Daily Insight: The ‘cost of staying in the NHS’ crisis

The chaos of the past week has been nothing short of startling as the current and future economic viability of the UK hung by a thread.

It was so eyebrow-raising one might have been forgiven for briefly forgetting that the stress from prolonged economic hardship pressing down on workers in this country is doing damage to our people and the fabric of our institutions.

This is true for the NHS, a fact NHS Providers underlined on Friday with a survey of trust leaders.

It sounded a warning siren that the crisis risks knocking the stuffing out of the health service.

Staff are leaving or looking to leave the service, most particularly from roles in lower pay bands. They are unable to afford to work in the NHS. They are struggling to afford the commute, to pay for food, for their children’s clothes, heating.

This will compound high vacancy and turnover rates. It will have a significant impact on capacity. Which is a double whammy; the same pressures on NHS staff are being felt by patients. Trusts expect demand to rise as a direct result of people falling prey to the cost-of-living crisis.

Redo the REGOs

Energy costs to trusts are bound up in the inflation-blown, spiralling global energy market. But one area of energy procurement causing grief for many trust balance sheets however is a cost pressure inflicted by the NHS itself.

The NHS standard contract stipulates trusts must buy renewable energy. To do so, they must use renewable energy guarantee of origin or REGO certificates.

These are an accounting tool to quantify the amount of renewable in the overall national energy mix. Each time a megawatt hour of renewable is produced, the national energy regulator assigns it a REGO.

Thing is, these REGOs are not indelibly bound to that MWh. They can be separated and sold on. An energy supplier getting all their power from fossil fuels can therefore buy as many “unbundled REGOs” as MWh they get from coal or gas and sell on the power to consumers as “green” energy.

A trust in Yorkshire has found the cost of these REGOs for part of its estate have risen by more than 1000 per cent and unsurprisingly have decided not to pay eyewatering sums for greenwash.

They appear to be a vanguard as other trust sustainability and procurement leads are eyeing REGOs as an unreasonable burden. We may see more providers seek a redo on the REGOs.