The long road to NHS devolution

Image source, PA

  • Author, Robert Peston
  • Role, Economics editor

Senior Treasury officials first started talking to me about how they would dearly love to see the NHS broken up back in the late 1990s, when New Labour was in power.

Their argument was that an organisation as big as NHS England, with its annual budget these days of around 拢100bn and 1.2 million employees, was simply too big to be manageable in an efficient and effective way.

They were far more excited about the possibility of securing more bang - or medical effectiveness - for taxpayers' buck from creating smaller devolved health units than from privatisation.

It has taken 20 years or so for the Treasury to begin to get its way - with plans to devolve to Greater Manchester control over a 拢6bn health and social care budget.

Naturally any reorganisation, especially one as apparently radical as this one, will create unease among healthcare professionals.

But breaking up the NHS into smaller units goes with the grain of current thinking on how best to improve productivity and manage risk.

If you want an idea of what can go wrong when organisations become bigger than a certain size, just think about the recent financial and reputational woes of the UK's most enormous companies, from Royal Bank of Scotland, to BP, to HSBC and Tesco.

What is perhaps not piquant is that Tony Blair was desperate in his early years as Prime Minister to lure Terry Leahy from the helm of Tesco, to sort out the NHS.

Leahy never wanted that degree of potential grief in his life.

Strikingly these days lead-footed Tesco might find itself more fleet of foot if it shrunk a bit.

Proponents of small is beautiful would of course argue that something important is still missing from the Mancunian break-up experiment, which is that there doesn't appear to be any suggestion that the new powerful mayor, who is on his or her way, would have any power to raise money locally, if Mancunians were to express a clear preference for spending more on health (or theoretically less) than citizens elsewhere.

But the logical extension of this kind of decentralisation or devolution is that ultimately local people would have control not only of health priorities but of the size of the health budget.