18 August 2006
Spending cuts of £350m, to budgets such as public health and training, will be used to wipe out this year's forecast NHS overspend of £333m, figures published by the Department of Health reveal.
The cuts aim to create a 'contingency fund' through a 6.4% saving to £5.5bn of resources previously managed by the DoH. This has now been devolved to strategic health authorities this year. Without the fund the NHS will improve on last year's financial performance by just £62m. But a DoH spokesman told Public Finance that SHAs had advised the department that they could make the savings and deliver the same standard of service as the centre for less money.
Professor Rod Griffiths, president of the Faculty of Public Health at the Royal College of Physicians, told that PF the spending cuts were 'short-sighted and are not good management. They are cancelling things they do not understand.' He added that clinicians and professional bodies had not been consulted.
News of the planned cuts come a month after a critical report from the chief medical officer Sir Liam Donaldson warned that life expectancy would drop if public health funds continued to be 'raided' to cover NHS deficits.
The newly devolved budget is also due to cover spending on GP salary bonuses, NHS Direct, walk-in centres and GP out-of-hours services. Nigel Edwards, director of policy at the NHS Confederation, said that in the past the DoH had underspent quite substantially on the budget and so it was possible that SHAs would be able to make the required efficiency savings.
However, he added that there was a risk the plan would send out the wrong message on public health and training in particular. 'These could look like soft targets to be raided, not just for the efficiency savings but for others. There's a hazard that people will make the efficiency saving and try and make an under-spend as well, and a number of staff groups are concerned about that,' he said.
Disregarding the £350m contingency fund, SHAs are forecast to make a surplus of £415m. Total SHA underspends of £765m will then be used to cancel out £748m of hospital and primary care trust overspends and produce a small net surplus of £18m, a DoH financial forecast explained last week.
But without the new £350m, the NHS overspend would be a net £333m – just £62m less than the underlying overspend of £395m in the last financial year, once the impact of the much-criticised Resource Accounting and Budgeting deductions of £117m are taken into account.
PFaug2006
