Comment / This bug will bite

The national deficit is real, so NHS protection from further cuts in 2010/11 is no reason to take the foot off the efficiency pedal.

The ‘let’s play it safe with people’s lives’ approach taken by airline safety body NATS during the recent volcanic ash episode provoked incredulity and venom from airline bosses and disappointed travellers alike. This may have resonated with those of a certain vintage in the NHS. 

Way back in 1999, the corporate world was fixated with the ‘millenium bug’.  This innocuous-sounding phenomenon represented the horrific proposition that computer chips embedded in machinery, cars, planes and medical equipment were about to malfunction as the year 2000 ticked in. The more extravagant doomsayers, many of whom resided in a somewhat opportunistic IT community, foretold planes and satellites dropping from the sky and the lights going out.

As it turned out, Big Ben rang in a pretty quiet new year, certainly in IT terms. However, the NHS had simply not been able to take the chance and had spent millions of pounds investing in the replacement of mission-critical equipment and running expensive business continuity and disaster recovery rehearsals.

The relief felt on that occasion perhaps resonates with the reaction of many in the NHS to new chancellor George Osborne’s announcement at the end of May on early action to address the UK deficit. The NHS will not be contributing to the £6.2bn of additional savings required of public services the rest of this year. This came alongside health secretary Andrew Lansley’s commitment to real-terms growth for the NHS over the five years of this Parliament.

 Both announcements represent a significant improvement on our previous working assumptions – that at least £3bn of the £6bn in-year squeeze would be directed at the Department of Health and that ‘flat real’ growth was likely to be the best outcome of the next comprehensive spending review.

The temptation might be to assume that our worst fears have passed. That we can carry on as previously, but with marginally less expansive behaviour.  But these announcements must not be an excuse for taking the pressure off the QIPP (quality, innovation, productivity and prevention) agenda.  Indeed there are at least four good reasons to step up the pace.

First, the £6.2bn may have an impact on health.  Certainly the multimillion-pound savings targeted in Wales, Scotland and Northern Ireland may even now persuade local assemblies to revisit NHS allocations in 2010/11. Second, the Department of Health, like other government departments, will be subject to Whitehall job freezes and efficiency drives. Third, inflationary pressure is building in the economy –  RPI is now 3.5% and rising, and in the next 12 months may be fuelled by pent-up wage demands in the private sector and higher VAT.  What price then negative tariff growth?

Finally, although undeniably painful for the victims of further in-year allocation cuts, £6.2bn is a drop in the ocean – a statement of intent to the money markets rather than a major contribution to recovering the deficit. The UK ‘s debt remains at eye-watering levels, £893bn at the last count (estimated at £90,000 per household if private finance initiative and public sector pension liabilities are added). Previous estimates of the impact on the NHS are unlikely to be understated and the challenges that lie before us are just as great as we anticipated.

So let’s celebrate this unexpected headroom and push even harder.  This bug will definitely bite.