Alan Milburn: Can the NHS be an agent of economic growth?

Matthew Taylor

So I'm joined on Health on the Line by my colleague Michael Wood. Michael, later in this episode of Health on the Line, we've got a great interview with Alan Milburn, who chaired the Pathways to Work commission that was hosted by Barnsley City Council. So we're talking about that commission and the importance of that work. But of course, Michael, this is a space you've been in for some time. So, remind me what your job title is. I always get it wrong.

Michael Wood

Hello Matthew. My job title is head of health economic partnerships and that is a job title I created myself. And I like to think I'm one of the very few people in the NHS in this country that managed to come up with their own job title, Matthew, and it's harder than it looks. 

Matthew Taylor

Well that's exactly what I wanted to talk to you, health economic partnerships. So Michael, you've been a voice in the wilderness, I would say, for several years talking about the relationship between health and the economy and now everyone's talking about it.

Wes Streeting says the Department of Health has got to be a department for growth, the health and work space is getting very well populated by, we've got a report coming out soon on it. So that's my kind of first question. It must feel like all your Christmases are coming at once. Everyone wants to talk about where your expertise lies. 

Michael Wood

It's true, Matthew. I've been working to bring health and economic development together for a number of years. And I was always struck that they were like different worlds, which I found fascinating because you think about the size of the NHS budget as a percentage of GDP. It's huge, isn't it? So my question was, why aren't we around the table in local discussions, local economic discussions? First of all, where are these discussions? Where are the tables? Before we get around them. 

So we an awful lot of time, as you've said, Matthew, just helping people inside and outside our sector understand the broad interrelations between health and the economy. 

Matthew Taylor

And an important part of that, course, is our relationship with other bodies and the other area you've done a lot of work on. And another area which is now absolutely coming to the fore is around health and devolution. I often talk about what happened when the last time Labour was in government. Now, one of the really big differences between then and now, of course, is that we've now got elected mayors, combined authorities, covering half the English population. 

We have a deputy prime minister, Angela Reyna, very determined to take that devolution agenda forward. Who were the first people, Keir Starmer, invited number 10 after the election? Well, it was those combined authority leaders. 

So that's another big dimension of this, this area of devolution, another area you've been talking about for some time and now everyone's interested in. 

Michael Wood

Yeah, I think health and devolution is a really exciting issue, Matthew. I think it builds on our broader understanding of the economy. And I will admit to giving a little cheer when the Secretary of State mentioned, what you just spoke about, in his one of his first pronouncements about health and economic growth.

I think there's really striking parallels between integrated care systems and combined authorities. And you're looking at a shared approach to geography, place, role, population outcomes. And the more you see that relationship, RSCS and combined authorities as one of equals, the more you see system leaders working together to support delivery at place and upwards to influence policy in Westminster.

And had those mayoral elections this spring, four of the 11 metro mayors have a direct experience of the health sector. More and more devolution deals contain health policy as well as looking at health in all policies. And since May, what's been fascinating, Matthew, is the number of calls are fielded from leaders just wanting to know what the landscape looks like and how they can influence. 

And you mentioned a deputy prime minister.I think many of us were waiting to see the new government's intentions and ambitions and appetite for devolution. You didn't have to wait long. She wrote that letters out in July to all leaders of both devo deals but also non-devo deal areas saying come forward with your proposed footprint with your ideas and let's draw new plans and new local growth plans. Wherever you are in a country these conversations are happening and it's brilliant to be actively facilitating supporting local partners.

Matthew Taylor

Which brings me to my last question, Michael, I could talk to you for hours, but I want the listeners to hear from Alan Milburn, which is that it has felt in the past as though the way government works undermines this agenda. And now, of course, we have this notion of mission-driven government. It's interesting. I heard the other day, perhaps I should have realised earlier, I'm sure you knew, that the health and work agenda that is Kendall's talked about has been taken forward not by the health mission board, but by the gross mission board.

You have talked to me in the past so often about the ways in which the synergies between health and the economy are missed. Regeneration is something we've talked about a lot. know, the NHS is massive investor. And of course, we all know that NHS only determines 25 per cent of people's health outcomes. That if we are going to improve health, it's going to be around housing and poverty and employment and all those kind of things. 

