City united

EVER since the government in Westminster stepped up the devolution of powers to Scotland, Wales and Northern Ireland, some in England have grown envious of the freedoms enjoyed by their neighbours. David Cameron’s government has been juggling these demands for autonomy with another difficult task: drastically trimming public spending, hoping to close by 2020 a spending deficit worth 10% of GDP when it entered office in 2010.

Next month will begin an experiment that aims to deal with both of these difficulties. In 2011, ten adjoining boroughs came together to form the Greater Manchester Combined Authority in order to help co-ordinate the government's devolution plans. As part of that process, on April 1st, a newly established body that brings together all the stakeholders in that sector will take control of the city's £6 billion ($8.6 billion) health and social-care budget. The hope is that a locally managed health-care system will improve services while saving money.

Britain is the most centralised country in Europe, with Westminster raising more than 90% of taxes and carrying out about 75% of spending. No organisation better epitomises this than the National Health Service (NHS) in England, run from London and funded by general taxation. The NHS also exemplifies the financial straits the country is in. Although the government has promised to protect its £116 billion annual budget, rising demand from an ageing public means it is having to squeeze more out of its doctors, who this year have gone on strike over pay and conditions.

The Manchester model will integrate health care with social care. Whereas the former is provided by hospitals and primary-care organisations (such as doctors and dentists), run centrally by the NHS and free at the point of use, social care (which includes old folks’ homes and social workers) is run and paid for by local government, which funds a heavily rationed service partly through user charges.

Both systems are in crisis across England. The NHS is halfway through the most austere decade in its history. Public spending on health as a proportion of GDP is projected to fall to 6.7% by 2020-21, pushing Britain into the bottom half of the OECD club of rich countries. Waiting times are rising and performance targets are being missed. It is “a system built for acute illness, dealing with an epidemic of chronic conditions,” says Phillip Blond of ResPublica, a think-tank.

Those with chronic problems such as heart disease account for 70% of NHS spending and 70% of NHS bed-days. For many, social care would be better. Yet a squeeze on social-care budgets means that old people’s homes are closing, pushing the elderly into pricier hospital beds. Local-authority spending on social care for the elderly has fallen by 17% in real terms since 2009-10, even as the population has aged. If nothing changes, within five years care homes will lose 37,000 beds—one in ten of the total—according to ResPublica. The number of hospital “bed blockers” is likely to rise. In the past five years the NHS has spent £2 billion caring for patients in hospital who are medically fit to leave.

Devolution or delegation?

Greater Manchester’s 2.7m people make good guinea pigs for the experiment in combining health and social care. Life expectancy is below average, unemployment above it. “The current system isn’t working,” admits Ian Williamson, the city’s head of health devolution.

Until now, most big decisions about NHS spending in Manchester have been taken in London. Under the devolved system the leaders of the ten boroughs, along with the heads of the city’s hospitals and primary-care organisations, will co-ordinate planning and funding through a “strategic partnership board”. In the past, they rarely interacted officially.

One of the boroughs, Stockport, has an annual budget of about £200m, of which £85m is for social care, says the council’s leader, Sue Derbyshire. It will now pool that with more than £100m from Stockport’s primary-care budget, she says, with the aim to treat more old people at home, which is cheaper than hospital. The other boroughs will take similar measures. Meanwhile, the number of hospitals offering some specialist services, such as emergency surgery, will decrease, reducing duplication. “The current system is very fragmented,” says Ms Derbyshire.

Richard Humphries of the King’s Fund, a health think-tank, believes things are moving in the right direction. But he points to several reports that say integration does not reduce costs, though it can improve care. Furthermore, “What we are seeing is more delegation than devolution,” he says. In Manchester, final accountability lies with Mr Williamson, an employee of the NHS. If Manchester’s plans went against national priorities, it would soon be reined in, believes Mr Humphries. Ms Derbyshire of Stockport council agrees, but adds that “just because it is delegation does not mean that it is insignificant”.

The devolution of health may be a model for other services. On March 16th the government announced that Manchester would gain control of parts of its criminal justice system. Decisions on offender management and work with wayward youths will be made locally. Like hospitals, prisons are clogged up by those who might be treated better and more cheaply in the community. Reformers believe that co-ordination in areas such as drugs and mental-health programmes could keep more out of prison, just as joined-up health and social care keeps people out of hospital.

Each year Manchester spends £22 billion of public funds. It eventually wants control of it all. First it must prove that it can improve people’s health and save money. The revolution has only just begun.

Correction: The article has been amended on March 25th to reflect the fact that it is not the Greater Manchester Combined Authority (GMCA) that will take control of the £6 billion budget, but a new body, created under devolution, that includes all the stakeholders in the health and social-care sectors, including the GMCA.