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NHS reforms cost 15% more than expected, says NAO

By Paul Nettleton | 10 July 2013

The government’s controversial NHS reforms have cost significantly more than expected, according to the National Audit Office.

A review by the watchdog, published today, also found that many of the 211 new clinical commissioning groups, which started work on April 1 this year, began operating in an ‘atmosphere of financial uncertainty’.

The reforms involved the closure of more than 170 organisations and the creation of more than 240 replacements, the NAO said. Primary care trusts and strategic health authorities were abolished, and commissioning responsibility transferred to NHS England, a new arm’s-length body of the department, and 211 clinical commissioning groups involving GPs.

Local authorities have also been given a statutory duty to improve the health of their populations and commission public health services in conjunction with Public Health England, an executive agency.

While the NHS successfully implemented the reforms and made sure all the new organisations were ready to start operating, the costs so far are 15% greater than forecast, at £1.1bn on March 31 2013, However, the Department of Health told auditors it did not expect the total to exceed £1.7bn, £215m more than the £1.5bn in the business case estimate.

Redundancy bills accounted for 40% of costs to  March 31, an average of £43,095 a person. The NAO agreed that estimated administrative savings of more than £2bn to March 31 would outweigh the cost of the reforms and contribute to the efficiency savings. Tracking wider benefits in improved health outcomes and reduced inequalities was work in progress.

The watchdog also found that not all of the new NHS organisations were operating as intended at the start of this year.

‘Many clinical commissioning groups began operations in an atmosphere of financial uncertainty, which has hampered their ability to plan and budget,’ the NAO said.

‘Shortcomings in commissioning and financial plans were the most common reasons for clinical commissioning groups having conditions attached to their authorisation. This raises concerns about their ability to make savings and remain financially sustainable in the coming years.’

NAO head Amyas Morse, head of the National Audit Office, said it was a ‘considerable achievement’ that the new organisations were ready to start work on time. He paid tribute to the commitment and effort of NHS staff.

‘However, much needs to be done to complete the transition,’ he added.

‘Some parts of the system were less ready than others, and each organisation now needs to reach a stable footing. This will be particularly challenging at a time when the NHS is having to make significant efficiency savings. The reformed health system is complex and the department, NHS England and Public Health England must take a lead in helping to knit together the various components, so that the intended benefits for patients are secured.




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