(c) crown copyright
Catalogue Reference:CAB/129/85
Image Reference:0017
SECRET
COPY NO
C.(57) 17
.
3
3
3 0 t h J a n u a r y , 1957
CABINET
NATIONAL H E A L T H SERVICE
M e m o r a n d u m b y t h e M i n i s t e r of H e a l t h
F o l l o w i n g t h e d i s c u s s i o n on t h e g e n e r a l e c o n o m i c s i t u a t i o n in
C a b i n e t on 2 1 s t J a n u a r y ( C . C . ( 5 7 ) 2nd C o n c l u s i o n s , M i n u t e 3) I h a v e h a d
d i s c u s s i o n s w i t h t h e C h a n c e l l o r of t h e E x c h e q u e r a b o u t t h e H e a l t h
E s t i m a t e s f o r 1 9 5 7 - 5 8 . I r e a l i s e t h e n e e d f o r u s a l l t o d o a l l w e c a n in
r e d u c i n g G o v e r n m e n t e x p e n d i t u r e . It m u s t b e s t r e s s e d , h o w e v e r , t h a t t h e
H e a l t h E s t i m a t e s h a v e b e e n s u b j e c t t o c o n s i d e r a b l e c u t s in s u c c e s s i v e
y e a r s . T h e p r o p o r t i o n of t h e g r o s s n a t i o n a l p r o d u c t a b s o r b e d by t h e
E x c h e q u e r c o s t of t h e N a t i o n a l H e a l t h S e r v i c e h a s f a l l e n f r o m 3 . 2 6 p e r c e n t
in 1 9 4 9 - 5 0 t o 2 . 8 0 in 1 9 5 5 - 5 6 . D u r i n g t h e s a m e p e r i o d t h e p e r c e n t a g e of
t o t a l i n v e s t m e n t d e v o t e d t o c a p i t a l e x p e n d i t u r e on t h e S e r v i c e d r o p p e d f r o m
0. 83 p e r c e n t t o 0. 56 p e r c e n t . F u l l e r d e t a i l s a r e a p p e n d e d .
2.
F u r t h e r m o r e , though next y e a r ' s e s t i m a t e s for the National
H e a l t h S e r v i c e f o r e c a s t a n i n c r e a s e of £ 4 7 m i l l i o n s o v e r t h i s y e a r ' s
e s t i m a t e , o n l y £ 1 0 m i l l i o n s of t h e i n c r e a s e c a n b e a t t r i b u t e d t o i m p r o v i n g
t h e S e r v i c e p r o v i d e d o r t o c a p i t a l i n v e s t m e n t . M o s t of t h e i n c r e a s e h a s
b e e n d u e t o g e n e r a l i n c r e a s e s in s a l a r i e s and w a g e r , a n d in c o s t s g e n e r a l l y ,
a n d i s t h e r e f o r e out of m y c o n t r o l .
3.
F o r t h e s e r e a s o n s m y p r e d e c e s s o r was about to c i r c u l a t e to the
C a b i n e t a p a p e r d r a w i n g a t t e n t i o n t o t h e p l i g h t of t h e N a t i o n a l H e a l t h
S e r v i c e and a d v o c a t i n g a p o l i c y of e x p a n s i o n in c e r t a i n d i r e c t i o n s .
4,
It h a s s o often b e e n s a i d t h a t t h e N a t i o n a l H e a l t h S e r v i c e c a n b e
m a i n t a i n e d at i t s p r e s e n t level at m u c h l e s s c o s t . But t h e Guillebaud
C o m m i t t e e , w h o s e m a i n c o n c l u s i o n s t h e G o v e r n m e n t a c c e p t e d only l a s t y e a r ,
c a m e t o t h e o p p o s i t e c o n c l u s i o n . T h e y found t h a t t h e S e r v i c e w a s giving
v a l u e f o r m o n e y a n d t h e y did in fact r e c o m m e n d c e r t a i n i n c r e a s e s in
e x p e n d i t u r e , p a r t i c u l a r l y on h o s p i t a l b u i l d i n g .
