By the time this edition of HSJ is published, two keenly awaited financial questions may have been answered. One is how the results of the Greek elections – widely seen as a referendum on “austerity” – could determine whether that nation’s future is within or outside the eurozone.
The second is NHS England’s financial outturn for 2011-12. Auditors have been in, and the smart money is on an underspend somewhere north of £1.5bn.
In January, strategic health authorities and primary care trusts combined were already forecasting that figure. What’s uncertain is the impact of late Department of Health attempts to offload money – a bung for the NHS Litigation Authority, a capital fund, something to offset private finance initiative liabilities, and rather a lot sloshed towards A&E performance. This should ease ministerial embarrassment.
Not that Whitehall faces will be red. It will be called a “surplus”, not an underspend. It will no doubt be praised as “progress” towards a quality, innovation, productivity and prevention target that, mysteriously, nevertheless stays at £20bn.
But it is not a surplus. Trading organisations, including NHS providers, make surpluses. Health insurance companies make surpluses too, though they tend not to crow about them. But NHS commissioners are ultimately an arm of government, prioritising and channelling the resource that Parliament votes for healthcare. Not spending it, especially for two successive years, suggests the NHS didn’t need the money in the first place. The 2010-11 underspend was nearly £1.4bn, and George Osborne retrieved £0.5bn of it in the Budget.
With the level of cost improvements being forced on NHS providers, that’s a crying shame.
In 2011-12 a strategic reserve of around £1.8bn withheld from PCT allocations may well prove adjacent to the final underspend. A similar reserve has been withheld in 2012-13. Smart providers will learn. Hurry slowly on the cost improvements: come winter the money will flow.
The link with what’s happening in Europe isn’t deficit, debt or bailout loans at punitive rates. The NHS is solvent, and has been for years. The link is a belief that “austerity” is virtuous; that spending less public money is automatically good.
Economists as well as voters are now calling this into doubt.