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NHS and Treasury deadlocked over budget increase before spending review NHS and Treasury deadlocked over budget increase before spending review
(about 2 hours later)
George Osborne and the NHS boss Simon Stevens are at loggerheads because the chancellor has rejected pleas to increase the health service’s budget by £4bn next year, despite fears that patient care could suffer if the money is not forthcoming.George Osborne and the NHS boss Simon Stevens are at loggerheads because the chancellor has rejected pleas to increase the health service’s budget by £4bn next year, despite fears that patient care could suffer if the money is not forthcoming.
The row between the Treasury and NHS England before next week’s spending review has reached such a critical point that David Cameron may have to step in and make the final decision, NHS sources say.The row between the Treasury and NHS England before next week’s spending review has reached such a critical point that David Cameron may have to step in and make the final decision, NHS sources say.
The Guardian understands that Stevens, NHS England’s chief executive, has been rebuffed in his protracted efforts to persuade Osborne to hand the service the £4bn he believes is the minimum it needs to press ahead with transforming how it provides care.The Guardian understands that Stevens, NHS England’s chief executive, has been rebuffed in his protracted efforts to persuade Osborne to hand the service the £4bn he believes is the minimum it needs to press ahead with transforming how it provides care.
The chancellor is understood to have offered Stevens only about £2bn, and is also understood to believe that any more than that is unrealistic and unaffordable in such a tight spending round and that the NHS needs to get its fast-crumbling finances in order to help balance its books.The chancellor is understood to have offered Stevens only about £2bn, and is also understood to believe that any more than that is unrealistic and unaffordable in such a tight spending round and that the NHS needs to get its fast-crumbling finances in order to help balance its books.
“At the moment it’s a very high-stakes poker game between Stevens and Osborne, and the disagreement between them is so great that it’s likely that the prime minister will have to intervene to settle it before next Wednesday’s spending review,” said a senior NHS source.“At the moment it’s a very high-stakes poker game between Stevens and Osborne, and the disagreement between them is so great that it’s likely that the prime minister will have to intervene to settle it before next Wednesday’s spending review,” said a senior NHS source.
The latest official financial performance figures, released on Friday, showed that the collective deficit of hospitals in England soared to a record £1.6bn after the first six months of 2015-16 and is likely to hit £2.2bn by the end of the year. Runaway spending on contract and agency staff, and beds “blocked” by medically fit patients who cannot be discharged because local social care is inadequate, are key contributors.The latest official financial performance figures, released on Friday, showed that the collective deficit of hospitals in England soared to a record £1.6bn after the first six months of 2015-16 and is likely to hit £2.2bn by the end of the year. Runaway spending on contract and agency staff, and beds “blocked” by medically fit patients who cannot be discharged because local social care is inadequate, are key contributors.
“Today’s figures show the NHS is in the grip of an unprecedented financial meltdown”, said Richard Murray, director of policy at the King’s Fund thinktank. Warning that the deepening black hole would inevitably hit frontline care, he added: “Quite simply, it is no longer possible for the vast majority of NHS providers to maintain standards of care and balance their budgets.”“Today’s figures show the NHS is in the grip of an unprecedented financial meltdown”, said Richard Murray, director of policy at the King’s Fund thinktank. Warning that the deepening black hole would inevitably hit frontline care, he added: “Quite simply, it is no longer possible for the vast majority of NHS providers to maintain standards of care and balance their budgets.”
Osborne has not been convinced by Stevens’s arguments in recent weeks that a significant amount of the extra £8bn that the government has promised to give the NHS by 2020 should be “frontloaded” – provided in 2016-17 and 2017-18.Osborne has not been convinced by Stevens’s arguments in recent weeks that a significant amount of the extra £8bn that the government has promised to give the NHS by 2020 should be “frontloaded” – provided in 2016-17 and 2017-18.
Stevens, who was Cameron’s personal choice to run the NHS, has made clear what he sees as the urgency of getting a substantial downpayment on the £8bn from next April, in a series of carefully worded recent public interventions.Stevens, who was Cameron’s personal choice to run the NHS, has made clear what he sees as the urgency of getting a substantial downpayment on the £8bn from next April, in a series of carefully worded recent public interventions.
At NHS England’s annual general meeting last month he called for “some frontloaded investment in service transformation”, as envisaged in the Five Year Forward View blueprint to safeguard the service’s future. He has also underlined that “for the NHS, next year and the year after are where the rubber will really hit the road” in delivering that plan.At NHS England’s annual general meeting last month he called for “some frontloaded investment in service transformation”, as envisaged in the Five Year Forward View blueprint to safeguard the service’s future. He has also underlined that “for the NHS, next year and the year after are where the rubber will really hit the road” in delivering that plan.
And he has stressed that “we’re already incredibly lean in our country’s health funding, overall, and on a per person basis” and that the £8bn was conditional on both public health and social care being improved. Instead, public health has had its funding cut by £200m and social care budgets are about to squeezed even further as part of renewed Whitehall-enforced cost-cutting by local councils.And he has stressed that “we’re already incredibly lean in our country’s health funding, overall, and on a per person basis” and that the £8bn was conditional on both public health and social care being improved. Instead, public health has had its funding cut by £200m and social care budgets are about to squeezed even further as part of renewed Whitehall-enforced cost-cutting by local councils.
