A cash injection will not cure the NHS's ills

15 Oct 15

It’s likely that the government will find extra funds to pass on to the cash-strapped NHS. This will do little to address underlying problems.

Given an underlying culture of short-term budgeting, underpinned by the knowledge there’s always a Treasury safety net available, it is not necessarily surprising that NHS trusts in England have racked up such large deficits. CEOs and chairs know they are more likely to face removal if quality fails than as a result of cost management deteriorating.

But the deficits stated may just be the thin end of the wedge. Whilst expecting trust boards to take action to reduce these deficits the government, the Trust Development Authority and Monitor should be equally unambiguous to trusts, and particularly to their non-executive directors. Trusts must report fully their expected outturns during 2015/16 even if this worsens the headline figures. We must avoid the problem that the system generates the numbers that are wanted top-down rather what is being reflected in internal management accounts bottom-up. This simply stores up trouble down the line.

It has become a political reality that the government is duty-bound to cover NHS deficits come what may. The chancellor may yet be forced to put more money in than planned before 2020.

But given the strong prospects that they will be the ruling party in government for a decade, there is a risk for the NHS ‘industry’ – its own organisations and those associated with it – of being seen to take the need for more resources too lightly and thus potentially driving more radical policy options in the future. For example, many pay for eye tests, dental care, social care and prescriptions. Might we need to introduce more charging? 

From CIPFA’s perspective, as the voice of public sector finance professionals across local government, central government, housing, schools and health, simply pumping in ever greater amounts of money is seldom the right solution and in fact is often instead just a short-term expediency. Yes, invest in transformation – but frankly you have to prioritise, stop things, increase productivity and improve culture and grip too.

Stability and control would be a better platform for the sustained long-term focus needed to develop prevention programmes to manage future demand. There is a wealth of evidence that shows every £1 spent on preventative action leads to £5-6 savings elsewhere. But to fund this properly, the Treasury must act consistently to give the right signals. Pulling the rug from under the sector’s feet when £200m was cut from public health budgets in June was a real error. This has led to months of Public Health England having to focus on distributing this cut when it would ideally have devoted all its leadership capacity to improving health and wellbeing.

The next 12 months will see the government under pressure. Welfare reform is electorally popular but cutting tax credits whilst reducing the burden of inheritance tax will get challenged. The government will also be challenged to steer a clear and navigable route on the EU referendum which will not be easy. But most of all it will be NHS finances that is the issue that is hardest to manage politically. The most likely outcome is that the government will choose to put in more money, but in truth this only defers the need to better control NHS finances and does not solve it.

  • 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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