Signal failure: the public health cut sends out the wrong message

25 Jun 15

The 7% cut to the public health grant was a foolish mistake by national government. Local leaders need to move into the gap and develop prevention strategies of their own.

Pre-election every major political party promised to ‘save’ the NHS, but now just over a month later these promises are already starting to unravel.

As the chancellor unveiled the in-year savings programme he asked the Department of Health to find £200m from the public health grant. Now, one swallow doesn't make a summer, and we should not over-react to a 7% loss of grant, but occurring so soon after the election it sets the tone that the emphasis on preventative action may sadly just be empty words and political rhetoric. People and systems subconsciously react to signals, and this one was a mistake. The foolish signal implicitly implies that the unprecedented pressures of an ageing population and ‘lifestyle diseases’ will inexorably lead to higher costs, and managing down demand through prevention is not a financial priority.

Perhaps this opens up the question about effective national and local system leadership in the NHS? If the public health decision shows a national failure, at present many areas feel that local system leadership is under-developed too. If the secretary of state wishes to sustain the government’s reforms and avoid back-to-the-future reversion to command and control, then action is needed.

If health & wellbeing boards are not setting the coherent narrative needed for commissioners and providers to understand and act upon, it will take all local partners to put in the time and capacity to sort this out; and not wait for a top-down solution to fill the gap. From an accountant’s strategic perspective, too many institutions are sticking to the “day job” of their own part of the system at present, and too few are investing time and capacity to ensure effective local system leadership and longer-term value for money to the public purse.

We need more resources to fund prevention, upstream activity and demand management programmes. The signal from HMT and DH that these areas can be cut to protect acute pressures must be countered by more confident local collaboration and leadership. Partners of the world unite – you have nothing to lose but your long-term overspends!

When Public Health England distributes the 7% cut in grant it will inevitably not match where reserves are held. Around a half of local authority public health spend is with the NHS on issues such as substance misuse and sexual health where cuts will only compound acute pressures in time.

There is a body of evidence that preventive action generates long-term savings and better system productivity – a ‘public pound multiplier’. For example, in areas such as tobacco control and psychosocial treatments for dependent drinkers, every £1 spent can lead to savings of £5. Of course, what might be an issue in one area may not be one in another and demonstrates the need for health & wellbeing boards to decide priorities based on local population needs. One would hope that releasing local government from the present crude and universal government-set council tax referendum cap, would in time see communities able to further invest in long-better health.

But whilst encouraging areas to follow the lead of Greater Manchester, step up to the plate and lead their health economies in a dynamic, collaborative and innovative way, there are some things needed through national intervention to help reduce costs by scaling up more traditional efficiency means.

The NHS funding gap is widely reported as £30bn by 2021. The NHS’s Five Year Forward View is based on making £22bn savings, leaving £8bn to be funded by the government. Yet, looking at achievement of savings to date, that £22bn efficiency target is a severe challenge meaning 2-3% against a record of 1%. Lord Carter's excellent interim report shows that standard tools of the efficiency trade – data and models of what good looks like – are not available at present. Trusts must bear down on cost, but need the information to do so.

A recent study at one large NHS provider analysed a mandated insistence that third party company representatives were time recorded. Not only did they find 650 company representatives regularly on site, but 10% (65 of them) were full time! I can assure you this was not through altruism but rather demonstrates a successful business model on their part.

Finance professionals, CEOs, non-executives and trust boards need this sort of information to challenge pharmaceutical or agency decisions. Transparency which shows the range of costs, reasonable therapeutic substitution, and the management of third parties would reduce cost pressures up and down the land. Overspending is not just caused by an ageing population or higher demand: we need to create a culture to passionately bear down on waste too.

And when money is saved, the really smart trust boards may wish to show local system leadership and resource long-term prevention as well.

  • Rob Whiteman

    Chief executive of CIPFA since 2013, after leading the UK Border Agency and the Improvement & Development Agency. Previously, he was CEO at Barking and Dagenham council.

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