The Canadian approach in the 1990s to making society-wide budget reductions has some highly relevant lessons for an NHS facing spending constraints now, says Phil Kenmore

The Comprehensive Spending Review is almost upon us and many across the public sector are holding their breath. Even though the NHS has a “protected” budget, this will not prevent the pain of transition from a context of growth to one of contraction.

Canada faced a similar crisis in the 1990s. The country had to implement major budget reductions and rethink the role of the federal government. Now widely regarded as having done a good job, it can offer lessons both for governments around the world and for health service leaders.

When the new Liberal government came into power in 1993, the Canadian national debt stood at 67 per cent of GDP, and servicing it was consuming over a third of the government’s revenues.

Previous attempts to make savings had not worked and it became clear that a more serious and coherent approach would be required. Jocelyne Bourgon, who was secretary to the cabinet and head of the Canadian public service at the time, described it as “less of a fiscal exercise and more of ‘un projet de société’ undertaken under severe financial constraints”. They were not just concerned about money but posing questions about how the country should be run, the role of the federal government and what citizens could expect in return for their taxes.

They had three elements that were critical to their success:

  • ensuring everyone understood the extent of the crisis and the fundamental nature of the spending review. All parts of government and its stakeholders, including the public, had to see the need for major change.
  • orchestrating a process of programme review covering all aspects of national government and centring on the lead politician and the head of service for each department. They all worked from six standard questions (see box).
  • developing a clear process of challenge and decision making: peer review of proposals at a senior level and arbitration of any outstanding questions by the full cabinet, which also ensured overall balance in the programme review.

By 2007, Canada’s government debt as a proportion of GDP was cut to about a third of its crisis level. It was by some margin the lowest of the G7 countries, having been the second highest. No wonder that, in the past year, other governments, including the UK coalition, have been consulting Canadian politicians and public servants about what they should do.

Reduced debt

So what lessons does the Canadian experience hold for the NHS facing cuts?

  • Engage stakeholders to build a common understanding of the crisis and a consensus about the need for change.
  • Rethink the purpose, priorities and mode of operation of the organisation as a whole and each area of service provision. Just demanding efficiencies or spreading budget cuts around through a policy of equal misery won’t work - decisions about investment and reductions have to be based on genuine strategy.
  • Build and keep working at the understanding and approach of the top team. There has to be a collective commitment to make savings at the right level and in the right way. It is also essential that each director accepts their personal accountability to make their contribution - protecting one’s own patch is not allowed.
  • Once the direction is clear, move quickly to make cuts and make them in one go. Slow or uncertain progress will increase the pain and make it impossible to sustain or improve services.
  • Validate proposals and secure the savings through a clear process of decision making, supported by strong programme management driven from the top.
  • Alongside the programme of financial savings, invest in parallel initiatives to raise the capability and morale of employees. This is not easy, but it is essential. Public expectations will only be satisfied by an engaged workforce which has the leadership and the skills to meet new demands.

The challenges facing the NHS are, in their own way, similar to those of the Canadians. Very difficult decisions have to be made, unheard-of changes implemented and stakeholders brought along.

No leader can face this without trepidation, but the best can learn from experiences elsewhere and see the challenges as an opportunity to create wider change - “un projet de société”.