Hunt’s productivity review has the NHS in its sights

This year’s Autumn Statement might have a more long-term impact on NHS budgets and reforms than most. Of particular note is the chancellor’s Productivity Review, which was announced by Jeremy Hunt in the summer, and about which we can expect to hear more when he stands up on 23 November. His stated intentions are to prevent the inevitable growth of the state and to enable this through major productivity improvements in public services (and the NHS in particular).

The UK’s productivity problem extends well beyond public services but their output has not rebounded from covid nearly as strong as the private sector. Consequently, the Productivity Review targets an additional 0.5 per cent of savings across the public sector through progress in three workstreams – prevention, AI/digital, and administration. In other words, slowing the growth in demand for services, transforming their delivery through AI, and reducing the overall running cost of the system.

For NHS audiences, it will attempt to provide solutions to the ambitious labour productivity assumption of 1.5–2 per cent contained in the Long Term Workforce Plan. The review’s first iteration will be published in the forthcoming Autumn Statement, likely setting out examples of how services could operate differently (including from the NHS).

NHS budgets will not fall, but the NHS is by no means insulated from this review simply because of its arm’s length governance, operational complexity, or political resonance. The NHS is firmly in its sights (and with almost £170bn of public money at stake, it has to be). Each of the three workstreams will have been defined with the NHS very closely in mind – unsurprising from a chancellor who has also been the longest-serving health secretary.

The review’s significance for healthcare services may be judged in three ways. First, it will select specific operational transformation priorities for political and financial backing. Second, it will influence the political debate on overall public spending levels (for whoever is in government). Third, and most significant, it offers the chance to overhaul how the Spending Review process itself works, thereby providing public finances with far more flexibility to deliver up-front investments in schemes which genuinely and demonstrably boost productivity.

The current government’s fortunes may depend to some extent on its success in credibly landing this tougher narrative on public spending

On the first point, there are ways to release capacity and drive economies in the NHS across all three of the review’s themes. NHS England will submit its wish list of transformational investments, while HMT and the Department of Health and Social Care will have their versions. The best of these ideas will deliver a return to patients and staff, not just taxpayers.

Indeed, the chancellor will be pressing the primary message that the key beneficiaries will be NHS clinicians, freed up to direct more of their energy to patient care. For example, reducing the administrative burden on nurses should release capacity and improve morale, as well as controlling the staffing bill. Automation of systems in areas like medication management will free up clinical time, strengthen patient safety, and save money through supply chain management.

The government won’t be short of operational transformation schemes to consider. We can expect the overall mission and supporting examples to be laid out in the Autumn Statement, but where exactly the chips are placed may be worked out subsequently ahead of the spring budget.

We may have a new government before any new initiatives within the Review are implemented but that doesn’t necessarily lessen their significance. A new labour administration will inevitably set its own productivity challenge and find they are given much the same advice from Whitehall institutions and NHSE.

Meanwhile, Jeremy Hunt’s own stated objective for the review is “to stop the state growing ever bigger as a proportion of our output” and the government is pinning a lot on this to demonstrate the case. The current government’s fortunes may depend to some extent on its success in credibly landing this tougher narrative on public spending – without which the Conservatives can’t give themselves the space to cut taxes in time for an election. 

For healthcare, the review’s most profound opportunity is to address the rules and behaviours which fundamentally undermine the NHS’s capacity to invest sufficiently in long-term productivity improvement. A broken capital regime in the NHS needs an overhaul in terms of allocation and accountability (on which the Hewitt Review gave instruction). Moreover, NHS productivity is structurally inhibited by the seemingly insurmountable dragging of all available resources into coping with today’s pressures at the expense of a transformed future.

This is less about fiscal frameworks and accounting standards and more a consequence of political choices. A future Labour government would also hope to prove that this short-termism need not be an unavoidable consequence of the NHS’s innate subservience to the national coffers and the local ballot box. 

For its part, there are grounds for optimism that the Chancellor’s Productivity Review will set a new framework which makes a “spend to save” case far easier for the bureaucratic process to approve. Comparable to the long-term workforce plan, this is arguably unfinished business for a chancellor for whom the desire to enable investment by NHS providers in long-term productivity improvement was at the core of his push for the long-term NHS funding package secured under Theresa May in 2018.

Whichever schemes, initiatives or technologies are favoured to unleash efficiency in NHS services, the successful execution of policy will ultimately depend on the presence of political willpower as much as financial muscle. If this Productivity Review can release either, then the almighty tasks facing healthcare leaders may become just a little more manageable.