5.
I a m p e r s o n a l l y c o n v i n c e d t h a t i m m e d i a t e r e d u c t i o n s in p u b l i c
e x p e n d i t u r e in t h i s field c a n o n l y b e m a d e e i t h e r b y finding a n a l t e r n a t i v e
s o u r c e of i n c o m e o r b y r e d u c i n g o r a b a n d o n i n g p a r t s of t h e s e r v i c e .
6.
A n i n c r e a s e i n t h e c o n t r i b u t i o n m a d e t o t h e c o s t of t h e N a t i o n a l
Health S e r v i c e from the National I n s u r a n c e Fund i s an a t t r a c t i v e p r o p o s a l
w h i c h h a s t h e m e r i t of b e i n g l o g i c a l . It w a s t h e o r i g i n a l i n t e n t i o n t h a t t h e
S e r v i c e s h o u l d b e f i n a n c e d p a r t l y on a n i n s u r a n c e b a s i s . T o d a y w e h a v e
t h e w o r s t of b o t h w o r l d s ; t h e p u b l i c b e l i e v e t h a t t h e y m a k e a c o n s i d e r a b l e
contribution through their weekly National Insurance p a y m e n t s , w h e r e a s
in f a c t t h e p r o p o r t i o n a t e s i z e of t h i s c o n t r i b u t i o n h a s d i m i n i s h e d
a n n u a l l y . A t p r e s e n t t h e H e a l t h S e r v i c e i s f i n a n c e d f r o m four m a i n
s o u r c e s - the E x c h e q u e r , the r a t e s , c h a r g e s paid by p a t i e n t s and a
c o n t r i b u t i o n from the N a t i o n a l I n s u r a n c e Fund. All s a v e one have been
s u b j e c t e d t o h e a v y i n c r e a s e s . T h e o n l y o n e w h i c h h a s n o t g o n e up in
r e l i e f of t h e o t h e r s s i n c e 1948 i s t h e c o n t r i b u t i o n f r o m t h e N a t i o n a l
I n s u r a n c e F u n d . A t o t a l i n c r e a s e of I s . in t h e w e e k l y a m o u n t p a i d by
e m p l o y e r and e m p l o y e e t o g e t h e r w o u l d b r i n g in a b o u t £ 4 5 m i l l i o n s a y e a r
a n d would t h e r e f o r e r e d u c e t h e e s t i m a t e s b y t h a t a m o u n t .
7.
I promised
Dental Service either
W h i l s t I a g r e e t h a t in
irritating small cuts,
t o e x a m i n e t h e p o s s i b i l i t y of a b o l i s h i n g t h e G e n e r a l
wholly or except for, say, the p r i o r i t y c l a s s e s .
p r i n c i p l e t h i s w o u l d b e p r e f e r a b l e t o a s e r i e s of
it is o p e n t o g r a v e o b j e c t i o n s ­
(i) L e g i s l a t i o n w o u l d b e n e e d e d a m e n d i n g t h e N a t i o n a l H e a l t h
S e r v i c e A c t , 1 9 4 6 . It w o u l d t a k e t i m e a n d b e h i g h l y c o n t r o ­
versial.
(ii) T h e r e w o u l d b e no q u i c k s a v i n g . We s h o u l d h a v e t o give
d e n t i s t s t h r e e m o n t h s n o t i c e of t h e end of t h e i r c o n t r a c t s .
C o u r s e s of t r e a t m e n t b e i n g g i v e n t o p a t i e n t s u n d e r t h e
N a t i o n a l H e a l t h S e r v i c e w o u l d h a v e t o b e c o m p l e t e d , often
taking six months or m o r e .
