Budget a wake-up call for the health service ahead of funding squeeze from 2011

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Commenting in response to today’s Budget, The King’s Fund’s chief executive Niall Dickson said:

'This is a wake-up call for the health service – no matter who is in power from 2011 the NHS will have to manage with very low or no growth in its funding. We are in a serious recession from which the NHS cannot be immune.

'The health service will have to make additional savings of £2.3 billion in 2010/11 but this was already planned for so this year and next year will be relatively benign. The real message from the Budget is that from then on the NHS will have to be much more productive or make significant cuts in its services. Given rising demand, a static budget will feel like a cut, unless the NHS delivers more value for every pound it spends.

'This is a challenge the NHS can meet but health professionals and managers will have to find ways of providing more care for less money while improving overall quality. What we should expect to see over the next few years is a turnaround in productivity levels, which have been falling over the past five to six years.

'While a degree of short-termism is inevitable, what the health service must avoid is crude cost-cutting measures, such as freezing posts and delaying care to patients. This would ultimately leave the NHS in a poorer state when the recovery begins.

'The good news for now is that, as planned, primary care trusts who fund local services will continue to receive cash increases of 5.5 per cent over the next two years. Also, £800 million of the £1.8 billion surplus the NHS has carried over to this financial year will be reinvested in frontline services up until the end of 2010/11.'

Niall Dickson added: 'The NHS in England has enjoyed unprecedented increases in funding in recent years – today’s Budget is £61 billion more than it was in 1997/8. This is equivalent to a real-terms increase of more than £34 billion. Efficiency savings are possible but what is needed are evidence-based measures that help the front line improve the way it uses resources. This should involve looking across health and social care and addressing this as one system so that savings made in one area do not end up increasing overall costs.

'Above all, the quality of care patients receive must not suffer. We know that high performance and improved safety can save money. We must use this opportunity to redesign services, focus on improving productivity and delivering better care in the face of rising demand with fewer resources. This could be an opportunity to bring about lasting reforms in the way we deliver care.'

Notes to editors

  1. For further information or interviews, please contact The King’s Fund press and public affairs office on 020 7307 2585, 020 7307 2632 or 020 7307 2581. An ISDN line is available for interviews on 020 7637 0185.
  2. The King’s Fund is a charity that seeks to understand how the health system in England can be improved. Using that insight, we help to shape policy, transform services and bring about behaviour change. Our work includes  research, analysis, leadership development and service improvement. We also offer a wide range of resources to help everyone working in health to share knowledge, learning and ideas.