Cuts, the Five Year Plan and STPs

The NHS England’s Five Year Forward View (FYFV) that set out plans for the NHS from 2015 to 2020 estimated that the NHS would need an extra £30 billion by 2020 to deal with growth in healthcare need, the emergence of new treatments, and so on. Of this figure, the FYFV suggested that the government should provide £8 billion, while £22 billion could be found from within the NHS through further ‘efficiency’ measures’: NHS England wants to see ‘productivity gains’ of 2-3% each year between 2015 and 2020 (see http://www.england.nhs.uk/wp-content/uploads/2014/10/5yfv-web.pdf). This is highly ambitious compared with the kind of efficiencies achieved by the wider UK economy or the health care systems of other countries. These ‘efficiencies’ may also bring safety risks in a service where every ounce of fat has already been cut.

In response to the FYFV, the government promised to give the NHS a sum of £10 billion.  But many say that this figure is misleading and it’s really closer to £8 billion, and covers six years rather than five.

What’s more, this money is only available through cuts of over 20% between 2015/16 and 2020/21 to the wider health budget. Due to a redefinition of what the NHS covers, a range of services – like public health, staff education and training, health visiting, sexual health and drug and alcohol services – now come under the wider health budget, not the NHS per se. As a number of think tanks like the Nuffield Trust, The Health Foundation and The King’s Fund have calculated, total health spending in England (i.e. not just for the NHS) will rise by only £4.5 billion in real terms between 2015/16 and 2020/21. This figure is also expected to cover implementation of new initiatives outlined in the FYFV, such as the cost of moving to a seven-day NHS (See, for example, the British Medical Association’s briefing “NHS funding and efficiency savings” and http://www.health.org.uk/news/health-foundation-responds-government’s-spending-review.)

Of the £22 billion that the Five Year Forward View expects the NHS to achieve through ‘efficiency savings’, these are to be found, for example, by

  • restructuring the NHS (again) through introducing new models of care that share similarities with Accountable Care Organisations (ACOs) found, for instance, in the US. ACOs aim to reduce costs by bringing in economies of scale and introducing higher thresholds for treating patients, although the evidence for reduced costs is mixed;
  • restructuring the NHS workforce through bringing in new, more ‘flexible’ roles carried out by less qualified, cheaper staff, and weaker rules about pay and conditions (such as a significant reduction in real term salaries for many staff); and
  • reducing red tape and reduced waste.

These savings are to be ensured by a carrot-and-stick approach: in 2016 NHS England directed that the NHS in England will be divided into 44  new ‘local health systems’ or ‘footprints’ and that each will produce a ‘Sustainability and Transformation Plan‘ (STP). Each footprint will show in its STP how it will transform the way it plans and delivers health and care services in line with the FYFV.  But most importantly, each ‘footprint’ is expected to show how it will cut expenditure and stay within budget through, for example,

  • moderating ‘demand’ (reducing patients’ use of services),
  • increasing productivity (cutting the budgets for service providers, reducing the pay bill, reducing the number of hospital beds etc), and
  • generating income (potentially from private patients or selling land).

The Health Secretary has made it clear that Trusts must balance their books or their governing boards could be removed. An extra £1.8 billion ‘transformation fund” for the NHS that George Osborne announced for 2016-17 is only available to NHS trusts that promise to meet a huge range of demands, including moving to seven-day services (https://www.opendemocracy.net/ournhs/colin-leys/sustainability-and-transformation-plans-kill-or-cure-for-nhs). It’s feared that even if footprints can meet NHS England’s demands, much of the funding they might receive will have to go on reversing financial deficits. (See also our page on Sustainability and Transformation Plans)

Sources

http://www.guardian.co.uk/society/2011/oct/17/nhs-cuts-impact-on-patients-revealed

https://www.opendemocracy.net/ournhs/matt-dykes/death-by-thousand-tariff-cuts

https://www.opendemocracy.net/ournhs/caroline-molloy/nhs-cuts-are-we-in-it-together

Further reading

https://opendemocracy.net/john-lister/jeremy-hunt-s-solution-for-cash-strapped-nhs-trusts-cut-375-nurses-each

updated January 2017

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