Andy McKeon on NHS efficiency and pre-election sparring

We are now deep into the phoney war. The party conferences have been and gone; the pre-Budget report looms in November and then, eventually, the election.

Listening to one set of rhetoric, one might be forgiven for thinking that a cut in bureaucracy and the removal of targets and centralised management would result in a surge in productivity and quality

The conferences in mellow early autumn days usually seem more glitter than substance to the outsider. My (limited) experience of party conferences was summed up one year when I found myself with a ticket for the floor of the conference hall for the big Tony Blair speech. The sense of theatre was all there, in the build-up, the carefully staged entrance and the departure. We left the hall to that well known socialist tune Come Up and See Me by Steve Harley and Cockney Rebel, which was perhaps meant to inspire thoughts of some gritty East End revolutionary, making common cause with Citizen Smith from Tooting. Anyway, at least we went out singing and foot tapping in a cheery mood.

This year’s conferences have been different - a bit more policy, no joy and strong messages about pain to come. Labour offered a £0.7bn spending commitment on free parking (how will this work with private finance initiative deals, even if it was cheered by my wife’s neighbour at a blood donating session?) and free care at home for the most needy. The Conservatives’ big financial message, apart from continued investment, was a cut in bureaucracy at all levels to release £1.5bn.

But this is shadow boxing. The real event will be the pre-Budget report in the darker days of November. It is here that the government has its main opportunity to set out what it will do on tax and spending and draw some sharply defined battle lines. The strategy looks clear. A set of Labour spending and tax plans to flush out whether the Opposition will impose deeper cuts or (which seems less likely) higher taxes.

It must be a difficult balancing act - providing a credible set of figures for the international finance community on how the deficit will be managed down, not frightening the middle classes with tax increases and at the same time demonstrating how public services can be protected and even improved with the kind of additional commitments made at the party conference despite overall reductions in spending.

Health secretary Andy Burnham’s proposal in his King’s Fund speech early in September to issue a four year tariff is part of that plan. It will show the level of efficiency expected by providers, although it would be as well to remember that the tariff does not translate directly into income. PCT allocations are still the key. In 2008-09 the tariff uplift was 2.3 per cent but acute and specialist trust income rose by 6.8 per cent - just a little more than PCTs had to spend overall.

Up for it

But it surprises me how ready managers are for what lies ahead. Perhaps triggered by articles about armageddon and the tone that savings can be made (haven’t McKinsey already done all the hard work?) we are now conditioned and fully expect to deliver. Managers I speak to seem to view the next three years with something approaching equanimity. It is the three after that they worry about. “We are up for it and up to it”, as one Italian football manager with a masterful command of English put it when his team won.

It’s a great can-do attitude. But there is a very long way to go to translate intellectual acceptance into action. I also wonder how ready we are for the personal sacrifices that may be involved - pay freezes and cuts, caps on pension payouts, lower pension benefits (probably) and significant redundancies and job losses for managers.

I also struggle with the notion that real savings can be delivered without reducing the number of frontline staff, unless everyone takes a real terms cut for several years or we have indeed created a fantastically bloated bureaucracy. It is worth remembering that even a one third cut in management costs will release an annual saving of less than 2 per cent, when 15-20 per cent is required.

Listening to one set of rhetoric, one might be forgiven for thinking that a cut in bureaucracy and the removal of targets and centralised management would result in a surge in productivity and quality. Rather like Labour in 1997, whose rhetoric suggested that removing the internal market and emphasising co-operation rather than competition would release many millions of pounds for patient care and set the NHS free for a great leap forward. If only.

It will require the sort of collective sustained effort that has transformed waiting times but with a bleaker underlying message and in a harsher environment, even with commitments to relative protection and extra investment. For if it proves to be easy it will be a real indictment of how the money has been spent in recent years.