Published: 01/07/2004, Volume II3, No. 5912 Page 3 4

The Health Development Agency is to be abolished and most of its work integrated into the National Institute for Clinical Excellence under the government's review of NHS arm's-length agencies.

HSJ understands that the HDA is one of several agencies expected to lose out in the review, the results of which are expected within two weeks.

The HDA, whose chief role is that of evaluating evidence on which public health measures work, will become part of NICE, which will take on a wider remit.

HSJ also understands that the Commission for Patient and Public Involvement in Health, which was only established in December, will be abolished and its patient advocacy function localised.

In the Department of Health's attempt to rationalise, reduce bureaucracy, and make£500m in savings, other bodies likely to disappear are the NHS Logistics Authority and the Purchasing and Supply Agency.

HSJ understands that DoH commercial director Ken Anderson has been given the powers to decide the fate of these agencies, which could be privatised. A number of the functions of the PASA will be devolved locally to supply confederations currently being established by strategic health authorities.

The National Patient Safety Agency will take on the policy work of NHS Estates, covering issues like catering and cleaning services.

The 42 bodies being reviewed split into three main categories:

services/back office functions;

regulation; and training/ education.

A large number fall into the service category, which could be part privatised and able to charge the NHS for their services. Such developments are likely to open up the market for a range of services.

Agencies with an educational role, such as the postgraduate medical education and training board, are likely to fall under a separate review.

And at least quarter of the bodies fall into a regulation/inspection brief. Changes to these agencies are likely to require organisational mergers or an expansion in the remit of the Healthcare Commission.

Making these changes will require changes to the statute books, with a bill expected in the autumn.

Sources speculated that the NHS Appointments Commission and the NHS Pensions Agency could also be moved out of the DoH and placed in a body that would run across government for all public services.

The DoH has a number of different options in order to change the role of the agencies, including the opportunity to set up communityinterest companies.

Other options are to outsource some functions of different agencies to the private sector; to set up establish companies limited by guarantee by the government; or to grant a fixed-term contract which would not be automatically renewed.

The National Blood Authority is the agency understood to be most likely to become a communityinterest company when the new Companies Bill becomes law in the autumn.

It is believed that although the National Blood Authority has the potential to be sold off to the private sector as happened in the US, it would be politically and culturally unacceptable to make a profit from blood if the funds were not reinvested in public services.

The private sector is also keen to get its hands on NHS Direct, seen as an attractive investment and a very strong brand in the market.

However, HSJ sources warned that the DoH must be careful not to give any private bidder a monopoly in the market, something which would also be the case if the government decides to sell off its nursing agency NHS Professionals.

Under review: the health secretary's aims A letter sent by Department of Health director of delivery John Bacon to chief executives of all the arm's-length bodies earlier this month spelt out five core reasons for carrying out the review.

It said health secretary John Reid's aim is for greater NHS devolution; greater co-operation between health and social care; strong efficiency gains; relocation of staff so that 'as many staff as possible are located outside London and the South East; and to ensure 'appropriate impact for minimal burden'.

Last month Mr Reid said that he wanted to halve the number of agencies to 21.However, HSJ understands that this number could be scaled back even further to 17.

Mr Reid is understood to have personally ordered the review when he learned that the arm's-length bodies represented '10 times as many people as those in the DoH'after the department was slimmed down.

The review was ordered last October, but Mr Reid made a further announcement in May this year spelling out exactly how swingeing the cuts would be. It said that by 2007-08 there would be 50 per cent cut in the number of bodies, an expenditure saving of£500m and a reduction of 25 per cent of posts.But of the 42 bodies covered by the review, seven are already abolished or earmarked for abolition, and two have yet to be created.

HSJ sources said Mr Reid made the announcement in May after being disappointed that preliminary recommendations made by civil servants did not go far enough.