Health and the economy: Why devolved health is relevant in this UK General Election

The IWA’s co-director Joe Rossiter considers the role of health and social care in the upcoming General Election.


Now, health and social care is one of the key areas where policy is devolved to Wales. So, why is this an issue featuring on a general election explainer? I hear you ask. Well… for all that health is a devolved issue, it is still an issue, which, correctly in my view, is discussed in a Welsh context at this UK-wide election.

Firstly, it is important to establish that whilst health is a devolved issue, it is of course part of a system which is interlinked with services across the UK. Secondly, and equally importantly, spending on NHS services in Wales is reflective of the UK Government spending on services in England. Such spending acts to dictate uplifts in Welsh Government’s annual budget through the Barnett Formula. Whilst Wales can reallocate other parts of its budget towards health and social care, getting a slice of equivalent spending on health in England is vital to protect and enhance services. UK decisions on health, even though devolved, are therefore still relevant. Whether the next UK Government decides to increase investment in the NHS, or not, will have a huge impact on Wales’ ability to deliver services which are fit for the present, let alone the future.

Health and social care are devolved matters and they take up a significant part of the money that Welsh Government has to spend. Health takes a huge slice of the Welsh Government’s budgetary pie, representing around 50 percent of Welsh Government’s budget year on year. While health and social care are devolved matters, though, Welsh Government’s actions in this area are partly determined by factors outside of their control, namely the size of the block grant from UK Government. Our Fiscal Firepower report highlighted how, much of Welsh Government’s budget is preallocated towards delivering statutory services, healthcare being the main one. This leaves little of their budget free to invest in the large scale projects which could improve outcomes over the longer term. Discussions around future spending at a UK Government level are therefore pertinent to Wales at this general election, mainly through indicating if more investment is likely to come to Wales through indicative spending on English health and social care services.

The future of health across the UK – similar challenges ahead?

Whilst the overall picture on health is similar across the UK, with services failing to deliver for all too many, healthcare providers at capacity, a workforce under significant strain, investment badly required and uncertainty over the future of the system, Wales faces distinct health challenges to the rest of the UK. 

Wales’ population is older and faces more complex health needs than that of the average UK population. Wales also has higher rates of diabetes and obesity than the rest of the UK. According to Nesta Cymru, a third of adults in Wales are now living with obesity. Mental health across Wales has also been worsening since the Covid-19 pandemic, with these conditions unequally felt across Wales. Our healthcare challenges could therefore be said to be distinctly acute. Wales could be acting as a canary in the coalmine for the whole of the UK’s health system.

The UK faces significant challenges in order to uphold healthcare standards over the decades ahead, with an increasingly ageing population likely to lead to a significant rise in the costs of providing healthcare across people’s lifespan. Such demographic shifts are disproportionately felt here in Wales, with our population being older than England’s.

The Future Generations Commissioner’s Office’s Cymru Can strategy rightly takes health as a key mission for the next seven years. The strategy clearly states the long-term challenge: progress on creating a healthier Wales is too slow, with health and social care set to become increasingly unaffordable, and inequalities unacceptably high.

Welsh Government must be able to use its budget flexibly in order to progressively move its healthcare budget towards preventative interventions.

The health and social care sector is also a major employer in Wales. Over 95,000 people are employed directly by the NHS in Wales, and around 85,000 work in the social care sector. Yet, workforce shortages in the health and social care sector in Wales remain a challenge to increasing NHS capacity, improving performance and tackling backlogs. This is felt considerably by local governments in Wales, who are struggling to recruit and retain social care staff. Such challenges take place against a backdrop of health worker strikes in recent years in Wales, over pay and working conditions. Workers’ wellbeing, pay and workplace conditions are long-term issues. Wales must therefore overcome the combined challenges of increasing NHS capacity, securing a fair pay packet for every worker and ensuring that the sector is attractive for the workforce of the future. 

It’s important to note that waiting lists for treatment in the NHS, a key indicator for healthcare performance, are substantially higher in Wales than the rest of the UK. Indeed, almost 600,000 people in Wales are on treatment waiting lists, the highest figure recorded, and little progress has been seen in Welsh Government’s efforts to hit their targets. Whilst it is difficult to compare stats across different health systems, it’s clear that the UK-wide debate at this election over the performance of health and social care is relevant to the challenges Wales faces.

A joined up approach between UK and Welsh Governments is required. Welsh Government must be able to use its budget flexibly in order to progressively move its healthcare budget towards preventative interventions. For example, granting Welsh Government more powers to borrow money in order to invest in improving health infrastructure (as advocated for in our Fiscal Firepower report).

