24 November 2006
The chief executive of the NHS has admitted that the Department of Health did not keep a close enough eye on hospital spending as they rushed to meet targets by 'overshooting' required staffing levels.
Giving evidence to the Commons' health select committee on November 21, David Nicholson and Health Secretary Patricia Hewitt implied there was a link between last year's £540m NHS deficit and staffing increases.
Hewitt said that by 2005, the NHS was already employing 3,000 more hospital doctors than the 2000 NHS Plan had envisaged by 2007. That meant funding increases were eaten up by higher than expected wage costs.
Asked why the DoH had not intervened to stop this, Nicholson said that opaque accountancy practices had disguised the problem. 'The mechanism for monitoring the plan was between financial and key targets.
'But the financial bottom line was the one people focused on, which was the cause of many of our ills, because although a hospital might have balanced its position, it was doing so by using non-recurring money.
'If we had been more accurately looking at the financial position we would have understood the position earlier and spotted that, as indeed the [hospital's own] board should be doing.'
Hewitt said: 'The NHS Plan worked out how many staff were needed to meet targets [but] the NHS achieved those [staffing levels] ahead of schedule and some trusts significantly overshot the [level].'
The comments came as NHS leaders prepared to meet with the Office of Fair Trading at a private conference in London to discuss whether the combination of NHS budgetary pressures and marketisation policies required an OFT role to ensure fair competition.
The OFT would not discuss the options being considered, but Sue Slipman, director of the Foundation Trust Network, told Public Finance that proposals – to be thrashed out over the next three months – included the introduction of an appeals body to investigate complaints around monopolies and conflicts of interest.
Monopolies could be created if a foundation trust merger limited patient and commissioner choice in a particular area, she said. Practice-based commissioning could also create conflicts of interest if GPs unjustifiably commissioned services from themselves.
As with competition issues in the private sector, the ultimate arbiter would be the European Union's competition commissioner. 'That's why it's important we assess the situation now as we don't want a health service run by Brussels,' said Slipman.
She added, however, that it was important that rules regulating competition were not overly prescriptive as that would risk undermining the independence and effective decision-making of NHS boards. 'We don't want to recentralise the NHS by having too restrictive a system,' she said.
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