Now, you've been involved in one of the first initiatives from the previous government, WorkWell, which is about that. Tell us a bit about WorkWell and tell us a bit about this bigger challenge of how we join up nationally in order to enable that joining up locally to spot those synergies. 

Michael Wood

Well, I think every now and again an issue comes along which really crystallises an agenda you've been looking at through different lenses for a number of years. And work and health is the issue of the time at the moment which transcends health and the economy.

What's happening at the moment? In October, we expect 15 integrated care system pilot sites to go live on WorkWell. WorkWell is a £64 million government approach to support people who are at risk of falling out of work or who have already stopped working because of their health. So we're going to follow these 15, we're supporting the 15, we're going to follow them, see what the learning shows us, see how systems can make a difference in this space going forward. It's the first real example, I guess, of system working on a concrete issue.

So you start to see the national-local symbiotic relationship here and it's really important ICSs and the ICP in particular, I'd recommend you're involved in shaping these. For me Matthew, this is the fourth purpose of an ICS in action and it really does build on much of our work here at the Confed and we look forward to carrying it on. 

Matthew Taylor

Well Michael, thank you so much. Your time has come and no one is more delighted than me.

***

The government faces a huge challenge in tackling economic inactivity due to long-term sickness and the government's already said it's central to achieving their number one mission of growing the economy. And of course, more and more people are expected to have major illnesses. That is a number that will rise right up to 2040. 

So, I was really interested to talk to the chair of the Barnsley Pathway to Work commission. That was a commission informed by local residents and experts, which presents a comprehensive, radical view of what need to do at both national and local level to support people and unlock the benefits of employment. 

Now, the chair of that pathway to work commission is none other than former health secretary, current health adviser to the government on long-term reform, Alan Milburn. And I'm delighted that Alan is with us today to delve a bit deeper into the commission's findings. 

Alan, welcome. 

Alan Milburn

Thanks, Matthew. Delighted to be here. 

Matthew Taylor

So, Alan, I re-read the commission this morning, having read it soon after it came out. It's a really powerful piece of work. Just give us, you know, you must have been asked to do a kind of elevator pitch. What are the key things that you would want to draw out of the commission? 

Alan Milburn

Well, I guess the most important starting point is that this is arguably the biggest economic and you could argue social problem that the country faces. In some ways, we're a victim of success because I grew up, as you know, in the north east of England. And when I was sort of a young guy getting involved in politics for the first time, it was in an era of mass unemployment, 3.5 million people on the dole. And the transformation in a sense has been remarkable over the course of this last few decades, because today we have more or less full employment.

The interesting thing about Barnsley is that it was the epicentre of that year of mass unemployment following closure of the coal mines. And today, on average, its unemployment rate, the official unemployment rate, is lower than the national average, which is quite a turnaround. And so something remarkable has happened in Britain's labour market, where, if you like to do the biggest constraint on trying to achieve higher levels of economic growth in the country is shortages of labour rather than surpluses of labour. 

And I guess what policymakers have increasingly relied on, sotto voce, over the course of the last 20 years or so is as the employment rate is ratcheted up and as the official unemployment rate is ratcheted down, the gap has been filled by migrant labour coming here from overseas. And the problem is the self-evident one, that immigration has become a pretty toxic issue and the political constraints on increasing immigration are obvious. And in fact, most of the political discourse is how you now control migration rather than enhance it. People might think that's a good thing or a bad thing, but that is the sort of reality. 

And meanwhile, under the surface of the labour market, something equally profound has been happening, which is that the number of people who are categorised as unable to work largely, not exclusively, but largely on health grounds has been dramatically rising. And in fact, today, the number of people who are categorised as economically inactive, unfit to work, number of adults, outnumbers the number of people who are officially unemployed six to one. And that is both curse and blessing. 

The curse is it's really bad for people not to be in work if they can work. It's bad for the welfare bill because it keeps rising. And if we keep on the current trend line, we'll be spending an extra £20 billion or so over the next five years on the welfare costs of ill health related non-working adults. The opportunity, however, is here as a cohort of potential workers for the future who can fulfil the requirements of the labour market and of employers who are looking for more skilled labour.

The final point, I guess, is a note of optimism from our work because the way that the current system works is you're either categorised as fit for work and economically seeking it, or you're categorised as unfit for work and you're never going to be supported to seek work because it's assumed that you can't or you don't want to. 

