this week

Ministers have called an end to the annual round of management cost-cutting targets for the coming year.

The move, announced by health minister John Denham in a written parliamentary answer last week, follows a report on management cuts in the first year of the Labour government. It shows that health authorities and trusts exceeded their targets.

As predicted in HSJ last week, the figures enabled ministers to claim that the NHS was 'on target to free up£1bn from bureaucracy over five years'.

The DoH report claims that management costs across the NHS fell by£106m in real terms in 1997-98 and will fall again when figures for 1998-99 are published.

But it also reveals that trust management costs across the country are set to rise by£19.2m in cash terms.

Announcing an end to cost-cutting targets, Mr Denham said the government 'recognises the importance of good management', but that it 'remains committed to tackling unnecessary bureaucracy'.

NHS Confederation chief executive Stephen Thornton welcomed the move, saying it was 'time to take stock and take steps to improve and develop management'.

Barry Elliott, chair-designate of the Healthcare Financial Management Association, described the presentation of the figures as 'smoke and mirrors'.

'On the other hand, if they are saying it has been achieved, I suppose that is good - especially if it means we are not going to be hit with further management cost reduction targets.'

The New NHS white paper promised that steps to 'reduce transaction costs' and 'changes in this white paper' would cut£1bn from administration 'over the lifetime of this parliament'.

Mr Elliott said: 'There is no doubt that the management cost reductions have been real and we have certainly felt them at local level. A lot of these reductions have not come about as a direct consequence of the internal market, which I think was the expectation.

'The savings we have made directly as a result of the ending of the internal market are fairly minimal because the new arrangements have brought with them their own bureaucracy,' he said.

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