At first it seemed clear enough. The McKinsey proposition – save £15bn-£20bn – was simplified as £20bn. The clarification was made, as the Department of Health’s Jim Easton said, “without anyone noticing”. After all, what’s the odd £5bn between friends?
A deadline of 2014 was set. It was rebadged the “Nicholson challenge”, presumably so the world would know who to blame. The answer would be QIPP, the DH’s quality, innovation, productivity and prevention savings programme.
April 2011 duly arrived and the NHS began saving even more money than previously. As well as cost improvements on a daunting scale, there was rationing, and a pay freeze. Referral criteria were imposed. Quangos were culled. Headcount was trimmed. Brown envelopes were issued.
The NHS had risen to the challenge, as it always does. Clever people might undermine the purity of the original message. Perhaps, they whispered, recession had dented some of the original McKinsey assumptions, like the one about pay inflation. Perhaps recession meant 2014 wouldn’t see a return to “business as usual”.
But the mantra “the problem is £20bn, the answer is QIPP” remained intact.
In uncertain times it was strangely comforting to know that some things, like financial trauma in the NHS, hadn’t changed.
Yet actually the NHS ended 2010-11 in the black. Primary care trusts and strategic health authorities underspent by nearly £1.4bn.
Foundation trusts and NHS trusts reported a combined surplus of £0.5bn. Besides, the foundation trust sector was sitting on cash reserves of £3.3bn. Puzzled provider managers, under the QIPP cosh, wondered why in-year savings could not offset the Nicholson challenge.
They’re still asking. The projected 2011-12 outturn for PCTs and SHAs, published in March, is an underspend just shy of £1.5bn. Presumably sensing embarrassing questions ahead – such as “with all this cash, why are you cutting services so deeply?” – the Department of Health began offloading money as if it was going out of fashion. A £300m capital fund, a private finance initiative bailout fund, £185m for the litigation authority, and lots of money to support acute hospital access.
A grateful George Osborne finally hoovered up half a billion of that 2010-11 underspend in his March budget.
Where will the 2011-12 savings end up?