When we surveyed people in Barnsley who were economically inactive, to our surprise, seven in ten of those people said that they would like the opportunity to work in the future. 

And so here you have a cohort of individuals who are wanting to work, as I'm sure we'll come to in a moment. The problem is that the system, either in health or in employment support, is not set up to support them into fulfilling that aspiration. 

Matthew Taylor

Let's explore a bit, Alan, who these people are. I'm talking to you, having just taken a really kind of inspiring visit to Birmingham and Solihull ICS, or particularly to East Birmingham where they're doing some fantastic stuff in primary and community camp. Part of what they're doing is really in-depth analysis of where demand comes from. And one of the interesting things about that demand is yes, absolutely the groups that you would expect older people, but also a lot more younger people, a lot more young people with mental health related issues, a lot more kind of complexity. So what do we know about this group of people who are economically inactive for health-related reasons? 

Alan Milburn

Well, it's not one group to begin with. I think, you when we're thinking about how public policy can best help here, public policy, as you and I both know, can be a pretty blunt instrument. So it's helpful to think about who are the cohorts? And there are clearly different cohorts. 

Economic inactivity is a product both of stocks and flows. There is a stock of people who are economically inactive and I'll come back in a moment to describe that. And then unfortunately there's a flow of people into economic inactivity out of employment, which is precisely the reverse of what you want to achieve. 

There are many more people, particularly older working adults in their 50s for example, who have work limiting conditions. And if we don't take action, and employers in particular don't take action, the risk is that they leave the labour market, fall into economic inactivity, never to come back again. 

So we've to take an action on both the stock and the floor. When it comes to the stock, it's true, there are a lot of older people who've been out of work for a while, you know, with life-limiting and work-limiting conditions, but the alarming trend, as you well know, is a big increase,

not just over recent years, but over the last decade, really starting in 2013, of the number of people who are out of work due to long-term sickness. 

And the biggest concern, as you point to, is this increase in inactivity-related mental ill health amongst young people, which is a bit more of a recent phenomenon. 

So, we know what the conditions are, the health conditions are that are driving this. Mental health, high blood pressure, muscular skeletal, are probably the top three conditions. So we know what they are. We know who these people are. We know that the biggest and most alarming trend is the rise in work-limiting ill health amongst young people. And yet the system, well, that's on the health side or on the employment support side, is not set up to deal with any of that. And in fact, you know, to be critical of what has happened over the course of last ten years, we've been trying to solve a largely health related problem because it's ill health that is driving economic inactivity largely. We've been trying to solve that through a benefit sanctions approach. So unsurprisingly, perhaps, when you point public policy ammunition at the wrong target, it gets precisely the wrong result. So you need quite a sort of sea change, both in the way that the benefit system works, the way that employment support works, and the contribution that healthcare makes to both. 

Matthew Taylor 14:59

Yeah, and one of the themes that comes up in the report is these kind of barriers between, for example, the health service and the Jobcentre Plus is a major issue here, and we have to bring services more effectively together. Now, the previous government kind of got this quite late on in its term. It created the Workwell programme, which of course is running through ICSs and we are supporting that programme to an extent as well. 

Is Workwell going in the right direction, but it just needs to be substantially scaled up, or is it missing some of the really key components that you think are needed to address this problem? 

Alan Milburn

Well I think it's a perfectly good programme and you're absolutely right that particularly when Mel Stride, the outgoing secretary of state for work and pensions was in role. I think he sort of got it, but the truth is came to the party too late at the of a sort of tired outgoing government. And I would say introduced a series of piecemeal initiatives, all of which have validity and they're all right. 

But what's needed here, Matthew, is a fundamental systems transformation because you've got to look at, this as an engine that has been set up to perform one rule when a quite different rule is now needed. Just to go through that very briefly, Jobcentre Plus focuses on the people who would like to be economically inactive and are actively seeking work, but it misses the big cohort, who outnumber those people six to one, the economically inactive. 

So you've got employment support focused on the wrong people, first of all. Secondly, the way that the benefit system works, arguably induces perverse incentives for people to be declared unfit for work. I'm not saying that people don't have severe disabilities because of course they do and there are some people who are unable to work and will probably be always unable to work. 

