Lansley: management cuts to slow after 2012

In a wide ranging interview, the health secretary also declared his readiness to “bite bullets” over the fate of struggling NHS providers.

He went on to reveal plans for an annual “budget for health”, speculate on the likely recommendations of the Francis inquiry into care failings at Mid Staffordshire Foundation Trust and to slam the “absurdity” of GPs angry about the government’s pensions reforms walking away from clinical commissioning groups.

Mr Lansley told HSJ that by the end of the last financial year, management and administration savings at the Department of Health, its agencies, strategic health authorities and primary care trusts, had totalled £1.4bn.

This would produce cumulative savings in the course of this parliament “in excess of £5.5bn”, up from the previous estimate of £4.5bn.

According to the health secretary this means “the bulk of the administration cost savings has now been achieved. There are further administration cost savings to be achieved by 2015, but they are now in the small hundreds of millions”.

He explained: “Places like the North East said ‘OK, you’ve set us the target now…we know what our administration cost envelope is going to look like, we might as well get there quickly’…and they have.”

The health secretary acknowledged that those running new NHS organisations, such as CCGs and commissioning support services, were worried that having put staff in place in time for the new system’s birth in April 2013, they would then be faced with the need to make cuts.

However, he said: “By April 2013, there is a fair chance they will be pretty close to where they need to be,” and would be able to “look forward to stability”.

Turning to the provider sector, Mr Lansley claimed “all my predecessors” as health secretary had been aware of the need to tackle long standing issues with some NHS trusts, but said that those problems had tended to be “smoothed over”.

“The smoothing over was not just bailouts and loans, it was also the fact that they [trusts] had rising income and they could get away with it [dealing with problems],” he said. “People were just floating on a tide of incoming work, well that tide isn’t there anymore.”

Tightening finances had “undeniably created a moment” in which it was clear that a minority of hospital trusts did not have a “real grip” on their future.

“We are at a moment when people are thinking – we can’t just carry on and imagine that the problems will go away – we’re going to have to deal with them,” he said.

Mr Lansley said he was prepared to make some of the tough decisions which he claimed had been avoided by previous health secretaries, repeating his threat that he would make changes to the management of any trust that could not achieve foundation status.

He claimed the coalition had “already done more in two years” than the last government in coming up with “the right kind of solutions” for NHS provision through the introduction of his “four tests” designed to test clinical and public support for service reconfiguration.

The health secretary claimed the “greatest turbulence” in the provider sector had been created by the last government’s Transforming Community Services reforms, which saw the provider arms of primary care trusts established as independent organisations or merged with trusts.

Mr Lansley said the change was “a good thing”, because it had shifted “people from thinking about themselves as a hospital trusts, or a community trust, or mental health trusts into increasingly thinking about themselves as a healthcare trust”.

He said the move had been particularly positive for mental health trusts, “ who’ve stepped up successfully” and had been able “to mainstream their activities and to demonstrate that they’ve got good capacity”.

However, TCS had also “exposed some community organisations” and led to a recognition that “they’ve got to up their game”.