HSJ live logo

HSJ live logo

  • Pay freeze lifted: average 1% pay rise for public sector
  • DH protected from departmental budget cuts for two years
  • Sandwell and West Birmingham Hospitals confirmed as candidate for new PFI


5.07pm More worries about how pensions changes will hit top medics. Paul Flynn, chairman of the BMA consultants committee, says: “We are pleased that the government has signalled its commitment to continue with national pay arrangements in the NHS.  A move to locally negotiated pay would be very damaging to the NHS. We are also relieved that the NHS remains due to receive a real terms increase in funding next year, albeit a small one.

“However, the change to the tax allowance on pensions savings will affect thousands of doctors – not just the highest earners.  Doctors with long service in the NHS could be facing a large tax bill.  This is on top of the whole raft of changes the Government is implementing to NHS pensions, including raising the Normal Pension Age and hugely increasing contributions.”

5.06pm Steve Simkins, KPMG’s head of public sector pensions, says: “The new pensions annual allowance, reduced to £40,000 as part of the government’s drive to reduce the deficit, will leave many public sector workers facing unintended consequences, bearing the brunt of the changes.

“This change, together with the reduced Lifetime Allowance of £1.25m also announced today, is designed to restrict pensions tax relief for people earning over £100,000 a year. However, public servants earning as little as £40,000 a year could incur a tax charge because of public sector pay scales”

“To add to this, public sector employers are committed to fixed pension arrangements and so are unable to respond to the additional tax charges by reducing benefit accrual in the way private sector employers can.

“This means that talented teachers, doctors and civil servants will see further benefit reductions in addition to the Hutton benefit reforms.”

4.25pm With social care facing a funding crisis that has profound implications for the NHS and local government, fresh thinking is needed, writes Lord Warner.

The former health minister says: “We still pretend that the core business of the NHS is acute hospital treatment, when it is now community-based care.”

2.57pm Here’s our full report on the abandonment of regional pay

2.50pm The Healthcare Financial Management Association has responded to the autumn statement:  “We are pleased that health budgets have been protected in this Autumn Statement. This recognises the pressures and challenges when managing healthcare with an ageing population and a wealth of innovations in technologies and treatments. 

“The chancellor confirmed a one per cent pay rise in 2013 for NHS staff, following two years of pay freeze. This will inevitably add to existing cost pressures alongside the incremental pay awards already built into the system.

“We welcome the launch of PF2, following the review of PFI. We have previously raised concerns that we need well-thought out options for long term investment in NHS capital. This is an important first step and we will study these plans in detail. 

“The chancellor’s decision not to impose further cuts in 2013-14 on local authority budgets is important for vulnerable people supported by both social services and the NHS.”

2.47pm One source close to the world of NHS PFI says: “Given the many hundreds of meetings Treasury hosted as part of the PFI review with contractors, health professionals and funders as well as the many written submissions in the ‘call for evidence’ what PF2 is in reality is the model used for LIFT (local improvement finance trust) schemes in primary care.

“It feels a fudge, a long and protracted exercise which in reality stalled PFIs. I doubt there is any real commitment in Treasury for significant investment in hospitals going forward. Little of the detail relating to infrastructure investment mentions hospital developments and I suspect roads, schools and other sectors will benefit from infrastructure investment.”

LIFT schemes see a private partner provide 60 per cent of the funding, with the remaining 40 per cent coming from the primary care trust and Department of Health-owned firm Community Health Partnerships.

2.45pm Royal College of Nursing general secretary Peter Carter said: “Nurses will welcome the chancellor’s commitment to national pay arrangements in the NHS. We now hope that experiments such as South West pay consortium will come to a natural end. National pay arrangements are a fair and flexible way of ensuring that the right staff are in the right place to deliver quality care for patients.”

2.19pm @andyburnhammp tweets: Osborne announces U-turn on plans for regional pay in #NHS - after Labour pressure.

2.14pm @HPIAndyCowper tweets: Nothing on Dilnot, then?

2.12pm Just to confirm, Sandwell and West Birmingham Hospitals Trust has been named as the first in the health sector to work with the Department of Health on a “PF2” deal. The Treasury papers on PF2 said the trust: “Is working with the DH to assess the suitability of PF2 to deliver significant new investment, enabling consolidation of services from multiple sites and reorganisation of activity between hospital and community settings.”

The Sandwell and West Birmingham work will be worth £325m.

2.10pm Bob Trunchion, MHA Healthcare sector spokesperson, says: “The reduction in the Pensions Annual Allowance from £50,000 to £40,000 will have a disproportionate affect within the medical profession, particularly for GPs whose pension fund is uprated annually by a dynamisation factor over which they have little control.

