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Azra Zyada
Health Series: Expert Comment

Has the NHS really come out of the Spending Review victorious?

Azra Zyada, Cass Business School Senior Research and Development Fellow, looks at the sums behind the Chancellor George Osborne's Autumn Statement offer for the NHS.

by City Press Office (General enquiries)

Azra Zyada, Cass Business School Senior Research and Development Fellow, looks at the sums behind the Chancellor George Osborne's Autumn Statement offer for the NHS:

"The NHS has come out as the 'victor' of yesterday’s spending review, with George Osborne’s triumphant announcement of a life-saving cash injection to the backdrop of furious nodding from the Health Secretary, Jeremy Hunt. Those in the know, or perhaps those following the news in recent months, may have gotten a nauseating sense of déjà vu. Something about the tag lines and the sums seemed very familiar, and albeit very nicely repackaged, it all essentially came out with the same odd sums: £3.8 billion for a good chunk of £22 billion. It felt like patching a leaking dam with a plaster and expecting a reconstruction.

"On to the numbers: the Department of Health predicted an overall £30 billion funding gap in five years if things continued as they were. This really means that everything stays the same as per when the Five Year Forward View was written well over a year ago, including rate of patient demand, a five-day elective service and assuming that the workforce isn’t going to up-sticks in droves whether it’s to the sunny shores of Australia or better paying agency firms. It’s amazing the difference a year makes.

"However, of that £30 billion, £22 billion was said to be achieved through 'efficiency savings' leaving £8 billion unplugged. The £22 billion has been widely criticised as likely to be unachievable as, according to the Health Foundation’s representation document to the spending review, the current rate of cost cutting is only half of what is required to achieve that targeted efficiency savings. As for the leftover £8 billion, the Tories pledged to cover it in £2 billion annual installments over the next five years.

"The fact that no NHS Trust this year has met their efficiency savings targets and collectively Trusts have racked up almost £2 billion in deficit, I don’t believe the Chancellor of the Exchequer had much choice other than to front-load much of the pledged installments, hence the £3.8 billion cash injection. The caveat, of course, is that the NHS won’t receive a penny of that until it makes good on 'efficiency savings'.

"With a significant cut to an already ailing social care system, a highly-skilled and diligent workforce that is being told to work more for less pay, it is very hard indeed to see how any of this is achievable to sustain a 5-day NHS let alone a 7-day one."

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