But the way that the system works at the moment is that if you're on the borderline between being able to work and fit for work, financially, it pays to be categorised as unfit to work because you get a higher level of benefit payments than if you're actively seeking employment, which on the first of it strikes me as pretty odd. So you've got that not really working. We know that the people who are categorised as unfit to work economically and actively, seven in ten of them, according at least to our data when we've actually spoken to people. And by the way, as far as I'm aware, there's been no corresponding survey nationally to actually ask people what they would like to do in their lives, which is an interesting indictment of public policy, I think. Seven in ten of them want to work. Eight in ten of them are in receipt of some form of state benefit or support, but only one in ten of them have any contact with employment support services. So we've got to fundamentally change that.

And then as you say, the health service and the broader health ecosystem operates largely in its own vertical silo when what is needed here is a horizontal-based approach so that you're better integrating health support and employment support. And so one of the recommendations that we make in the commission's report, for example, is that ICSs and ICBs should be under a duty to engage with the local, mayoral-driven economic activity strategy so that the health service is better contributing to helping get people back into work where they're able to do so.

And that probably means focusing on some of those primary conditions and some of those primary cohorts within the overall economically inactive group who could be in employment if they had the opportunity to do so. 

So some of these initiatives are great, but it's not just a scaling problem. that is required. It's how these align with an overall national strategy to raise the trend rate of employment growth and at the same time to reduce the trend rate of economic inactivity growth. 

And what is interesting is, you know, is the government has set itself some pretty stretching ambitions. One, to have the fastest growing economy in the G7, and secondly, to increase the employment rates. The risk, I think, is that in raising the employment rates, it has to have recourse to increase migration levels at a time when immigration has become more politically toxic. 

So one of the things that I've recommended to Liz Kendall and to Rachel Reeves, the DWP secretary and the Chancellor, is that they should think about a new corresponding target, which is how do you reduce the rate of economic inactivity in support of the increase in employment that you want to create. What is the requirement? It's a sort of interesting parallel to me about what needs to happen in health, where you don't need just a tweak to the current system. You need a fundamental systems transformation. And that's got to be a cross-government initiative.

Matthew Taylor

Well, absolutely. we'll come to that in a moment, Alan, if we can. One thing that strikes me is that this is the kind of problem that integrated care systems were created to address. And actually, in particular, a part of that architecture, is often under regarded, which is integrated care partnerships, which are the kind of through partnership bodies focused more broadly on population health and health outcomes. And those ICPs are then replicated at place level through place bodies.

This is a kind of dry topic, I know, but it is important. In terms of the kind of institutional architecture here, do you think this is something that needs to be pursued at place level, at system level? I mean, you've got a mayor in South Yorkshire deeply committed to improving health outcomes, for example, but you've also got a fantastic leader in Barnsley who's done great work here. How do we get the institutional architecture right? 

Alan Milburn

You’re absolutely right. And I know both Oliver Coppard, the mayor and Steve Houghton, leader. Earlier this week I was with Tom Hunt, the leader in Sheffield who you know and Kurt Joseph, the chief executive there and Gavin from the ICB. And we were talking about exactly these issues. 

So what we need to do is we need to replicate this horizontal architecture nationally that I've just described. And this is where Keir Starmer's sort of view about mission-based government is helpful. Because what effectively he's trying to do is subvert the vertical silos that exist, for example between health and employment support at a national level by introducing more of a horizontal axis for public policy. 

We've got to replicate that at a local level and a systems level and you're absolutely right this is where ICSs and ICBs and ICPs should come into their own because they provide the convening authority in the relationship building. You and I both know this, that a lot of this, you know, you can get the right financial incentives, you can get the right KPIs, you can get the right sort of policy programmes, but in the end, when you're trying to cross organisational boundaries, it fundamentally relies upon relationships being established and maintained around common core objectives. Of course, you can do some of that at national level, but where the rubber hits the road is at the local level.

And so this is where, me, we've got to rethink in the NHS context what the NHS is really about, because there's a whole service provision thing that we've got to get right, reducing waiting lists, reinventing primary care, dealing with the mental health crisis in the country, all of those sort of pure, if you like, service provider issues and priorities that have got to be addressed. 

