NHS: Finance

Department of Health written question – answered on 23rd February 2015.

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Photo of Derek Twigg Derek Twigg Labour, Halton

To ask the Secretary of State for Health, pursuant to the Answer of 26 January 2015 to Question 221511, what estimate he has made of the level of efficiency savings that NHS providers and commissioners can make in 2015-16 without affecting (a) the quality of, or access to, services, (b) staffing levels and (c) organisational financial performance; and if he will make a statement.

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

Since 2010 the National Health Service has risen well to the efficiency challenge it has faced, reporting around £15 billion of efficiencies in the three years of 2011-12 to 2014-15. At the same time, there are now over 21,300 more professionally qualified clinical staff since May 2010 including:

- over 9,500 more doctors; and

- over 6,300 more nurses, midwives and health visitors.

In contrast, the number of central administrative staff has fallen by over 20,300.

The 2013 Spending Round protected health funding in real terms. Subsequently, the 2014 Autumn Statement announced additional funding of £1.98 billion in 2015-16 for frontline NHS services. Together this will enable the NHS to maintain the quality of, and access to, services, in the face of continuing rapidly rising demands. At the same time, it will provide for significant new investment in new services, models of care and infrastructure to transform care for patients and ensure that the NHS remains sustainable in the longer term.

The NHS will need to continue to make significant efficiency savings. The Government’s mandate to NHS England for 2015-16 set an objective of “working closely with Monitor and the Trust Development Authority to secure unprecedented improvements in value for money across the NHS.”

Monitor and NHS England have responsibility for setting tariff prices which NHS providers receive for providing treatment and these prices build in an annual efficiency requirement. In their consultation on 2015-16 prices (Impact assessment for the proposals set out in the ‘2015/16 National Tariff Payment System: A consultation notice’’), they proposed an efficiency requirement of 3.8%, informed by evidence from an independent study on achievable efficiency (which took into account a variety of factors, including staffing levels), as well as evidence on recent NHS efficiency performance and feedback from the sector. They noted that “if public providers meet the efficiency factor and costs increase as expected, their annual financial performance would not change significantly as a result of proposals that affect overall price levels.”

As part of the NHS planning process, it is for local providers and commissioners to determine how best to deliver their locally identified efficiency opportunities in order to live within their budgets while continuing to meet demands and maintaining quality and access standards. It is also for local organisations to determine their staffing levels within the same framework.

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