensions, health & social care and Government, resulting in an immediate return to a small government accompanied by a much fairer system which will over time support a gentle redistribution of wealth. In the process the Green Paper demonstrates that there are ways of shoring up the banks without Quantitative Easing, and ways of delivering QE which do not alienate your voters by appearing to favour the bankers. Finally, the Green Paper shows that with enhanced and more modern accounting, the budget deficit can be eradicated over the life of this parliament and it suggests better methods for measuring national wealth to evidence the success of these changes.

All in all, it is an excellent time for the Treasury to do some high level scoping of the ways that dramatic change can be used to strengthen our position and in the process build that elusive and truly big Big Society. Mr Cameron will be very grateful, and so will we. You might even get to do another term of government if you get this right.

Memo to Dave

The rise in social care fees is a tax, say Labour http://bbc.in/sTDdNU

Aren't politicians lovely. Labour dump a huge financial mess on all of us and then pick on pieces as if the current government are to blame. In a sense of course they are, but that is for failing to come up with a real plan to deal with the mess, they are not to blame for the mess and certainly not for increases in social care charges. Such increases are inevitable in a system funded from current day tax receipts when receipts fall or life lengthens. At the moment we have the perfect storm of both of those occuring simultaneously, alongside a huge bulge in the number of people turning 65.

The success of the NHS and better standards of living in keeping people alive longer is the problem. Longer lives mean more social care, more NHS care and more pensions. This triple whammy means that my fag packet jottings tell me that for every additional person living from 85 to 95 we need to find an extra £300,000 just for those 10 years of life. At some point in the next few years there will be a further 1 million of them, meaning an additional £300bn in tax or charges needs to come from somewhere on top of the current deficit.

In sense, then Labour are right. The charges for social care are a tax, and they arise from the doomed attempt to fund our health, pensions and social care from current day taxation. This simply must stop, it is barely affordable today and as I have just shown it will get worse at speed.

The Unofficial Big Society Green Paper argues for an entirely new system with a clean break from the past. It suggests complete honesty and transparency with all of us about what we put in and what we will get out. If you are worried that we are leaving our children an impossible situation, you are right. It is time for bold and decisive action, not another pile of debris pushed quietly under the carpet. That bulge in the carpet is already quite large and without real strategic action at some point in the next 10 years Britannia is going to trip over the carpet and find that she has sustained injuries from which there will be no recovery.

Please act now.

Gareth