The NHS may have fared well financially from Tony Blair's comprehensive spending review, but, asks Lyn Whitfield, will the conditions it comes with prove too restrictive?

The future of management skills

The conference was told that managers would need to develop skills to manage a new-look NHS.

Brian Simons from the Office of Public Management argued that the internal market had taken NHS management 'much closer to the commercial model'. But the new NHS would see managers 'managing things they cannot control' and even 'being held accountable for things they cannot control' which would be 'bloody awful'.

To adapt, he argued, managers would need to develop 'diplomacy and reconciliation' skills to get people from different organisations and backgrounds working together. They would also need to use 'networking, negotiation and facilitation' to achieve their goals.

Simons admitted he could only talk at a 'high level' because 'nobody knows what this new world is going to look like on the ground' or what 'managers will come into work and actually do' in five years' time.

NHS finance managers have been warned that prime minister Tony Blair's promise of 'money for modernisation' will mean managing an NHS with less financial freedom.

Richard Douglas, joint deputy director of finance at the NHS Executive, said last week that the NHS had received a 'good' financial settlement from the comprehensive spending review.

But he told the Association of Chartered Certified Accountants' health service society that the money would come with 'real strings attached'.

'The world has changed significantly,' he announced at the society's annual conference. 'We have got this money on condition that we achieve some clear and specific targets.'

Mr Douglas said the Executive was still grappling with the 'big agenda' of how to monitor targets agreed with the Treasury 'without creating a new monitoring industry'. But when a member of the audience joked that it was difficult to imagine yet more monitoring he was told: 'You ain't seen nothing yet.'

The Healthcare Financial Management Association has expressed concerns about the government's tendency to distribute cash on an 'earmarked' basis. HFMA chair Jaki Meekings warned two weeks ago that this would make it difficult for trusts and health authorities to deal with balance sheet problems. Although Mr Douglas did not respond directly, he acknowledged that a number of flexibilities had disappeared from the system.

In particular, he said new rules limiting virement between capital and revenue budgets to five per cent a year meant 'an enormous flexibility has gone' - although he stressed 'it means we can protect our capital base'.

He added that the three-year nature of the settlement also presented challenges: 'The Treasury has made it clear that the settlement is for three years and if something happens - for example on the pay front - we are expected to manage. We cannot go back to the Treasury and raid the reserves.'

On the other hand, Mr Douglas argued: 'We have done a lot to move towards balance and we have got a settlement that should allow us to move further towards balance while dealing with waiting lists.'

The HFMA has also expressed serious concerns about a lack of detailed guidance from the Executive on the implementation of the NHS reforms. Ms Meekings called for a 'coherent policy' to be developed for dealing with specialist services currently paid for through extra contractual referrals.

Mr Douglas told the ACCA conference he had found discussions about the end of ECRs fascinating. 'When I started, I got so many complaints about ECRs from both sides, from HAs and trusts,' he said. 'Now, everyone tells me there could not have been anything better, while the new system will not work at all.'

ECRs should be replaced by arrangements for commissioning specialist services or 'out-of-area treatments', generally seen as a 'default' position for dealing with services that cannot be wrapped up in any other way.

Mr Douglas told HSJ last week that the sums of money covered by OATs should be 'very, very small' and that the new system should not cause problems for most trusts, although he did acknowledge there could be difficulties in London, where major teaching hospitals depend on ECRs. But a conference discussion showed that finance managers are extremely concerned about how specialist services will fare next year.

Patrick Butcher, finance director of King's Healthcare trust, said: 'The work on commissioning specialist services is a long way behind schedule, so OATs will actually cover a lot of money next year.

'I have had 50 or 60 HAs write to me saying 'this is how we want you to deal with it'. I have ignored them and said 'this is what we are going to do' to keep the system running.'

Other participants felt there was a definite 'risk' that some large trusts could be 'destablised'. But a regional office manager argued trusts would deal with cases 'on the basis of need' within their service and financial frameworks and that any over performance on OATs would be managed by their 'host' HA. This, he pointed out, would mean local populations would lose out if too many urgent cases came in from elsewhere.