NHS finance sources are concerned the new government may claw back the £1.7bn set aside for “non-recurrent” spending.
The coalition government has confirmed plans outlined by the Conservatives before the election to cut £6bn from “non-frontline services” this financial year.
A comprehensive spending review – designed to set out spending for the next two to three years – has also been launched and is due to report in the autumn.
The announcement has left NHS finance sources expecting the new government to “claw back” the 2 per cent of primary care trust allocations that were set aside for “non-recurrent” spending this financial year.
The requirement to set aside the 2 per cent – approximately £1.7bn – was set out in the NHS operating framework. NHS chief executive Sir David Nicholson told HSJ at the time that £1.7bn should be used to “fund the costs of change”, including reconfigurations and redundancies, although the former are now less likely given the political uncertainties of a hung parliament.
An NHS finance director told HSJ: “It’s just there, waiting to be clawed back. It’s almost as if the DH top team did it strategically knowing a new government would want it back.”
During the election, the Institute for Fiscal Studies said only around a fifth to a quarter of the spending cuts implied by the Conservatives and Liberal Democrats had been set out in detail, creating anxiety over further cuts which will be outlined in the emergency budget that the new government said yesterday would happen within 50 days.
Sources close to the Conservative Party told HSJ this week that a Conservative-Liberal Democrat alliance gave the Conservatives “political cover to cut the NHS”.
If they did so, the government would want ensure that “taking the pain” of cutting more money from public services was enacted sooner rather than later.
The source said: “You [the government] will be able to say ‘that’s Labour’s fault [for getting us into this situation]’; that’s the sort of thing you would do strategically.”
Finance sources also told HSJ the Department of Health was refusing to make capital allocations to the NHS, as they were uncertain whether the NHS’s £4.5bn capital budget for 2010-11 would hold.
A senior NHS finance source said: “There is a fair amount of uncertainty around capital: There might not be any at all.”