“A GP with 30 years service and earning in the region of £120,000 could easily fall into a tax charge by exceeding the annual allowance.”

2.05pm @shirleyayres tweets: health protected but not #socialcare - this will have serious implications for the #NHS #as2012

2.03pm @NickGolding tweets: Health is the ONLY dept protected from budget cuts in 13-14 and 14-15. Flat budget, not rising #as2012

1.55pm This from Osborne’s speech:

“Today, we are reducing departmental resource budgets by 1% next year and 2% in the year after. We will continue to seek efficiency savings in the NHS and in our schools, but that money will be recycled to protect spending in these priority areas.

Local government budgets are already being held down next year to deliver the freeze in council tax, so we will not seek the additional 1% savings next year – but we will look for the 2% saving the year after.

1.54pm Alan Downey, UK and Europe Head of Public Sector at KPMG, says:

“With the fragile state of the economy the chancellor clearly wanted to spend more on capital programmes in an effort to stimulate economic growth and fund investment in infrastructure. The big question now is how government departments will respond?  Will they just trim at the margins, or will they opt for more radical change?

“The hope must be that this turns to advantage by using it as an opportunity to drive fundamental reform of our public services, and invest the money that is saved in capital programmes.”

1.50pm Local Government Association chair Sir Merrick Cockell says: “So far local authorities have largely restricted the impact of cuts to discretionary areas such as culture and environmental services, with councils working hard to protect spending on social care for children and the elderly. But even these areas are now facing reductions. That impact will only increase in line with any further cuts.”

1.48pm: @BlackettWalker tweets: Reduction in the annual allowance & lifetime allowance will have a significant impact on Doctors/Consultants pension arrangements

1.44pm This from the main document: “The Government will operate on the principle that departmental resource budgets will continue on the same trajectory in 2015-16 as over the period of the Spending Review 2010. In line with the policy set at Spending Review 2010, spending on health, schools and Official Development Assistance (ODA) will be protected from further reductions.”

1.43pm Deficit levels: Last year the deficit was 7.9%, this year 6.9%, 6.1% next year, 5.2% the year after, 4.2% in 2015-16, then 2.6%, before reaching 1.6% in 2017-18.

1.38pm The full transcript of the chancellor’s speech is available. Here are a few key passages:

Growth forecasts: are -0.1% this year, 1.2% next year, 2.0% in 2014, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017.

“We are today publishing the reports we commissioned from the pay review bodies on market-facing pay. We commit to implement these reports. This means continuing with national pay arrangements in the NHS and Prison Service, and we will not make changes to the civil service arrangements either.”

1.27pm Osborne’s now finished. Treasury documents confirm HSJ’s story from yesterday: “In the health sector, the Sandwell and West Birmingham Hospitals NHS Trust project is working with the Department of Health to assess the suitability of PF2 to deliver significant new investment (c. £325 million), enabling consolidation of services from multiple sites and reorganisation of activity between hospital and community settings.”

@NickGolding tweets: That’s only mention of the word hospital in the whole document I could find. Doesn’t look like many hosp rebuilds are “shovel ready” #as2012

1.15pm @CrispinDowler tweets: GO: Will save 3.7bn in 2015-16 by uprating benefits by less than rate of inflation.

1.10pm @CrispinDowler tweets: Pay freeze will be lifted. 1% rise.

1.01pm Osborne says documents will be published today on replacing the “discredited” PFI

12.57pm @CrispinDowler tweets on dept expenditure limits: Reducing DELs by 1% next year, but not in DH

12.55pm @NickGolding tweets: Osborne commits to national pay arrangements in NHS #as2012

12.49pm @hmtreasury tweets:”Tougher economic conditions mean that while deficit is forecast to go on falling - it will take 4 years instead of 3.” #AS2012

12.45pm @CrispinDowler tweets: #AS2012 OBR forecasts net growth of -0.1% this year.

11.02am The Care Quality Commission is investigating a claim its former chief executive Cynthia Bower tried to discourage the health service ombudsman from investigating concerns about University Hospitals of Morecambe Bay Trust.

11.01am A cash pot used to pay for life-extending drugs should not be limited to patients who have cancer, the head of the National Institute for Health and Clinical Excellence has suggested. Sir Mike Rawlins, chair of the NICE, told the Commons health committee that allocating the money solely to cancer treatments made him “uncomfortable”.

7.05am Good morning, on HSJ today Noel Plumridge and Steven Reid write about how understanding patients’ psychiatric conditions can help acute care providers improve physical health.

“Evidence from a range of sources suggests liaison psychiatry reduces A&E reattendance by people with mental health problems and reduces readmissions and length of stay, particularly among older people where dementia frequently passes undetected and results in a prolonged admission.”