1
(iii) While in a full y e a r t h e s a v i n g w o u l d a m o u n t t o s o m e
£ 3 5 m i l l i o n s ( o r , for t h e p a r t i a l p r o p o s a l , £ 2 0 m i l l i o n s )
in 1 9 5 7 - 5 8 f o r t h e r e a s o n s j u s t g i v e n t h e s a v i n g m i g h t w e l l
be no m o r e t h a n a q u a r t e r of t h e s e s u m s . T h i s w o u l d
p r o b a b l y be further r e d u c e d b e c a u s e t h e r e would be a r u s h
of p a t i e n t s b o o k i n g c o u r s e s of t r e a t m e n t w h e n it b e c a m e
known t h a t t h e s e r v i c e w a s t o be a b o l i s h e d .
(iv) We c o u l d not h o p e t o a v o i d g i v i n g d e n t i s t s t h e o p t i o n t o t a k e
out t h e i r a c c r u e d s u p e r a n n u a t i o n r i g h t s . T h i s m i g h t
i n v o l v e l i a b i l i t i e s of up t o £ 2 0 m i l l i o n s o r m o r e d u r i n g
1 9 5 7 - 5 8 a n d m i g h t w e l l m o r e t h a n w i p e out a n y s a v i n g s in
that year.
All this m e a n s that this highly c o n t r o v e r s i a l
and r e t r o g r e s s i v e m e a s u r e m i g h t b r i n g n o
s a v i n g in t h e f i r s t y e a r .
(v) I a m at p r e s e n t c o n s i d e r i n g t h e r e p o r t of a C o m m i t t e e u n d e r
t h e C h a i r m a n s h i p of L o r d M c N a i r w h i c h i n v e s t i g a t e d
r e c r u i t m e n t to the dental profession. The picture is already
an a l a r m i n g o n e a n d I a m s u r e t h a t t h e effect of e i t h e r
m e a s u r e u n d e r r e v i e w w o u l d b e d i s a s t r o u s . T h e effect on
o t h e r p r o f e s s i o n s , of w h a t w o u l d u n d o u b t e d l y b e p r e s e n t e d
a s a b r e a c h of f a i t h , w o u l d b e e v e n m o r e s e r i o u s .
(vi) T h e effect on t h e d e n t a l h e a l t h of t h e p o p u l a t i o n w o u l d be
bound t o be a f f e c t e d , m o r e w o r k i n g d a y s w o u l d b e l o s t
through dental trouble and the insured population a s a
w h o l e w o u l d b e w o r s e off in t e r m s of d e n t a l b e n e f i t
t h a n it w a s e v e n u n d e r t h e old N a t i o n a l H e a l t h I n s u r a n c e
Scheme.
8.
T. t h e r e f o r e c a n n o t b e l i e v e t h a t , d e s p i t e t h e d e s i r e for e c o n o m y ,
t h i s w o u l d b e a f o r m of r e d u c t i o n in G o v e r n m e n t e x p e n d i t u r e w h i c h w o u l d
c o m m e n d i t s e l f t o t h o s e who l o o k f o r a p r o g r e s s i v e p o l i c y . I b e g a n m y
e x a m i n a t i o n of t h i s p r o p o s a l in a n o b j e c t i v e m a n n e r but I find m y s e l f
s t r o n g l y o p p o s e d t o i t . Not o n l y would it fail t o p r o d u c e e c o n o m i e s a t
t h e v i t a l t i m e , but we w o u l d find it difficult t o r e b u t t h e p o l i t i c a l c h a r g e
that we w e r e now beginning t o d i s m a n t l e the Health S e r v i c e .
9.
L o o k i n g at o t h e r s e r v i c e s f o r w h i c h I a m r e s p o n s i b l e , a
p r e f e r a b l e a l t e r n a t i v e w o u l d b e t h a t t h e c h a r g e for w e l f a r e l i q u i d m i l k
s h o u l d b e i n c r e a s e d t o half t h e c u r r e n t n o r m a l p r i c e ( i . e . f r o m l ^ d . t o
4 d . a p i n t ) w i t h a c o r r e s p o n d i n g i n c r e a s e i n t h e p r i c e of N a t i o n a l D r i e d
M i l k ( f r o m 1 0 ^ d . t o 2 s . 4 d . a t i n ) and t h a t t h e full c o s t s h o u l d b e c h a r g e d
f o r o r a n g e j u i c e , v i t a m i n t a b l e t s a n d cod l i v e r o i l .