But the NHS has three functions, not one. It’s a service provider. It's also the biggest procurer of goods and services in the country and it would be good to think that we could find a way, particularly at a local level, of utilising its purchasing power in pursuit of social value ends in local communities. And then finally, of course, it's the biggest employer in the country and often in disadvantaged communities in particular, like Barnsley, as an example, it's by far the biggest employer.

So one of the things that I think we've got to think about, and this is less an ICB, ICS, ICP issue, but this is a trust issue. How do trusts as big employers in local areas contribute to a reduction of levels of economic activity in their local communities? And part of the way of doing that is about thinking of new pathways into employment, apprenticeship models, flexible working, all of those types of things.

And this is all about in the end changing the mindset in the NHS to think of itself as part of being an engine of economic growth and not just a user of the proceeds of economic growth. Obviously, it is a user of the proceeds of economic growth because it's 44 per cent of all public expenditure nowadays. But unless we're contributing to economic growth as the biggest employer in the country, some of these problems are not going to be dealt with in the way they should.

Matthew Taylor

Yeah, absolutely. And we've done a lot of work at the Confed on this kind of relationship between health and the economy, also health and devolution. So it's a big area for us. Let's take kind of two or three elements of this, the specific contribution the health service can make. So let's start with the first of your kind of the three legs of your stool, which is the service. Coventry Warwickshire got some attention a while ago because as part of its health inequality strategy, it prioritised on the waiting list, family wage earners on the basis that if these folks didn't get their treatment it wouldn't just be problem for them but it would potentially mean the whole family fell into poverty. 

So do you think that part of this, and you can imagine it might be controversial, is to say well actually we do need to look at waiting lists in a creative way and we need to recognise that the economic upside of keeping people in work or getting people back into work means that it is legitimate to prioritise potential employees or to think about this work agenda in terms of the way in which we address the waiting list? 

Alan Milburn

Yes, I do. I think you're absolutely right. And of course, it's controversial and it's a resource allocation choice and it's a priority choice that you're making. 

I would go even further than that and say, look, in every area of the country, and again, this is where ICSs can be particularly effective alongside providers, is we ought to be doing the basics and data analytics capabilities that we have nowadays allows us to do this, of assessing where mobility lies, predicting where it will rise in sort of geographical areas, assessing whether our local services are properly aligned to that demand side, and if they're not, adjusting them accordingly. 

I'll give you one very, very simple example. Jim Mackey, when he was in chief executive for the Northumbria Trust, he's obviously moved to Newcastle now; they set up their health inequalities board, they had people looking at prevalence of cancer rates in very localised neighbourhood areas, looking then at who was presenting, at what stage of cancer they were presenting, who was showing up for screening and diagnostic services, and of course, realising pretty quickly once they analysed their own waiting lists that there was quite a delta between the supply of the services and where those demands lay.

And then they reconfigured their services in order to be able to deal, in this case, with quite a profound health inequalities challenge. And so I think that's what we ought to be looking to ICSs across the country to be doing with a particular focus on this question of maintaining people in employment and getting them back into employment where that's possible. 

Matthew Taylor

Absolutely. And then let's turn to the second leg of the stool, which is the NHS as a kind of major investor in buildings and goods and services. I mean, I was having a conversation with NHSE colleagues the other day about capital and clearly, given the straitened circumstances that our service finds itself in at £12 billion maintenance backlog, we're not going to have the kind of capital we need, but we've been looking at various solutions to that, new forms of PFI or whatever. 

But one thing it seems to be as part of this is we need a more entrepreneurial approach. Part of that is that we don't kind of recognise the externalities quite often. I'll give you a couple of examples. There's an ICS in the north where the ICS has been offered a closed department store by a local authority free of charge, which is used for community diagnostic centre, all sorts of things as kind health on the high street approach. But the capital rules get in the way of being able to do that. 

Another example is a new town in the south east where there's a new hospital and we can look at it as an NHS project. But actually, if the new hospital isn't built, the old hospital can't be closed. And actually, it's only by closing the old hospital you can turn it into new housing. And that new housing is needed to regenerate the town centre. 

Our systems don't enable us to spot those externalities, do they? 

