The must read stories and most important developments from Friday

Money talk

On Friday, George Osborne abandoned his target to bring government finances back into surplus by 2020.

The target has been the cornerstone of the chancellor’s economic policy, and the driving force behind the public spending cuts set out in the 2015 comprehensive spending review.

For the Department of Health, unlike other spending departments, his efforts to bear down on the deficit have not been translated into real terms budget cuts - but they have driven the most sustained restriction in spending growth in the history of the NHS, which is in the midst of a major financial crisis.

There is no reason to assume Mr Osborne’s reversal opens up the possibility of any increase in NHS funding during the current parliament – an outcome many people had been hoping for prior to the outcome of last week’s Brexit decision.

Abandoning the surplus target would, however, allow the government to increase public borrowing in response to reduced tax revenues, rather than impose further spending cuts or increase taxes.

Meanwhile, in his first speech setting out why he thinks he should be prime minister, Michael Gove said: “I will take all the steps necessary to give the NHS at least another £100m per week by 2020.”

It is unclear how he intends to fund this increase.

It’s worth bearing in mind, though, what Simon Stevens said last month. “I do not believe it would be prudent for us to assume any additional NHS funding over the next several years”, he told the Confed conference, and if extra money did appear “frankly, we should be arguing that it should be going to social care”.

A bloody mess

The ink was barely dry on Jim Mackey’s letter detailing how consolidating pathology services would be a key part of driving down the provider sector’s deficit when news broke that a flagship pathology venture was in disarray.

Providers have been given just a month to produce plans for consolidation of back-office and pathology services across entire STP patches, under instructions sent out by the NHS Improvement chief executive on 28 June.

But the dramatic developments in the East of England we revealed on Friday have shown how challenging consolidating pathology services is.

Cambridge University Hospitals Foundation Trust, the host trust of The Pathology Partnership, declared it was pulling out of the six-trust venture, which racked up a £15m deficit last year.

The trust faces a £5m bill to cover the costs of extricating itself from partnership, which was launched just two years ago.

The partnership’s 800 staff are all contracted to the teaching trust, which also hosts one of the network’s two main “hub” laboratories, meaning its departure removes a cornerstone of the project.

The drive to consolidate pathology services was first called for by Lord Carter’s review of pathology service 15 years ago, but many trusts still retain their own standalone labs. Cambridge will now re-join this bunch and use its state of the art facility to serve the trust and GPs in its catchment area.

Drawing up the plans for these ventures is never the problem. It’s when the plans are implemented that the trouble begins.