Latest analysis and reaction to budget, including four more years of NHS pay restraint

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5.15pm Nigel Edwards of the Nuffield Trust has commented on the budget, warning that “holding down pay indefinitely is likely to be a false economy”.

“For most doctors and nurses whose wages will be cut in real terms, low morale and the pull of the global marketplace will make it ever harder to fill posts. We are already seeing a spiralling bill for agency staff within the NHS, driven in large part by growing problems with recruiting and retaining permanent staff.  In reality, therefore, curbing public sector pay may make it even harder for the government to realise some of its totemic pledges, such as seven-day working and reducing reliance on temporary staff.

“The Chancellor’s surprise pledge to raise the minimum wage to £9 per hour by 2020 will help the health service’s lowest paid staff. But it will mean costs for these staff rising faster than 1%, and will have a knock on impact right up the pay scale. In social care, a growing wage bill at a time of deep cuts may mean council budgets can pay for even fewer vulnerable people to receive help.”

5.08pm Dave Prentis, general secretary of Unison, has commented on the continuation of public sector wage restraint:

“Capping wages at a miserly one per cent for four more years for public sector workers will hasten the reluctant exit of many dedicated staff from our hospitals, schools and local councils.

“The economy is growing yet public servants remain shut out of the recovery. Despite bearing the brunt of austerity, they are to keep paying the price for the reckless behaviour of the banks.”

5.06pm George Osborne confirmed that Cornwall was one of the regions currently involved in discussions with the government to agree a devolution.

As HSJ and our sister title LGC reported last week, this is understood to include greater control over health and social care in the county.

Commenting on the budget announcement, Kernow CCG managing director Joy Youart said: “We welcome the national announcement in today’s budget that Cornwall will continue to explore closer integration within our health and social care community.

“This is in line with our ethos of integrating health and social care, empowering local communities to have greater ownership of decisions and resources, tailored to local needs. It could enable more resources to focus directly on local patient care and outcomes.”

4.37pm Daniel Mortimer, chief executive of NHS Employers, has commented on the budget. He said: 

“We welcome the government’s commitment and confirmation of additional funding for the NHS.
“Patients and employers want to see improved and better seven-day services, and what we urgently need to consider is the workforce and pay and contract reform required to support this, especially for medical staff.
“In continuing with the work to reform terms and conditions of service in and across the NHS, we now look forward to the publication of reports and the observations from the pay review bodies. Following publication we will be urgently seeking to speak with our trade unions, to ensure we continue to work in partnership to progress pay reforms and service improvement across the NHS. 
“Our discussions will now need to be set against the context of today’s announcement from the government of continued public sector pay restraint and we recognise that these discussions are now likely to be more difficult.”

3.35pm Dr Porter is also critical of the government’s plans to replace student maintenance grants with loans:

“Increases in tuition fees and the higher cost of living have made medicine a much less attractive option for many students. The chancellor’s decision to scrap maintenance grants and replace them with loans, burdening students from low income backgrounds with further debt, may be a further disincentive to pursuing a career in medicine.”

3.32pm Mark Porter, British Medical Association council chair, has commented on the budget. He’s not very impressed:

“The government has pledged an additional £8 billion but has failed to set out how the NHS, already the most efficient healthcare service in the world, can achieve the additional £22bn in efficiency savings needed to plug the gap.

“So far the majority of savings have been found through cutting tariffs paid to hospitals and cutting staff pay. The health secretary himself has admitted that continued pay restraint is unsustainable and the chancellor’s cynical disregard for NHS staff is shown by this announcement of a pay freeze for another four years at a time when he knows that inflation will rise above that.”

3.18pm She also flags some potential unintended consequences from the chancellor’s pay announcements:

“NHS staff’s pay will grow at much slower rate than private sector earnings. While this may help bridge some of the efficiency gap it raises real questions on whether it will put more pressure on the NHS’ soaring agency budgets if it leads to recruitment and retention problems.

“The Living Wage announcement is welcome - it will benefit large numbers who work in the social care sector, but with falling local government budgets there are real questions about how this can be paid for without further cuts to services.”

3.15pm Ms Charlesworth argues that in addition to the £8bn increase in spending, the NHS will also require a “transformation fund”:

“The NHS will need this transition money - which will cover investment in new services to run parallel to existing ones - to be able to move care out of hospitals and into communities, making the service fit for the needs of today’s population”.

