Testing times ahead for NHS, warns Nuffield Trust

Read the Nuffield Trust's response to The Operating Framework for the NHS in England 2011/12, published yesterday afternoon by the Department of Health.

Press release

Published: 16/12/2010

Commenting in response to The Operating Framework for the NHS in England 2011/12, published yesterday afternoon by the Department of Health, Nuffield Trust Chief Executive Dr Jennifer Dixon said:

‘We agree that the broad direction of NHS reforms, which aim to reduce political direction over the NHS by politicians, is the right one. Merging PCTs alone would be enough to create a major upheaval and risk of loss of quality and financial control locally but, coupled with widespread restructuring and the demands for £15-20 billion of efficiency savings, the NHS has a real challenge ahead. This period of reorganisation and turbulence will require careful management and development as temporarily merged PCTs develop competing consortia and work on their own demise.

‘Headline funding to PCTs is to grow by three per cent to £89 billion in cash terms. £650 million of this will be transferred to local authorities for social care. PCTs will be left with 2.2 per cent recurrent growth, this is less than the latest forecast for whole economy inflation. Even with the promised access to £150 million of previous surpluses PCTs face a tough settlement. Two per cent of their allocation will be top-sliced and only available for short term projects with SHA approval.

‘As a result, core allocations to PCTs will be flat in cash terms, meaning a drop in real terms. Measures such as local agreements to freeze incremental pay for NHS staff, currently being negotiated with national trade unions, will become important as they will save the NHS nearly £1 billion.

Commenting in response to The Operating Framework for the NHS in England 2011/12, published yesterday afternoon by the Department of Health, Nuffield Trust Chief Executive Dr Jennifer Dixon said:

‘We agree that the broad direction of NHS reforms, which aim to reduce political direction over the NHS by politicians, is the right one. Merging PCTs alone would be enough to create a major upheaval and risk of loss of quality and financial control locally but, coupled with widespread restructuring and the demands for £15-20 billion of efficiency savings, the NHS has a real challenge ahead. This period of reorganisation and turbulence will require careful management and development as temporarily merged PCTs develop competing consortia and work on their own demise.

‘Headline funding to PCTs is to grow by three per cent to £89 billion in cash terms. £650 million of this will be transferred to local authorities for social care. PCTs will be left with 2.2 per cent recurrent growth, this is less than the latest forecast for whole economy inflation. Even with the promised access to £150 million of previous surpluses PCTs face a tough settlement. Two per cent of their allocation will be top-sliced and only available for short term projects with SHA approval.

‘As a result, core allocations to PCTs will be flat in cash terms, meaning a drop in real terms. Measures such as local agreements to freeze incremental pay for NHS staff, currently being negotiated with national trade unions, will become important as they will save the NHS nearly £1 billion.

‘The Operating Framework unveils a central grip to effect the reforms and help achieve the unprecedented four per cent efficiency savings, coming when two thirds of foundation trusts are behind in delivering their cost improvement plans this year.

Measures such as central performance management remain necessary to ensure quality in this period of financial constraint, but the Government will have to maintain a balance between quality targets and autonomy to PCTs.

‘Worryingly the Operating Framework confirms the intention to set maximum prices for care since evidence strongly suggests that price competition will result in lower quality care. This is because price is more transparent than quality, and haggling over price tends to receive more attention that quality when contracting.

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