Matthew Taylor

That’s entirely right. This is where actually, I think, as we both know, if you've been in public policy in any way, shape or form, you've got to be an optimist. And it's easy to pessimistic. But this is where I sort of really quite like the mission-driven approach, because what it does is it begs questions across a horizontal rather than just taking a vertical view of things. But look, I'm absolutely with you. I'll give you another I mean, very pertinent example to the work of the commission in Barnsley, you know, because you've got to a far-sighted council with brilliant political leadership and, by the way, continuity in leadership over a very long period of time, which has really helped. 

So they built a new shopping centre and they designed the shopping centre to house NHS Diagnostic Centre. Why? For perfectly obvious reasons. It was more convenient for people so they could go and get their scan whilst they were doing the shopping, but it also increased footfall for the new shopping centre. Absolutely brilliant.

They've also got a proposal in Barnsley from the council effectively to decant outpatients altogether out of Barnsley Hospital by making a provision available once again in the town centre. But that requires exactly that lateral permission from Treasury to enable that to happen. And what I'm hopeful about, I don't know what is going to happen clearly, but I'm hopeful about that with a new Chancellor of the Exchequer and with the constraints that you obviously have on public sector capital, they have the political courage to look again at the fiscal rules, particularly around these capital constraints. 

And that applies, by the way, both to making possible new PPP models and just doing some of the sensible things that you've just highlighted. 

Matthew Taylor

And then let's finally turn to the third leg of this tool, which is as an employer and actually by wonderful kind of coincidence, Barnsley is also home to a really brilliant initiative, the Proud to Care hub, which does fantastic work in particularly targeting people who would find it hard to get into work and opening up apprenticeships and routes into health and care work. I was reading about it the other day. It's a wonderful example. We need Proud to Care hub approaches everywhere, don't we? 

Alan Milburn

Exactly. I mean, one of the wonderful things about the often, you've written these type of reports, I've countless numbers of these types of reports over the years and the risk always is that you write the report and then there's somewhat of a time lag if you're lucky before anything happens. And the thing in Barnsley again, I think mainly because it's got great political leadership, fantastic relationships between public sector bodies and with private sector employers.

I was able, when we launched the report on July the 23rd with Liz Kendall there in attendance, I was able to announce that we managed to get the top 20 employers in Barnsley giving a cast iron commitment that they would take on 200 people who are currently economically inactive back into jobs. Obviously amongst those, of course, is the local NHS. And that's what we need to be doing everywhere. And if we can't do that, as the biggest employer in the country, frankly, why should other private sector employers even bother to think about it?

So we've got a primary responsibility as large social value, social purpose driven anchor institutions to do precisely that. And it's not just a question, as you know, of giving a commitment, I'm going to take on 100 people or recruit 100 apprentices or whatever it is. It's about making sure that those opportunities come from the communities that are most disadvantaged, who are further from the labour market. 

And then it is about adjusting your employment practices, both your recruitment and your retention practices, to make sure that those people have a successful career path. You know, nobody's pretending it's straightforward. It isn't. We shouldn't go into this saying to employers, whether that is the NHS or anywhere else, that you don't have to invest behind it because you clearly do.

But I think there are enough examples of really good practice on the part of the National Health Service to say we need to make this a scale effort across the whole of the system and not just parts of it. 

Matthew Taylor

Well, Alan, this has been fantastic and I would strongly recommend people to read the Pathways to Work report. It's brilliant. 

But I'm just going to take advantage of having you on Health and Line to ask you just a couple of questions about the broader strategy for the NHS because I know that you're playing kind of advisory role. I'm just going to ask about two huge tensions, or as I see them tensions, and I'm really interested in your perspective on both. 

So the first is, if you look at the government's overall economic, and you might say to a certain extent political, strategy, it is to say, look, things are going to be tough, tight, austere even, in the next kind of couple of years. But if we can get economic growth going, then there's the potential for a bonus from that which enables us to invest more in in public services and we get into a benign cycle.

The problem is the transformation in the health service. And you've talked about transformation and the international evidence underlines this requires you to double run. You talked about Jim Mackie earlier. I remember going to see Jim in Newcastle and Jim said to me, you know, if I could take 5 per cent of my budget to primary, would be an extra 20 per cent for primary, which would be utterly transformative. But the reality is he can't take 5 per cent out of his budget because he's fully stretched as it is. 