3.13pm Anita Charlesworth, chief economist at the Health Foundation, has commented on the Budget. She echoes others in saying the extra £8bn might not be enough to bridge the health service’s looming funding gap:

“Despite confirmation of the £8bn in today’s announcement - alongside the £2bn already announced in the last Autumn Budget for this year – the NHS will still need to significantly improve productivity over the next five years to achieve some £22bn in efficiency savings which are required to avoid cuts to the quality of care. If it’s unable to increase productivity, this extra money may not be enough to allow the service to offer the same range and quality of care it currently does.”

2.56pm The Healthcare Financial Management Association has said there is an “urgent need for clarity” on how the £8bn extra funding for the NHS will be allocated.

Director of policy, Paul Briddock, said: “For NHS organisations to implement the wide-scale changes needed to meet the overall £30bn NHS financial challenge and become fit for the future it should be front rather than backloaded or risk a further deterioration in the state of NHS finances.

Our recent ‘temperature check’ showed 92 per cent of finance directors don’t feel the health organisations in their area have sufficient resources available to implement the Five Year Forward View without additional support. In addition, 78 per cent of provider trust finance directors expect to be in a worse financial position at the end of 2015-16 than they were in 2014-15 and, alarmingly, 63 per cent are forecasting a deficit for the end of this financial year, up by a third compared to the 47 per cent that finished 2014/15 in deficit.

Finance directors have ambitious plans to save through improving efficiency, from procurement savings to supporting staff to work in different ways. While this will help protect and maintain services, we can’t rely on these measures alone to plug the remaining £22bn gap in NHS finances. Increasing demand for services and an ageing population mean transformation of service provision is the key to a sustainable, fit-for-the-future NHS. This will require short term investment before long term benefits are realised.”

2.53pm Our story on the budget’s pay restraint announcement is now live.

Chancellor George Osborne has announced four further years of public sector pay restraint, in a surprise move as part of today’s summer Budget.

Speaking in the Commons, the chancellor said public sector pay would rise by only 1 per cent a year for the next four years.

This is at odds with what was predicted in last year’s NHS Five Year Forward View. NHS Employers has also recently talked openly about how to engage staff in contract changes as the NHS moves out of pay restraint.

2.41pm NHS Providers has commented on the budget.

Director of policy and strategy, Saffron Cordery, said:

“This budget comes at a crucial juncture for NHS providers. With high levels of financial pressures on the NHS, we need a clear five year financial plan to match the five year forward view. There is a need to stabilise both performance and finances, and to pursue a realistic goal based on what the NHS is actually capable of achieving over the next five years.

“The announcement of devolved services in Cornwall follows in the mould of ‘DevoManc’. As with the Manchester devolution, there is a need to ensure that there is appropriate and full engagement with healthcare providers in the region, and that there is clarity about the roles and functions of all involved. The clear accountability of every organisation is paramount. It is also important to ensure that the current legislation bill is sufficiently enabling, rather than prescribing an approach based on experience of one or two localities. And with the integrated commissioning that will take place between health and social care in Cornwall, we anticipate with interest what the long term strategy will be around specialised commissioning later this year, as devolution is rolled out.

“We urge HM Treasury, the Department of Health, and the Department for Communities and Local Government to work with NHS and social care providers to establish three things:

  • a clear funding profile for the NHS between 2015-16 and 2020-21;
  • commit to multi-year funding allocations and use of the payment system to enable confidence in investment and better value for money;
  • and give assurance that the NHS will receive the funding that has been pledged in full, alongside stable social care funding.”

2.29pm A bit more from Shaun:

2.20pm HSJ’s Shaun Lintern on more pay restraint:



2.14pm Here’s some first thoughts on the budget’s NHS announcements from HSJ’s Crispin Dowler:

2.08pm A Treasury spokeswoman has confirmed to HSJ that all NHS employees will be eligible for the new £9 an hour living wage announced by Mr Osborne, despite the 1 per cent pay freeze for all public sector employees for the next four years.

1.59pm Harman: people will take the Conservatives’ spending commitments with a “pinch of salt” because of spending reductions in areas like mental health over last parliament.

