Cuts vs Savings

From the BBC:

Compared with other departments, health did well in the coalition’s spending review. The government promised to increase funding in England in real terms, year on year, throughout this parliament.

But a lot of chief executives are pessimistic. They feel they are grappling with a spending squeeze, facing unpopular decisions involving cuts and closures without political cover.

A lot of this pressure comes from a plan called QIPP – Quality, Innovation, Productivity and Prevention. This scheme, first announced under Labour, aims to save £20bn over four years through improved efficiency, with the money going back into front-line services.

Anita Charlesworth, former director of public spending at the Treasury who is now with the health research group the Nuffield Trust, says their real-terms funding increase has become a real-terms cut.

“The government has increased the money available to local health authorities to buy care by 3%. But when you take into account inflation and the fact of those health authorities being asked to hold back some money to prepare for contingencies and pay for one-off investments, the money that they’ve got available to spend with hospitals is 3% lower in real terms on average.”

On top of this comes productivity savings – averaging 4-5% a year.

Areas to think about:

• What are productivity/efficiency savings? How do the differ conceptually from cuts?
• The NHS was granted a (more or less) real terms freeze in the headline health budget. Therefore, technically the coaltion government is correct to say that health spending is keeping pace with inflation. Individual Trusts are having to make significant cuts locally due to mandatory efficiency savings, with the savings spent on other health projects/investments. Therefore, technically the local trusts are correct to say their budgets are dropping. What do you think is likely to be net effect of these two, technically correct, positions on health care delivery in the UK?
• How does the Health & Social Care Bill currently working its way through Parliament attempt to prioritise how health care is delivered?