Welfare Reform on the Web (November 2006): National Health Service - funding

Get reform back on track and finance will follow

K. Palmer

Health Service Journal, vol.116, Oct.12th 2006, p.22-23

The author argues that the current financial crisis in the NHS is due to: 1) the unexpectedly high growth in demand for hospital care; 2) the rapidly rising costs of pay and drugs; and 3) the declining productivity of trusts. In order to restore financial balance, the government will need to: 1) strengthen the strategic commissioning role of primary care trusts, so that they can more effectively shape the pattern of local health services and control demand for hospital care; 2) eliminate of current financial incentives for hospitals to increase admissions; and 3) provide funding to cover the costs of service reconfiguration.

NHS debts topped £540m last year despite cash injection

T. Branigan and W. Woodward

The Guardian, Oct. 10th 2006, p. 18

Health Secretary, Patricia Hewitt revealed that the NHS ran up debts of £574m at the end of 2005, well above the government’s target of 200m. However, Hewitt expects a surplus at the end of 2006. Critics of the government’s NHS policies have pointed out that trusts should be in a better financial position considering the massive public spending on health. The article comments on the Conservative reaction to the news. Tory leader David Cameron blames ministerial interference for NHS underperformance. He promises that under a Tory government the health service would be free of ‘political meddling’.

NHS employers: far fewer job cuts than first claimed

D. Carlisle

Health Service Journal, vol.116, Oct.19th 2006, p.9

NHS Employers says that fewer than 800 NHS staff have been made redundant so far this year as trusts strive to achieve financial balance. It is expected that most savings will be achieved by freezing vacant posts.

NHS Local Improvement Finance Trusts

Committee of Public Accounts

London: TSO, 2006 (House of Commons papers, session 2005/06; HC 562)

The Department of Health launched Local Improvement Finance Trusts (LIFTs) in 2000 to address long standing under-investment in primary care facilities. LIFTs are a new form of PPP that invest in new build primary care premises and aim to improve the overall quality of primary care estate in England. This report examines affordability, benefits and impact of LIFTs and whether they have been implemented effectively.

This may hurt

N. Plumridge

Public Finance, Sept. 8th-14th 2006, p.16-19

The new GP and consultants’ contracts and the roll out of the Agenda for Change pay reform programme have led to large pay rises for NHS staff. This improvement in pay acted to boost staff retention and recruitment in the short term. In the meantime, the government has quietly worked to increase the supply of health workers through recruitment from overseas, more use of paraprofessionals, and expansion of training. These measures have increased the supply of skilled labour, so that the government can now bear down on pay inflation.