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Money talks


28 July 2015

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The reality of delivering manifesto promises presents a significant financial challenge

The reality of delivering manifesto promises presents a significant financial challenge

The election’s over. Barring splits and Euro-crises, the Conservatives have unambiguous control for the next five years. None of the uncertainties and horse-trading of coalition. Jeremy Hunt remains secretary of state for health. For NHS commissioners, then, back to business as usual?
Not quite. The unexpectedly clear election result brings both a mandate for implementing manifesto pledges, and the expectation that promises made in the heat of the election campaign will be honoured. And, of course, there’s the small matter of the economy, to which we’ll return.
For commissioners, this already means pressure to transform the local NHS into the promised seven-day service – and no gripes, please, about resource or workforce availability. The Conservative manifesto commitment to ensure you can see a GP and receive the hospital care you need, seven days a week by 2020, along with same-day appointments for anyone over 75 who needs one, will not be negotiable.
Can commissioners achieve this? The absence of new plans for NHS structural change should not be taken as signalling government confidence in the status quo. If the Conservative election campaign only belatedly addressed the tricky issue of NHS funding, it was also remarkable for its seeming denial that Andrew Lansley’s 2012 Health and Social Care Act – the legislation that created clinical commissioning groups (CCGs) and other current NHS structures – actually happened on the Tory watch. Meanwhile George Osborne’s Manchester initiative, a restructuring in all but name and one that caught Labour flat-footed, was born of impatience and a perceived need for stronger and more visible local leadership.
What’s good for Manchester will presumably be good for other cities, and indeed shire counties, across large parts of England. The NHS has embarked on the road to “integration”, albeit focusing more often on integrating health and social care – driven by the financial imperatives of the Better Care Fund – than on the integration of primary care, community services and hospitals.

System leadership
But honouring the manifesto pledges means more than compliance with centrally-determined process; it requires large scale delivery. So CCG commissioners will either need to demonstrate the sort of whole-system leadership that can deliver major change, or be edged aside by those who can.
This might mean transformation brokered by major acute hospital trusts, which often see themselves as the “natural” leaders of the local NHS and retain high levels of public recognition. It might mean a more active role for health and wellbeing boards and crucially for county councils, many of which enjoy strong political connections with government and have the confidence of ministers. Either way, CCGs run the risk of marginalisation from the major strategic change challenges that face the NHS.
Satisfying political aspiration isn’t just about honouring overt election pledges. The Conservative party shelters a broad range of aspirations on health policy. Some MPs believe government should have no role in health and the NHS should be replaced by an insurance-based system. Others, recognising continuing public affection for the NHS and its electoral risks, regard the NHS as something of a necessary evil. Others actually quite like it.

Business comes first
However, most agree that, whatever the rights and wrongs of a publicly funded NHS, there remains a greater potential role for the private and independent sector in delivering health care, and in its administration. Again this is partly ideological (the state should have a smaller role) and partly pragmatic (we should take advantage of commercial skills and business acumen). The much-maligned Health and Social Care Act  managed to accommodate both viewpoints, establishing structures and powers to enable competition but allowing ministers discretion around the pace of change.
Over the last two years the volume of services put out to tender by commissioners has slowed – whether because of wariness, CCG capacity or a perceived lack of private sector interest – and ministers appeared to tolerate this slowing of the pace of change. This tolerance is unlikely to continue, especially if traditional NHS providers appear to obstruct progress towards the seven-day NHS or other quality and access aspirations.

Money, money, money
And then there’s the money. Asked about the most important change within the English NHS during the last five years, many would point to the Health and Social Care Act. If you were working in a primary care trust or a strategic health authority, the restructuring changed your career. If you’re now at a CCG, your organisation owes its very existence to the 2012 act.
Yet on the provider side of the NHS it’s been about savings. No growth worthy of the name, other than in expectations; the steady drip-drip-drip of cost improvement targets, 4% or more each year. Financially, the story of the NHS over the last five years has been a slide from surplus into deficit and an increasingly tough struggle to survive. To recruit and retain staff amid pay freezes and mounting daily pressures. To somehow keep afloat.
Business as usual, financially, is no longer an option. Last autumn’s Five Year Forward View recognised this reality, as did the provider revolt over Monitor and NHS England’s proposed 2015-16 tariff with its implied further round of (3.8%) cost improvements. The Five Year Forward View sought an extra £8 billion from politicians, and the money was belatedly and perhaps reluctantly pledged by George Osborne during the election campaign.
Belatedly, in that it did not form part of last autumn’s budget. Reluctantly, in that Osborne’s wider financial ambition is to eliminate the nation’s fiscal deficit. The chancellor’s manifesto pledge is to run a surplus on government spending in 2018-19, and to introduce legal obstacles to attaining such a surplus by increasing income tax, national insurance or VAT – leaving spending cuts (and asset sales) as the preferred route.
So sceptics wonder about the timing of the extra £8 billion. Will it arrive quickly enough to forestall the financial crisis that many predict for the coming autumn and winter? Will there be strings attached?
But the Five Year Forward View also envisages a further £22 billion of efficiency savings from within the NHS. And those election pledges on seven-day access come with a price tag, as does maintaining a viable workforce as repressed pay expectations surface in an economy that, in the south-east at least, is beginning to boom.

The challenge ahead
How might the NHS achieve such efficiency gains? That’s the true strategic challenge for commissioners in the coming months. Great hopes are being placed upon “integration” in its various forms, and certainly there are good reasons to believe closer, more co-operative working can greatly improve the user experience. But will it reduce demand at the key pressure points: the GP surgery, the accident and emergency department, the ambulance control room? Will it even begin to allow the asset and staffing reductions needed to save real money on the scale required?
The commissioning challenge is plain, and ministers will be expecting serious strategic leadership. Very soon, hospital deficits will be back on our TV screens. A challenging autumn and winter lie ahead.

Noel Plumridge is a finance columnist.

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