The NHS is unlikely to achieve the £22billion of efficiency savings it has agreed to make to plug the £30billion gap in its finances by 2020, public finance experts warned today.
The Chartered Institute of Public Finance and Accountancy (CIPFA) said the NHS was not able to “react fast enough” to achieve this unprecedented level of savings over the next five years while maintaining the same level of service and carrying on treating an ageing population.
CIPFA said much of the work needed to deliver major efficiencies to the NHS required radical transformation but this was not realistic by 2020, whilst Trust Boards should also exercise more direct grip on short-term efficiency measures.
In its paper, “The Health of Health Finances”, CIPFA said the £30billion funding gap figure was an “optimistic position” and that the real figure may be higher because it preceded the Government’s manifesto pledges such as increasing seven-day working in the NHS.
Pay restraint is also likely to become harder to deliver, even with the recent Budget announcement of a 1% cap on annual pay increases, while the introduction of the National Living Wage will put further pressure on costs.
Under these circumstances, the £8billion of additional support from the Government would then be insufficient - even if £22billion of savings were delivered. The Treasury should set out how it intends to tackle this issue over the long term though the Comprehensive Spending Review in November.
As things stand, the government is left with three choices: charge patients to use some services such as a flat rate contributory fee to see the doctor, reduce services, or increase funding - which would impact on other departmental budgets.
CIPFA said the Government’s £5.3billion Better Care Fund to join up the NHS and council-run social care systems must continue to prevent the knock on effects on health of underinvestment in social care.
The Government should also set aside “invest to save funding” to enable upfront investments in areas such as procurement or merging back office functions to make savings in the future without undermining the short-term position. The development of these new services may also require a period of “double running” where parts of the new and old models are funded at the same time as the old services are phased out.
Rob Whiteman, Chief Executive of CIPFA, said:
“Without radical transformation, we will struggle to offer a high quality public health service for future generations.
“The NHS is presently beset by a Five Year Forward View and resource assumptions that will not add up. System leadership is needed with less short term promises and more medium term financial planning.
“But it is not all about the need for more resources, because presently there is insufficient will to improve productivity, encouraged by the prevailing expectation and culture that more state funding will continue indefinitely.
“This is simply not sustainable and we urgently need to do away with this approach, plan for the long term and secure greater integration of health and social care services to lessen long term spending pressures and better manage future demand.
“This should be combined with an open and honest debate between politicians and the public about what kind of NHS we want in the next 10 to 20 years.
“This will require some brave thinking on how health services are delivered and paid for in the long term – something I would urge the government to place front and centre of the Comprehensive Spending Review later this year.”
Please find a copy of the report. For more information contact the CIPFA press office.
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