The latest productivity data reveals billions of pounds is being squandered every year with eye-watering amounts thrown away on extra staff that were not needed or poured into excessive pay rises for doctors. Critics said the revelations are a damning indictment of Labour's stewardship of the Health Service during its 13 years in power. And the situation is getting worse according to the figures from the Office for National Statistics which show the decline in productivity in 2008 was more than double the level the year before.
NHS spending rose soared between 2001, when it was £43billion, and 2008, when it was almost £100billion - fulfilling Tony Blair's pledge that the amount spent should be on a par with other western European countries.
Much of this was funded by a 1p increase in National Insurance, but the ONS figures show that although many more services were provided for this money, the taxpayer did not get quite as much as it paid for.
Every year between 2001 and 2008, productivity fell by an average of 0.4 per cent a year - adding up to a 3 per cent fall in productivity by 2008.
It means that, by 2008, taxpayers were getting 3 per cent less in terms of operations, tests and appointments than they should have done if all the money had been spent properly. This indicates that around £3billion is effectively now being wasted every year.
In contrast, before the extra money was pumped in, between 1995 and 2001, productivity remained broadly stable, with the amount going in never exceeding the outputs - indicating that the Health Service was spending its limited resources much more wisely.
Matthew Elliott, chief executive of the TaxPayers' Alliance, said: 'This fall in efficiency has cost taxpayers a fortune, and puts the lie to the Government’s boasts about public spending. By focusing on spending more rather than making sure the budget was spent well, they have squandered billions of pounds. The NHS must now improve efficiency and give taxpayers a better deal, which will save money and improve patient care.'
There are worrying signs the situation is getting worse.
In 2008, productivity declined by 0.7 per cent compared to the previous year. This is more than double the 2007 fall of 0.3 per cent.
Three years ago, MPs lambasted the 'reckless and uncontrolled' recruitment of too many doctors and nurses. The health select committee said an 'appalling' lack of planning by the Government meant that trusts recruited far more staff than they could afford to pay. They took on record numbers of doctors and nurses between 2000 and 2004, when money was readily available - only for thousands to be laid off after 2005 as deficits began to bite.
Money was thrown at new staff but there was little effort to ensure they were being more productive. In many cases, it meant that staff were taken on but simply ended up doing the same amount of work as was taking place before.
The NHS Plan, published in 2000, said there was a need for 20,000 extra nurses by 2004. Instead, almost 68,000 were employed.
GP numbers swelled by more than 4,000 - double the number planned.
New pay contracts for NHS staff also cost much more than expected.
For example, in 2004/05, the GP contract cost £250million more, consultants £90million, while the Agenda for Change package, which covers nurses and other NHS staff, overspent by £220million.
The new contract for GPs, for example, has seen their pay rise by 47 per cent to an average of £106,000. But at the same time, the amount of work they are actually doing has fallen:by some seven hours a week. And more than 90 per cent of them have opted out of responsibility for patients out of hours - leaving it up to primary care trusts to bring in expensive cover which is often substandard.
But the Government points to improvements in waiting times and survival rates, which it says would not have happened without vast increases in resources.
Health minister Mike O'Brien said: 'In 1997, the NHS was severely under staffed and under funded.
‘We have had to address this under staffing and that has affected productivity. We can now deliver the shortest waiting times in the history of the NHS and a major reduction in death rates and health care associated infections, whilst improving quality and seeing and treating more patients than ever. Most economists and HM Treasury accept it is difficult to grow capacity and productivity at the same time, yet the NHS maintained virtually flat productivity (-0.3 per cent per annum) over the longest period of sustained growth in its history.'
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