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TX: 07.04.08 - NHS Underspend

PRESENTER: JOHN WAITE

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WAITE
Getting the NHS to break even has been described as the equivalent of landing a jumbo jet on a postage stamp whilst wearing a blindfold. But as the financial year ends the National Health Service seems to have pulled off that trick and more, with what appears to be an underspend of around £1.8 billion.

Ray Jones is professor of social work at Kingston University and a former director of social services in Wiltshire and he argues that the NHS' underspend could and should now be the saviour of social care, providing much needed support in the home for the elderly and disabled.

JONES
What's happening is that the NHS this year is beginning to report an underspend of £1.8 billion, it's probably going to be more than that but I would be surprised if that's declared because £1.8 billion is embarrassing enough. And that's something that's been created over the last two years by cutting back on NHS services right across the country. Two years ago the NHS was overspending in a big way and there was a very strong message down from London that the NHS had to get its finances in order. What's happened is that the NHS in getting its finances in order has overshot on its savings targets and is delivering less healthcare than the government's given it money to provide. At the same time local councils have had very little new money given to them by the government and that's why there's a real impact now when the NHS passes costs on to local councils, the local councils don't have the money to pick it up. One way of dealing with this would be the government to accept that they need to pass more money direct to local councils if they're going to also see the NHS passing costs on to councils. What I would be suggesting is that a share of the £1.8 underspend ought very urgently now, as what's called a specific grant, be passed on to local councils so that they're not cutting services to disabled people.

WAITE
Professor Ray Jones from Kingston University.

So is the NHS underspend something that could or should be transferred or does the NHS, like any big business in the private sector, need a buffer to keep the money in its coffers to deal with unexpected contingencies?

Well to discuss this, Professor Jones' proposal, we brought together Sir Simon Milton from the Local Government Association which represents local councils and Jo Webber, deputy policy director at the NHS Confederation which represents health trusts.

WEBBER
I'd love to say that there was £1.8 billion sitting in the piggy bank. I have to say if you look at the surplus as a percentage of the overall budget it's only just over 1% of the NHS budget. And I think your point at the beginning of the interview about trying to land a jumbo jet on a postage stamp are absolutely spot on here. You wouldn't run any other organisation without some sort of reserve and for the NHS that's exactly the same. What we're trying to do is get it on a sound financial footing so we've got some reserve.

MILTON
Well the NHS, with all due respect, is not like any other business because it's paid for by the taxpayer and ultimately it can't go bust, unlike a normal business. And I'm tempted to recall, I think it was Ronald Reagan who once said, a billion here, a couple of billion there, sooner or later you're talking about real money and £1.8 billion is real money.

WEBBER
One point eight billion pounds is not a lot in a budget of coming up to £100 billion and we do need those reserves to be able to invest in new services for the future. What we have is a reserve which we haven't been able to have before and that's because we've done some quite astute financial management to try and get through the deficit situation and to try and ensure that the NHS is on a firm footing. Our problem is that the big injection of money we've had over the past three years is no longer there and therefore we do need to have some reserves and at the moment we also need to have reserves to put those services in at the front end - the prevention - the services that will enable people to stay independent for longer whilst still delivering the services that have been so that people still get their reduced waiting times, they still get their cleaner hospitals but at the same time we're investing for the future and the long term.

MILTON
Care budgets and NHS budgets are two sides of the same financial coin. When primary care trusts hit the financial buffers a couple of years ago and were racking up massive deficits what happened in reality was that PCTs withdrew their support from schemes that they were running jointly with councils and social care and those budgets got cut or that councils had to find the money to keep them going on their own. So if we're now in a situation where the NHS has more money left than it thought it had it would seem appropriate that you share in the upside as well as the downside.

WEBBER
Our issue is that we've got a certain amount of double running that we have to do in the meanwhile which is dealing with some of the causes of ill health that we've got now, so people still expect their waiting times to be reduced, they still expect to have that good access to general practice and to accident and emergency services. We have to run that at the same time.

MILTON
If there is going to be £1.8 billion left unallocated in the NHS budgets then we feel very strongly that money should be allocated on services for social care. Now whether that's done by transferring money to councils or whether it's done simply by investing more in the kind of preventative services that we know will allow people to live independently in their homes I don't really mind, I just think the money needs to be spent in the right place.

WEBBER
I would absolutely agree the money needs to be spent in the right place and I think that's why we really need to be working closely together at local level, we need services that do respond to what people need at local level, we do need services that enable people to be as independent as possible for as long as possible, I don't think we're disagreeing about that. I think we can get into a very sterile debate about who owns the money. The main thing is to get the services that are necessary.

MILTON
I hope you'd agree I'm not tempting you down that sterile debate but what I am looking for is some kind of reassurance from you on behalf of the NHS that that money or a significant amount of that money will be spent on providing services for older people and people with needs to live independently in their homes. And a pound spent on prevention is worth at least a pound on acute care, that's certainly been the experience of the pilot schemes that we've got running together on partnerships for older people. But it's not simply a cash balance because of course if you spend a pound preventing illness you don't have all of the distress and the problems that illness causes to people and their families. So the more we can start to switch funding from the treatment side to the prevention side the better it's going to be for all of us in the long run.

WEBBER
I think it's fair to say a one off injection of cash is not going to solve all of our problems, the one off injection of cash into the social care system is not going to solve the problems. It does need a very much longer term look and we would entirely agree, I think, with Simon's point that this is around long term savings, this is about long term gains in health and care experience. Some of those reserves have to be necessary for some of those rainy day things; what happens if we have something like a flu pandemic, what happens if we do have just one off events that mean that you've got to divert resources somewhere else or the next big thing comes out because obviously some of this money has to be saved against, for instance, some of those high cost medical treatments that come on line - are agreed through NICE as being effective treatments and then have to be paid for through the system? So we do need to keep something in reserve, this needs that funding review of social care funding and the green paper that's promised later on this year to put social care on a good basis, not to suddenly think because we've got £1.8 billion in health that that's going to be the long term solution because it isn't, it needs a much more far ranging view.

MILTON
Councils feel that we shared your pain would now like to share some of your pleasure. The NHS is a huge organisation, absolutely mammoth, its budgets are massive and therefore within the context of that small percentages can represent a lot of money. I think there is an opportunity to use that money in ways that will really help people who are struggling to live more independently better lives at home than we're currently able to help at the moment.

WAITE
Sir Simon Milton from the Local Government Association and Jo Webber, deputy policy director at the NHS Confederation.

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