1.53pm Harman: pay restraint should be based on a fair process, with the decisions of pay award bodies not disregarded.

1.48pm The chancellor has finished his speech, Harriet Harman, the leader of the opposition, is responding now.

1.22pm Here’s an interesting comment from the BBC’s Business Editor, Robert Peston:

1.11pm George Osborne says the government is working on the first of its county deals in Cornwall (as revealed by HSJ and our sister title, LGC, last Friday).

12.59pm Mr Osborne commits to funding an extra helicopter for the children’s air ambulance.

12.58pm The chancellor says the NHS is “only safe in Conservative hands”.

12.57pm Mr Osborne reiterates that a strong, seven day NHS is dependent on a strong economy.

12.56pm The chancellor confirms the NHS will receive an extra £8bn by 2020, on top of the £2bn announced in the last autumn statement.

12.54pm Osborne: we will continue with recent public sector pay awards.

In other words, the government will continue with public sector pay restraint.

12.47pm “In normal economis times governments should run an overall budget surplus.”

12.43pm Mr Osborne says that by 2020 Britain will be doing the responsible thing by raising more money than it spends.

12.39pm George Osborne has begun delivering his budget. He started his speech by saying a strong economy was needed for strong public services, including the NHS.

12.32pm Mr Cameron asked question about investing extra money for children and adolescents mental health in supporting relationships between young mothers and their newborn babies. He says this work is “vitally important”.

12.29pm The prime minister is asked a question on Age UK research showing that one million elderly people are not receiving the care they need.

12.21pm Mr Cameron replies that it is best that experts make decisions around drugs, but says questions will be asked of the prices pharmaceutical companies are charging for their drugs.

12.19pm Conservative MP Caroline Noakes asks the prime minister about the delay in NICE making its decision about whether new drugs should be funded for duchenne muscular dystrophy.

12.16pm Its PMQs in the Commons now, ahead of today’s budget at 12.30pm. If anything health related comes up, we’ll let you know.

11.39am It’s already been a packed week at HSJ, as we announced the winners of the Patient Safety Awards, and named this year’s Clinical Leaders, Best Places to Work, and our inaugural Patient Leaders.

If you want to catch up with who won what, and who came where in our power lists, you can find all the links here.

11.06am New care models provide a unique opportunity to clinical leaders to break barriers of the past and try new solutions to existing challenges, write NHSEngland’s Samantha Jones and Saira Ghafur.

Writing to coincide with HSJ Clinical Leaders powerlist, published on Monday, the authors argue:

“The HSJ Clinical Leaders have demonstrated and celebrated how clinicians have influenced and shaped key policies at national level to make a significant impact on the running of the NHS.

“This positive message needs to be seen across the health service and clinicians at all levels can be empowered with leadership capability and skills in order to continue this impact.”

10.57am All eyes will be on George Osborne this afternoon, as he delivers the first Conservative budget for nearly two decades.

Follow HSJ Live for full coverage of everything in the Chancellor’s red box pertinent to health.

10.33am Last night HSJ unveiled its inaugural Patient Leaders power list.

The inaugural patient leaders awards aim to recognise the full breadth of patients’ and citizens’ role in healthcare. This includes individuals shaping national policy and influencing the NHS nationally and those making waves through being involved in their own care.

You can read the full list of 50 here.

10.25am The Daily Telegraph reports that figures showing the average Briton is issued with 20 prescriptions a year have raised warnings that the country has become “a nation of pill pushers”.

Official statistics show the number of drugs prescribed has risen by 55 per cent during a decade, with steep rises in the numbers tasking anti-depressants, Viagra and heart disease pills.

Leading medical professionals raised concerns that drugs are being too often doled out to tackle lifestyle ills in place of consultation therapies and efforts to encourage healthier habits.

10.24am The Times (newspaper only) also reports on the Dame Barbara Hakin’s retirement, which was exclusively revealed by HSJ last Friday.

10.23am The Times reports that screening more women for breast cancer would not necessarily save more lives, according to a Harvard University study of more than 16 million women.

7.00am Good morning and welcome to HSJ Live. If you missed yesterday’s key stories, why not read our Executive Summary.

The inaugural HSJ Patient Leaders recognises 50 outstanding individuals whose personal experiences have led them to instigate change and as a result are shaping healthcare. Click here to find out who they are.