10.
T h e s e p r o p o s a l s w o u l d p r o d u c e a n e s t i m a t e d s a v i n g for a full
y e a r of o v e r £ 1 5 m i l l i o n s (for E n g l a n d a n d W a l e s ) if c o n s u m p t i o n r e m a i n e d
a t i t s p r e s e n t l e v e l , a n d , if t h e c o n s u m p t i o n of w e l f a r e m i l k d r o p p e d b y
10 p e r c e n t , of £ 1 7 ^ m i l l i o n s . T h i s w o u l d s e e m a f a i r c o n t r i b u t i o n f r o m
m y Vote t o t h e n a t i o n a l n e e d .
A n a m e n d i n g O r d e r , s u b j e c t t o a n e g a t i v e r e s o l u t i o n , w o u l d be
n e c e s s a r y . If a v e r y e a r l y d e c i s i o n w e r e t a k e n a n d a d m i n i s t r a t i v e
a r r a n g e m e n t s c o u l d b e put in h a n d at o n c e , w e s h o u l d g e t m o s t of a full
y e a r ' s s a v i n g in 1 9 5 7 - 5 8 .
11.
I h o p e t h a t I s h a l l n o t b e p r e s s e d t o go f u r t h e r t h a n t h i s .
M o r e o v e r , I should hope to be able to p r e s e r v e intact t h e H o s p i t a l Building
P r o g r a m m e . F o r m a n y y e a r s h o s p i t a l s h a v e b e e n t h e C i n d e r e l l a ' of
a l l t h e S o c i a l S e r v i c e s , and n o w t h a t w e a r e a t l a s t a b l e t o m a k e a m o d e s t
a n d m u c h h e r a l d e d a d v a n c e , t o w h i c h w e a r e fully c o m m i t t e d , it i s
e s s e n t i a l t o s h o w c o n t i n u e d p r o g r e s s on a t l e a s t t h i s f r o n t . At t h e s a m e
t i m e , if w e a r e not to l o s e t h e v o l u n t a r y s e r v i c e w i t h o u t w h i c h t h e S e r v i c e
w o u l d b r e a k d o w n , we m u s t m a k e r e a s o n a b l e p r o v i s i o n for r u n n i n g c o s t s .
D.F.V.
M i n i s t r y of H e a l t h , W . l .
3 0 t h J a n u a r y , 1957
APPENDIX:
EXPENDITURE ON SOCIAL SERVICES IN GREAT BRITAIN
(Source:
Central S t a t i s t i c a l O f f i c e Tables
f o r the p e r i o d 1949-1956)
Current and Capital Expenditure excluding s u b s i d i e s and cash grants t o p e r s o n s , as percentage o f gross n a t i o n a l produot a t market p r i c e s penditure by Central
Government alone
1949/50
1955/56
1955/56
All Social Services
9.25
8.56
5.79
5.28
Health
3.46
2.99
3.26
2.8o
Education
2.18
2.57
1.14
1.34
Nutrition
0.56
0.49
0.54
0.47
Housing
2.57
2.07
0.53
0.38
Capital Expenditure, excluding grants to
p e r s o n s , a s percentage of t o t a l investment
xpenditure by Combined
Public Authorities
Expenditure by Central
Government alone
1949/50
1955/56
1949/50
17.40
12.80
1.79
Health
O.83
0.56
0.77
Education
1.76
2.22
0.03
All Social Services
^Peak year 1951/52 :
Nutrition
Housing
19^5/56
2.7JJ7
0.48
0,16
0,35
0.03
14.08
9.73
0.6o
0.02
^/Peak y e a r 1952/53:
15.1l7