So this is the first conundrum is the model of change for the health service actually is if you want to bend that medium-term demand curve we have to invest upfront in order to be able to transform. But that isn't really how the economics of this works. 

What's your perspective on that conundrum? 

Alan Milburn

No, you're right. It's a fundamental challenge and the ambitions that the government has set itself are pretty big. It's boss at one in the same time trying to fix today's problems, which are a lot about access, whether that's to a GP into primary care, into mental health services or into the acute sector through Jim's elective recovery plan. And at the same time, it's seeking to transform the system so that it's much more upstream based, preventative and predictive. And that's hard.

It's hard to do these two things anyway, and it's doubly challenging to do it at a time of fiscal restraint, which is where we are. Obviously, there's two parts, as you well know, to the fiscal restraint solution, so to speak.

There is the immediate, there's a budget up and coming, followed by spending review. And then one hopes that the ability to grow the economy does provide the sort of fluidity to increase spending in the right way where it needs to be increased spending over the medium term. 

So I think the first thing that you've got to do with this is you've got to take a long-term view about it. This is not amenable to some sort of short-term fix. And I think the government has got a really difficult political job to do to manage expectations because on the face of it, here you are, you've got 170 plus seat majority and the public are probably looking and thinking with Keir Starmer and saying, just get on with it, because we've given you the mandate, go ahead and do it. And it's just not like that, as we both know. 

This is where I think the work around the long-term plan for the future of the care system is going to be critically important in terms of setting out what the long-term roadmap looks like in over a ten-year period, not over a two, three, or even a five-year time horizon is to turn this to an obvious answer. 

The second thing, and this is a much more difficult message for people to hear, is, let's not pretend that there aren't productivity and inefficiency challenges that we have fully addressed because we haven't. And we are going to have to at all levels within the system, but particularly within, I think, the acute sector, we are going to have to look very hard at what is needed to drive up levels of productivity, drive down levels of inefficiency because there are still gains to be made. 

Those things need to be happening. And our first question should always be, how can we get the maximum amount out of every pound that we're currently putting in before we're asking for yet more pounds? know, it is 44 per cent of public expenditure after all at rising. 

And there comes a point where sort of enough is enough. So I think there's some organisational questions that help drive towards those productivity answers. So we know that the patient pathway is deeply fractured, organisationally. That in my view at least has got to change. And over the medium term, we've got to be thinking about organisational structures and financial flaws that are much more focused on keeping people healthy and out of hospital and recognise and reward that activity. 

And so I think we're always thinking a little bit too staccato about, we've got a cake, it's sliced in a particular way, we need to reduce the level for hospitals, we need to increase levels as institutions for primary care.

There are interesting models around the country where hospitals and community services and primary care services have become housed under one umbrella rather than under several. So there's a real question about whether that is a, is that a model that we want to pursue in a few geographical areas or do we want to pursue more generally? 

So look, I think the final part of the equation is if you were in any other organisation or any system in any sector of the economy in any country of the world, you would be asking yourself a fundamental question about how technology is going to both drive change and bring economic benefit as well as outcome benefit. And I think that we've really got to look hard at what the technology bonus can be from better investment here that doesn't have to come purely from the public purse. 

And so the work that you've done in the Confed is really important, around where are the sons and daughters of the peer. I did a lot of PFI as you know, some things we got right, some things that we got wrong. No one is arguing that you'd need to reinvent PFI, but it's a bit of a conundrum in the world that we've got this huge demand side from the public services for increased investment, particularly around capitalisation and digitalisation. 

And we've got huge liquidity in the private markets and huge expertise and know-how in the private markets and somehow we can't put these two things together, we have to find an answer to that. 

Matthew Taylor

I completely agree. I think that impact investment type models around technology have got a lot of potential. If a technology company can demonstrate that they can really make an impact, they should be rewarded for that. They can put the money out front. 

Alan Milburn

And by the way exactly the same applies to life sciences. So, you know you can barely get into a conversation with a pharmaceutical company to be a global one who will say, well, look, the UK is becoming increasingly a difficult place to invest because the returns are so poor. Well, actually, comparatively, they're probably right. But we haven't set up the system in such a way that there is a benefit reward system in place. 

