Plenty of column inches have been dedicated to local authorities' efforts to drive down costs in line with the efficiency targets imposed by the Gershon review of public sector efficiency. The scope of the review goes beyond local government, however, containingrecommendations for the public sector as a whole, including spending efficiencies in the NHS. Thomas Howard explains the details

Following the recent spending review, which brought a slowdown in NHS spending, itwould seem that now is a good time to consider introducing the recommendations of the Gershon review into health service planning.

Yet the influence of Gershon is already being felt in NHS spending.In recent years, the review has helped structure the development of the service and the policies that shape it in a number of ways.

One clear example of this is the ongoing reduction of NHS arms'-length bodies. In fact, in 2004, then health secretary John Reid said: 'Our review of arms'-length bodies shares a common objective with the Gershon review.' A concentrated streamlining of areas once handled by the bodies is likely to see a trimming of their number from 38 to 20 to achieve a 25 per cent workforce reduction by the end of 2007.

Sharing costs

Another example of the effect the review is having on the NHS can be seen in theNHS shared business services initiative - a joint venture between the Department of Health and Xansa for the provision of payroll services.

Although the initiative came into existencebefore the Gershon review was published, its core business overview reads almost like an excerpt from the review itself.Take-up of the services post-Gershon has been so successful that the programme is now providing services for more than 100 trusts.

Likewise, the HealthcarePurchasing Consortium currently represents more than 60 NHS trusts and primary care trusts in the West Midlands and London, achieving savings through group procurement of goods and services

An excellent example of a local government efficiency drive working in tandem with the NHS can be seen in the emergence of care trusts. The combined delivery of PCT services and the social services for which local authorities are responsible can significantly reduce the levels of resources required.

The restructuring of PCTs and strategic health authorities in 2006 was almost certainly influenced by the Gershon review. Trusts and authorities were merged rather than broken up or dissolved to take advantage of potential economies of scale by reducing bureaucracy and headcounts.

However, efficiency drives are rarely a smooth ride, and a knock-on effect of a move towards increased shared services may well be job losses, which can in turn lead to an increasingly disgruntled workforce. Recent and likely further industrial action over pay bears witness to this. All the same, the new government continues to place an emphasis on restraint when it comes to public sector pay.

With this in mind, the NHS might consider streamlining other assets, such as land and property, in keeping with the Lyons review - another efficiency-inspired government drive - to bring about cost savings.

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