In the shorter term, the NHS budget for 2010/11 is to be reduced by £2.3 billion from a planned £104.6 billion to £102.3 billion. Combined with efficiency savings already required of the NHS by the 2007 spending review, this £2.3 billion brings the total required efficiency savings for the NHS to £10.5 billion over this spending review period (2007/8 — 2010/11).
The Department of Health has said that this £2.3 billion saving will be taken from budgets held centrally by the Department. In 2008/9 these totalled £13.1 billion and included funding for training health service staff (£4.5 billion); the Connecting for Health technology programme (£1.2 billion); a centrally held NHS contingency fund (£0.4 billion); funding for vaccines (£0.3 billion) and preparedness for a pandemic flu outbreak (£0.1 billion).
Increases in funding allocations for primary care trusts (PCTs) — which make up 80 per cent of the NHS budget — have been confirmed as 5.5 per cent per year for both this year and next year (2009/10 and 2010/11), as set out in the Operating Framework 2009/10.
Planned increases in funding to local authorities (which cover social services) of 1 per cent in real terms have also been maintained to 2011.
The tariff that determines how much PCTs reimburse hospitals for patient care and accounts for most of NHS hospitals’ income will assume an efficiency saving of 3.5 per cent in 2010/11, up from the current level of 3 per cent. Savings generated from this by PCTs are to be redeployed directly to other front line health services. Local authorities who are responsible for social care services will be required to find a 1 per cent efficiency saving, which will also be redeployed for frontline services.
In addition, £800 million of the £1.7 billion surplus the NHS carried over into 2009/10 will be re-invested into front line services between now and the end of 2010/11. Decisions on the remainder of the surplus will be made as part of next Comprehensive Spending Review.
The government has identified a series of policies that it expects to deliver longer term savings for 2011 and beyond. These include improvements in the efficiency of commissioning and changes to the Payment by Results tariff, which are together intended to deliver £5 billion per year of ‘savings and quality improvements’ by 2013/14. Improving use of the NHS estate is expected to reduce both the need for new hospital space (saving up to £3 billion) and the cost of the existing estate (by £100 million a year). Making better use of collaborative purchasing across the NHS, aided by a new NHS Commercial Operating Model and reducing back office costs through the NHS Shared Business Service, is expected to deliver more than £100 million a year in savings. Consolidating pathology services is expected to save up to £500 million a year.
A 2 per cent increase in tobacco and alcohol duties has been levied to support the government’s public health policies.