So, when I was doing the health secretary job, to be honest, I was pretty relaxed about the drugs bill the size of it, providing it delivered really good outcomes. And that's the providing. And we've got to ask ourselves a question about whether the way that the reward system is currently constructed, in particular for pharma products, is giving that outcomes-based rewards mechanism. I think it probably isn't, is it? 

Matthew Taylor

So I see here, just to kind of finish, I was thinking about this the other day, pondering on the question I asked you about how is it you achieve transformational change in a situation of constrained resources. 

And I was also then reflecting on the lessons of the ‘97 government. And this is an incredibly simplistic account of what happened there. But arguably then, the early years were not used as effectively as they could have been. And then arguably, money went in a little bit ahead of reform, rather than money going in on the basis of understanding exactly where we wanted to go. 

And from that, can, well, I intuit, and I don't know to define this, but is a model that says, okay, we've got to manage public expectations. We do need to demonstrate some progress in key access areas. We then need a really clear vision for the future of the health service, one that is actually really based in what patients, what people want. Not an organisational vision, but a people-focused vision. And then what we can do with ICSs is to test out radically different ways of doing things.

We can't do it everywhere. We can't afford to do it everywhere. But you know, I told you I was in East Birmingham today and what they're doing, they've brought primary community, social care, community mental health together in a single organisation, incredibly effective relationships, also working really well with the acute sector. 

Let's look at those ICSs that seem to have the potential to do things radically differently and give them the support to do that so that when there is a bit more money, we've actually tested the concepts a bit and we kind of have a stronger idea of what is going to work.

Now the political perils of that, the patience it will require from the public, know, big, big challenges. But that does seem to me to be a reasonably coherent change model. What would you think? 

Alan Milburn

Well, I think your starting point is exactly the right one. The truth is, if you go back to ‘97, we basically lost two years, right? And we had more permission, I think, to do radical change than we grasped. But that's true in health and it's true in other areas of public policy. 

We wasted a couple of years and as we all know, change, particularly transformative change, always takes longer than you think. It's just harder, you and you're having to change behaviours as well as structures and where money flows and heaven knows what. 

So I think that gives you a clue as to what needs to be done, which is that you need to the ground running. You need to provide clarity for the system. You've got to set out a clear destination and direction of travel.

You've got to define the steps along the way and the roadmap, if you like, so that people, both the public, but importantly, people within the system know what they're doing, what they're supposed to be contributing and when they're supposed to be making that contribution. And right now that is conspicuously lacking. And so, so I think this is where the sort of ten-year plan thing is really, really very important.

And I think you've also got to be acutely aware if you are, and I'm speaking now from personal experience rather than what Wes Streeting has to achieve as the health secretary, I would say that my learning from being a leader within the system is there are only three gifts that in the end you can give. 

You can give the gift of clarity, ie this is where we're heading, this is the North Star, this is the roadmap along the way, these are the steps that we need to take. 

You can give the gift of permission to your point about how do you enlist people, to be part of the journey, to contribute to it, to provide the enabling framework such that they want to, and particularly to allow better performers to move faster than the slower performers, consistent, of course, with equity considerations. So how do you give the gift of permission? 

And the final gift that you've got to give is the gift of hope. And right now, I would say the biggest deficit in the National Health Service, certainly the last few years, that people are feeling pretty pessimistic rather than optimistic. And if that's the case, if that mindset remains in place, then it's almost impossible to facilitate change. 

What you have to do is to be able to set out not just a vision, but you have to be able to set out the concrete steps and identify, as you rightly say, those institutions and organisations that are ready to go and give them the freedom and the ability to do so. 

One of the reasons as you know, that I liked the whole foundation trust and autonomy model was precisely because it was saying to the higher performing organisations, okay guys, go for it. And you've got some freedom to do so, including some fiscal freedom. So that's, think, something that some of the lessons in the past, we need to think about their application to the future. 

Matthew Taylor

Alan, that’s brilliant. As the organisation that represents ICSs I would say don't underestimate the appetite to do things very differently. I see it as I go around the country and of ICS is at different points of the evolution, different points on the journey, but everything from what I saw in East Birmingham today to Cambridge and Peterborough's commitment to year on year to increase the proportion of money going into primary community settings. There is a real desire to do things differently. 

Alan Milburn, thank you so much for joining us and Health on the Line.