News / News review September 2015

The summer kicked off with a second Budget this year, with chancellor George Osborne committing the government to ‘fund fully’ the Five-year forward view. ‘Our balanced approach means I can confirm the NHS will receive – in addition to the £2bn we’ve already provided this year – a further £8bn,’ he said. ‘That’s £10bn more a year in real terms by 2020.’ Mr Osborne said there was a ‘simple trade-off’ between pay and jobs in public services, so recent public sector pay awards would continue with a rise of 1% per year for the next four years.

The question of how the additional money will be allocated to the NHS over the next five years will be oft repeated in the run-up to the spending review on
25 November. Certainly, the NHS would like it early – and according to the King’s Fund and the Health Foundation, more than the promised £8bn is needed. In a joint report, Making change possible: a transformation fund for the NHS, they said £1.5bn to £2bn a year was needed in the period up to 2020/21. They added that an independently administered transformation fund should be established to accelerate changes in the delivery of healthcare. This would help unlock efficiency savings and become an integral part of the NHS and the
way it is funded.

 Pharmaceuticals are a major cost for the NHS and we learned in August that medicines used to treat diabetes account for 10% of the annual primary care prescribing bill in England. The Health and Social Care Information Centre said the net ingredient cost for managing diabetes in 2014/15 was £868m. This was 10% of total primary care prescribing spend and compares with 9.5% in 2013/14 and 6.6% in 2005/06. Charity Diabetes UK said the number of people with the disease had risen almost 60% in the last decade to more than 3.3 million. Only 60% of those with diabetes receive the eight care processes recommended by the National Institute for Health and Care Excellence.

Medicines dispensed but unused is an unnecessary cost and health secretary Jeremy Hunt announced a plan to address this. He said the public had a part to play in the responsible use of NHS resources by not wasting drugs – believed to cost £300m a year. He plans to publish the indicative medicine costs on all packs of medicines costing more than £20. The note on dispensed packs will also say ‘funded by the UK taxpayer’ to remind patients of the cost of medicines, he said. The move could be introduced next year.

Despite the extra funding this year, providers in England are still struggling and are revisiting financial plans to uncover further savings (see Summertime blues, page 8). Symptoms of this were seen in July and August when Monitor made a number of announcements on the finances of individual trusts. The regulator launched investigations into the finances of four foundations. However, it closed an investigation into Yeovil District Hospital NHS Foundation Trust, concluding that the trust has a strong leadership team and had developed a robust plan to address its financial problems.

As Healthcare Finance went to press, Monitor had announced seven foundation trusts had agreed plans to improve their financial positions. This included Queen Elizabeth Hospital King’s Lynn NHS Foundation Trust, which was removed from special measures following improvements in the quality of care. Monitor warned that the trust still faces significant financial challenges. The trust has agreed to a plan for securing clinical and financially sustainable services. This will aim to clear a deficit of almost £14m.

A row broke out between Labour and the government over mental health spending. Using freedom of information requests to clinical commissioning groups, Labour said the average MH budget has declined in 2015/16. NHS England guidance says it should increase, but 50 of the 130 CCGs that responded to the requests said they planned to reduce the mental health allocation this year. The Department of Health said it did not recognise the figures and insisted that mental health services were a priority for the government. 

With the focus on the service’s financial woes, attempts to change hospital doctors’ contracts have largely flown under the radar. The changes are linked to the government’s insistence on a move to seven-day services. Mr Hunt plans to remove the weekend opt-out for newly qualified consultants. Senior doctors can keep their current contract, though off-contract payments for those who continue to exercise the opt-out will end. Removal of the opt-out was backed by the doctors’ pay review body, though it said more resources would be needed. Negotiations were to conclude in August, but Mr Hunt said if no deal was agreed he was ready to impose a new contract. BMA junior doctors’ leaders decided not to negotiate with employers, claiming the government was trying to impose a new contract.

Away from bruising encounters with doctors, Mr Hunt announced the jointly led Monitor and NHS Trust Development Authority would be called NHS Improvement. Ed Smith, currently NHS England vice chair, will chair the new body, with Ara Darzi as non-executive director.

A Welsh government green paper could lead to a shake-up in the NHS financial regime. Our health, our health service said health boards could be allowed to borrow funds for capital development. Currently only NHS trusts in Wales can borrow, to a limited extent. The paper also asked if it remained appropriate to prepare separate statutory summarised accounts for NHS trusts and health boards, given the organisational changes. Also, trust accounts may soon be included in the Welsh government consolidated accounts and would have to be consolidated with health board accounts. This raised the question of whether two summarised accounts were needed. Consultation on the paper closes on 20 November.

Health and social services minister Mark Drakeford announced that the mental health budget in Wales will continue to be ring-fenced. The ring-fence on MH revenue allocations was introduced in 2008 and the Welsh government Together for mental health strategy, published in 2012, pledged to continue this arrangement until a review this year, which has now been completed.