Stevens aired his deep frustration at the progress of discussions with the Treasury in an interview with Health Service Journal on 9 November. “As of today, considerably more progress is going to be needed before we can say we have a genuinely workable HSJ funding solution for 2016-17 and 2017-18, but spending reviews usually come down to the wire, so hopefully we’ll get there by 25 November,” he said.Stevens aired his deep frustration at the progress of discussions with the Treasury in an interview with Health Service Journal on 9 November. “As of today, considerably more progress is going to be needed before we can say we have a genuinely workable HSJ funding solution for 2016-17 and 2017-18, but spending reviews usually come down to the wire, so hopefully we’ll get there by 25 November,” he said.
Several well-placed sources say that Stevens going public has not helped break the deadlock over the issue. The NHS Confederation, which represents hospitals and which is now chaired by the former Conservative health secretary Stephen Dorrell, warned last week of “the huge risk if we don’t see the £8bn additional funding for health upfront in the next two years”.Several well-placed sources say that Stevens going public has not helped break the deadlock over the issue. The NHS Confederation, which represents hospitals and which is now chaired by the former Conservative health secretary Stephen Dorrell, warned last week of “the huge risk if we don’t see the £8bn additional funding for health upfront in the next two years”.
Osborne is thought to favour giving the NHS the £8bn in four roughly equal instalments of about £2bn in each of the next four years. He is said to be perplexed as to why NHS overspending has ballooned and performance against key waiting time targets has deteriorated further, despite it having been given an extra £2bn this year.Osborne is thought to favour giving the NHS the £8bn in four roughly equal instalments of about £2bn in each of the next four years. He is said to be perplexed as to why NHS overspending has ballooned and performance against key waiting time targets has deteriorated further, despite it having been given an extra £2bn this year.
He also does not trust the NHS not to use any substantial extra funding simply to plug the widening deficit and wants to see major progress on delivering the £22bn of efficiency savings that Stevens has promised, which the NHS hierarchy regards as completely undeliverable.He also does not trust the NHS not to use any substantial extra funding simply to plug the widening deficit and wants to see major progress on delivering the £22bn of efficiency savings that Stevens has promised, which the NHS hierarchy regards as completely undeliverable.
One senior NHS official said: “Osborne’s view is that we are giving you the £8bn you asked for, Simon Stevens – in fact we’re giving you £10bn – and that our finances are out of control and that we in the NHS are meant to be making efficiency savings. He’s right about the finances being out of control, and there is no plan in sort that.”One senior NHS official said: “Osborne’s view is that we are giving you the £8bn you asked for, Simon Stevens – in fact we’re giving you £10bn – and that our finances are out of control and that we in the NHS are meant to be making efficiency savings. He’s right about the finances being out of control, and there is no plan in sort that.”
Anita Charleswoerth, chief economist at the Health Foundation thinktank, said: “If the £8bn isn’t frontloaded, as the head of the NHS has called for, then the implications are that the finance crisis in the NHS deepens, the NHS is locked into poor-value-for-money choices by being reliant on expensive agency staff, and it wouldn’t be able to transform the way that it delivers care. It would be a false economy which would set the NHS back.”Anita Charleswoerth, chief economist at the Health Foundation thinktank, said: “If the £8bn isn’t frontloaded, as the head of the NHS has called for, then the implications are that the finance crisis in the NHS deepens, the NHS is locked into poor-value-for-money choices by being reliant on expensive agency staff, and it wouldn’t be able to transform the way that it delivers care. It would be a false economy which would set the NHS back.”
The latest figures from Monitor and the Trust Development Authority, which supervise hospitals, show that four out of five NHS trusts have overspent, that at £1.8bn in six months the service’s spending on agency staff was double the figure expected, and that the £1.6bn deficit was £358m worse than expected. Delayed transfers of care cost another £270m, they disclosed.The latest figures from Monitor and the Trust Development Authority, which supervise hospitals, show that four out of five NHS trusts have overspent, that at £1.8bn in six months the service’s spending on agency staff was double the figure expected, and that the £1.6bn deficit was £358m worse than expected. Delayed transfers of care cost another £270m, they disclosed.
Jeremy Hunt, the health secretary, hopes that tough measures he has imposed to tackle NHS overspending, such as limiting what hospitals can spend on agency staff and management consultants, will over time help the service get its finances back in order. But privately some hospital bosses say that a tough winter, which they expect, could make things even worse.Jeremy Hunt, the health secretary, hopes that tough measures he has imposed to tackle NHS overspending, such as limiting what hospitals can spend on agency staff and management consultants, will over time help the service get its finances back in order. But privately some hospital bosses say that a tough winter, which they expect, could make things even worse.
The Department of Health reiterated that the NHS must implement urgent cost-cutting measures. A spokesman said the department was confident that the NHS overall would end 2015-16 “in financial balance”.The Department of Health reiterated that the NHS must implement urgent cost-cutting measures. A spokesman said the department was confident that the NHS overall would end 2015-16 “in financial balance”.
A spokesperson for NHS England said: “We will not comment on this inaccurate speculation other than to say that constructive progress is being made.”