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Coming to terms with NHS funding cuts

30th April 2009

Sally Gainsbury dissects the figures and looks at the options for the NHS as growth makes way for austerity.

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Prudence on the part of NHS chief executive David Nicholson was a factor in enabling chancellor Alistair Darling to proclaim in his Budget speech that funds for local health services were rising by over 5%, even though the Department of Health’s overall resource funding will increase by just 4% between 2009-10 and 2010-11.

However, any comfort is likely to be short-lived and in reality, primary care trust budgets have already been affected with the chancellor using his Budget to amend his projections for total public spending increases for 2011-12 onwards from the 1.1% real terms annual growth he envisaged just five months ago to just 0.7%.

King’s Fund chief economist John Appleby says it is very hard to see how the NHS can escape a real terms cut while NHS Confederation policy director Nigel Edwards says whatever the final settlement is for the period from 2011-12, it is “undoubtedly going to be grim”.

KPMG believes it is likely the cuts would mean the NHS will need to scale back its ambitions while NHS North West chief executive Mike Farrar says that to keep their levels of investment stable, PCTs need to start thinking now about introducing new efficiencies to “smooth” spending over the next five years.

Workforce planning is going to be a critical area for the NHS, though PricewaterhouseCoopers lead healthcare partner Ian Wootton indicates rather than redundancy, the balance will come down in favour of frozen pay.

 

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