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Nicholson: 'No significant savings made through reorganisation'

Nicholson: 'No significant savings made through reorganisation'


Concerns have been reignited over the NHS reorganisations, at a charged meeting between the Health Select Committee and outgoing NHS England chief executive Sir David Nicholson.

At the Westminster meeting to explore public spending in the NHS, Nicholson said reorganisations had done little to save money for the health service, compared to efficiency savings branded the 'Nicholson Challenge'.

However, saving money through efficiency can only go so far, he said.

“We're doing more than we expected in terms of efficiency, and less in terms of transformational change,” he told the group of MPs.

Changes that were expected to save money for the healthcare service were reorganisations of emergency care and centralising services in a number of trusts.

He said: “We've made progress in both of these areas, but we haven't made fast enough or significant enough cost savings across the whole of England.”

And Paul Baumann, NHS England's chief financial officer, agreed that although £4 billion in savings were delivered in 2012/13, NHS England is struggling to deliver transformational savings.

Baumann said: “This reflects the difficulty in delivering transformational change. There have been very few savings that are not sustainable, but the issue is how we can increase the proportion of transformational savings.”

Moves to halt a 1% pay rise for NHS were criticised by trade unions earlier this month. But Nicholson backed up the government's choice not to go forward with the pay rise. He said total expenditure on wages needs to be “controlled”.

“We need to control the headline increase in pay,” he said, “But in the NHS there are all sorts of incremental schemes that go on, so even though we have a pay freeze, pay still increased in the NHS over that period by 0.7%.

“If you look at the NHS going forward, there's little indication that there will be real terms growth, so one of the key things we need to do is control the total payment.”

But he defended senior managers high salaries because they do “incredibly difficult jobs”.

He said: “We really do need really good, top-drawer people to lead that and if we constantly denigrate and criticise them it's hardly surprising that they respond to that. I think we all have a responsibility to support those people in incredibly difficult jobs.”

Sir David blamed “constant reorganisation” for increasing managers pay.

His comments came after NHS England's chief medical director, Sir Bruce Keogh, said NHS managers “deserve very significant salaries” during an interview on BBC Radio 4 earlier this week. 

Nicholson will be stepping down from his role next year and his successor is Simon Stevens, who is president of global health and UnitedHealth Group in the US.


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