Health as an economic issue

It’s important to consider health as part of a wider determinant and indication of Wales’ economic performance as well. Wales has a stubbornly high level of economic inactivity, which is continuing to rise, to historically high levels, and, notably recently reached the highest level of any UK nation. So much potential and opportunity, for individuals, organisations and the nation itself is lost due to many being unable to access the care they need and locked out of employment. At a UK level, research by the IPPR highlights areas with high levels of sickness associated with areas of low productivity, high poverty and persistent unemployment. Investing in better health outcomes thus results in economic benefits.

Our health system also displays starkly wider inequalities across the nation. Health inequalities have persisted without improvement since 2011, with healthy life expectancy diverging between our least and most prosperous areas. Tackling socio-economic inequalities across Wales, and tackling inequalities in health outcomes are therefore two sides of the same coin. 

Long-term determinants and inhibitors of better health and wellbeing are therefore, to a point, socio-economic. What’s required is long-term investment, not only in frontline health services, but in lifting people out of poverty, providing economic security, access to safe, secure and affordable housing, access to recreational activity, creating healthy local food environments and access to community-based services which prevent the escalation of illness. A carrot and stick approach (as called for by the Bevan Foundation) which helps those in need of treatment promptly, but also prevents illness in the first place, is urgently required. The solutions are long-term and require political will alongside investment. 

Parties’ perspectives

The two largest parties have historically both played a blame game when it comes to Wales’ poorer health outcomes. Indeed, this has become something of a two-way game of political football, one in which nobody wins, and certainly not those waiting for vital health interventions.

Whilst health policy interventions speak to England-only services, the amount of money committed by parties provides some indication of what the future may hold for Wales’ services.

Over the past 14 years, successive Welsh Labour governments have blamed a UK Conservative Government for failing to adequately spend on health services, thus inhibiting Welsh Government from doing the same in Wales.

The Conservatives, at both UK and Welsh level, have also used the poor performance of the NHS in Wales in comparison to the rest of the UK as a criticism of the government at devolved level. Indeed, this has been part of the campaign during this election. 

Whilst health policy interventions speak to England-only services, the amount of money committed by parties provides some indication of what the future may hold for Wales’ services. The Institute for Fiscal Studies (IFS) has, in its analysis of both the UK Labour and the Conservative manifestos, highlighted how both’s spending commitments, alongside a lack of tax rises, would likely lead to significant challenges on meeting the increasing financial needs of public services, at a time when they are already underperforming across the UK. Economic growth is the suggested solution to these challenges, yet this would take a reasonable period to deliver (and is not without its challenges and uncertainty itself). Additionally, with Wales receiving more than per-head spend on England on public services, the likelihood that a new funding formula from the UK (as put forward by Plaid Cymru) would provide significantly more investment is queried by the IFS, who suggest that a reform to the Barnett Formula could result in a loss of funding. 

As such, whatever UK government comes into force, there appear to be challenging times ahead for health and social care services in Wales.

You can read the manifestos of the Conservatives, Labour, Plaid Cymru, the Liberal Democrats, the Green Party and Reform UK via the links.

The IWA stance

The IWA firmly believes that health and social care sit at the heart of a sustainable and prosperous future for the nation. One where living standards are secured for all, and we live up to our mission to improve well-being for all. Whilst health itself is not one of the focus areas of our strategy, its ties to the state of Wales economy implicitly make it an area of consistent interest in our work to secure the best outcomes for everyone in Wales. As such, we do not have a list of policies to recommend. Instead, this article will seek to wrestle with some of the key challenges ahead for health and social care in Wales, and why the debates at this UK general election are pertinent for us in Wales.

For us, what this means is a holistic approach to tackling poor health outcomes, continuing the journey towards a more preventative health system. Preventative action, like creating a national food strategy and continuing to invest in active travel options are but two examples of interventions which have to be seen as part of a holistic system aiming to ensure a healthy, thriving population less reliant on frontline services. Keeping people out of the health system is the best way to ease capacity over the medium-to-long term. The Future Generations Act and its intentions to extend decision-making enable this shift to take place. Whilst progress is slow, committing to a preventative course is the best way forward. 

Another aspect which could be looked at in a Welsh context is the case of hypothecated Welsh taxation, meaning taxation ring-fenced for a specific purpose. The case for a social care levy has been made on the welsh agenda by Gerald Holtham and Tegid Roberts way back in 2017. The challenge facing social care remains, with little solution forthcoming. Another related conversation we platformed was with Mairi Spowage, discussing the impact of the  on the welfare and tax reforms in Scotland.

So, this election period, it is important that voters in Wales consider what a UK Government could do to support Welsh Government to tackle long-term challenges to health outcomes in Wales. Supporting public service delivery at a UK Government level to an adequate standard would ensure that Welsh Government can do likewise.

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Joe Rossiter is the IWA's Co-Director, responsible for the organisation's policy and external affairs.

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