Richard Smith: Chair of NHS England wants a £50 billion NHS bond, culture change, a good relationship with the private sector, and innovation


Lord Prior, the chair of NHS England, is tall and thin, has a playful smile most of the time, and answers questions with a directness unusual in the higher echelons of the NHS. A barrister, he has worked in finance and industry, been a member of parliament, and chaired multiple NHS bodies. He spoke earlier this week at a meeting of the Cambridge Health Network, which brings together people from the NHS, private sector, charities, and academia. Usually its meetings are held according to the Chatham House Rule, meaning that people can be quoted only with consent, but Prior’s meeting was open.

Prior began by emphasising the deep significance of the NHS to the British. He’d been listening on the radio to the American ambassador discussing access for American companies to the NHS and had realised that the ambassador just didn’t understand the cultural importance of the NHS. Then he described visiting Teeside, where he had once worked, and seen how sites where British Steel and ICI once employed 45,000 well paid jobs now employed 2000. The NHS, in contrast, is still here and embodies a spirit of us all being in it together that has disappeared from most of Britain. The NHS matters beyond delivering healthcare.

The NHS also matters to Britain’s life sciences, which offer both new treatments and wealth creation. It’s important, Prior said, that the service finds a way to offer scientists access to NHS data while guaranteeing patient confidentiality. A lawyer in the audience from an international firm said that she thought that investors in life sciences were becoming less interested in Britain, and somebody from a drug company regretted that the NHS was often unwilling to pay for expensive new drugs. Prior disagreed about life sciences, saying that life sciences in Britain were as strong as almost anywhere. Meeting the cost of expensive new drugs is, he said, a major challenge to the NHS.

But despite the importance to the nation, the NHS, said Prior, is not sustainable in its present form. Costs continue to rise by about 3% a year, but the economy is unlikely to grow by more than about 1% a year. We can’t, Prior said, just squeeze the service harder. Plus the NHS needs to do better at tackling health inequalities, with the poor dying ten years younger than the rich and experiencing 20 years of poor health before dying. Most money is spent on physical treatment services that come late in people’s diseases rather than on primary care and promoting self-care.

Prior has confidence in the NHS 10-year plan, which emphasises prevention, primary healthcare, and public health; the challenge is to deliver the plan. The 45 Integrated Care Services (inevitably called ICSs) are responsible for delivering the plan and bring together all parts of the health service and local government, which is responsible for social care and public health. Some ICSs are already working well, whereas others are fragmented, unwilling to change, and populated by organisations and people hostile to each other. Prior sees two big questions for ICSs: Who will be in charge? And how will there be contestability, meaning that they cannot degenerate to being unresponsive, local monopolies? The answer to the first question is some sort of collective governance, but the answer to the second question is less clear.

There are, said Prior, three enablers essential for the NHS to develop and sustain itself: people, culture, and capital. Perhaps conveniently he left aside questions of people, saying how Dido Harding, his co-chair, had that that day produced a report on workforce.

With culture, Prior divides people in organisations into missionaries, those motivated primarily by the mission of the organisation and mercenaries, those motivated more by money. He thinks that both Simon Stevens, the current chief executive of NHS England, and David Nicholson, the former chief executive, are missionaries, and he added that “the market goes against the grain of the NHS.” He has worked in the NHS since 2002 and said that it has “not been a comfortable time.” The reforms introduced by Andrew Lansley when he was Secretary of State for Health were a mistake, and the emphasis on targets and performance management has been overdone. The culture has to change to one with more cooperation and where people are willing to give up some of what they have for the benefit of the overall system.

Leadership will be important for the success of ICSs, and Prior regretted how the old strategic health authorities had driven a wedge between clinicians and managers. There had been a culture of bullying and of black and minority ethnic people being treated badly. He would like to see more investment in leadership training and more clinicians becoming chief executives. (He was asked about 7000 staff in NHS England and NHS Improvement being put at risk of redundancy, and he said that he regretted that, although emphasising that he would not tolerate poor performance.)

Prior placed a heavy emphasis on more capital for the NHS, arguing that at this time of low interest rates the government should issue an NHS bond of £50 billion. There continues, he added, to be considerable waste and wide variation in the NHS, but despite the lack of capital investment the NHS has improved productivity in the past 11 years between two and three times faster than the general economy, including the private sector. (The NHS provided “16.5% more care pound for pound in 2016/17 than it did in 2004/05, compared to productivity growth of only 6.7% in the economy as a whole,” concluded the University of York).

The capital budget for the NHS has fallen by 7% from £5.8 billion in 2010/11 to £5.3 billion in 2017/18 with money being transferred from the capital to the revenue budget. Capital spending in trusts has fallen by 21% over the same period—from £3.9 billion to £3.1 billion. The maintenance backlog has increased from £4.4 billion in 2013/14 to £6 billion in 2017/18. To bring capital spending up to the OECD average would require another £3.5 billion in 2019/20. Around 40% of NHS buildings, said Prior, are more than 30 years old, and 18% date back to before the NHS was founded in 1948.

In short, the NHS is, said Prior, “capital starved.” More investment is needed, particularly in information technology. Government, he pointed out, can borrow money at around 2% interest, whereas trusts are paying 10-12% of private finance initiatives, totalling almost £1.5 billion annually. The case for a government bond for the NHS, concluded Prior is “almost unarguable.”

Several people asked whether the NHS was becoming more anti-private sector. Prior said that it would be “very sad” if that was the case as new ways of doing things often come from the private sector. He said that as far as he was concerned the private sector is “part of the system” not outside the system.

Somebody in the audience said that selling innovative technology into the NHS was difficult because NHS organisations had no money, had a risk-averse culture, and needed to see an immediate financial return. Prior said that he hoped that the creation of NHSX [the new joint organisation for digital, data and technology] would lead to a “gear change.” “You,” he said to the questioner, “are crucial.” Innovation is good for the NHS and for the British economy. Asked at the end what one thing he would like to see if he had a magic wand Prior concluded “innovation.”


Read Richard’s blog on the BMJ.