10 per cent admin budget cut could leave CCGs 'unsustainable'

Under spending plans set out today, the Department of Health’s administration budget will be cut to £2.7bn in 2015-16 – a real-terms cut of 10 per cent.

The budget pays for the running of NHS England as well as internal departmental running costs. It also funds CCG running cost allowances, which in turn fund commissioning support units.

“A cut of that size would make some CCGs unsustainable”, said Steve Kell, co-chair of NHS Clinical Commissioners.

“CCGs are barely able to function at the current level of the running costs allowance, which is itself an incredibly blunt tool that doesn’t recognise local need or organisational size. 

“CCGs are very lean organisations.  We are already making a difference but clinical commissioning has to be given the space and resources to succeed. Any cuts will directly impact on our ability to do what we need to deliver high quality patient care.”

The administration budget cuts could also force NHS England and commissioning support units to restructure. A senior NHS England source told HSJ: “I cannot see 10 per cent less admin in NHS England without a rethink on local area teams.”

All CSU funding comes from the administration budget via commissioning groups’ running cost allowances. The cut would hit CSUs in the year they are preparing to become “externalised” as standalone organisations in April 2016.

One CSU leader told HSJ: “The whole system needs to factor in significant and sustained challenges to management costs, and accept the need for continuous adaptation… I think there is a good likelihood of fewer, larger CSUs, doing more as NHS England and CCG running costs are squeezed.”

A DH spokeswoman said the 10 per cent cut was “stretching but achievable.”

However, NHS Confederation chief operating officer Matt Tee said it was “hard to see how the government expects organisations just three months into their existence - including NHS England and CCGs, some of which are not yet even fully staffed - to plan to make drastic savings from budgets that are already tight”.

He added: “We await further detail on this aspect of the spending round with concern.”

Nuffield Trust chief economist Anita Charlesworth said: “It is absolutely right that the front line should take priority when resources are scarce.

“However, with clinical commissioning groups and the Care Quality Commission playing a vital role in ensuring quality and security of services, ministers must ensure that they have enough funding to do their jobs well.”

She called for the government to provide assurance that the government had “fully considered any potential impact on the commissioning and oversight of care”.