New NHS efficiency challenge is half that of 5YFV

A briefing compiled by NHS leaders estimates that multiple cost pressures, such as staff pay, population ageing and chronic conditions, will total £31bn by 2024-25. In July, the government committed to increase the health service budget by £20.5bn in real terms over the five year period.

The gap of around £10.5bn would need to be bridged through efficiency and productivity savings, which compares favourably with the £22bn efficiency challenge that accompanied the 5YFV. Early in the 5YFV period, it became clear that financial sustainability would not be achieved with the stated funding envelope.

There will still be concern, however, that many of the more straightforward opportunities to deliver savings have already have been utilised.

The briefing was compiled by NHS Clinical Commissioners, NHS Providers and the NHS Confederation.

James Rimmer, co-chair of NHSCC’s finance forum and chief financial officer of Southampton City Clinical Commissioning Group, said: “On a daily basis, clinical commissioners are forced to make difficult decisions that balance the needs of the individual against those of their entire local population and this will clearly continue to be important over the next five years.

“We have long been calling for an honest conversation with the public, patients and clinicians about what the NHS should and can provide, and that conversation has now become even more critical to ensure we get the best value from the limited NHS pound and only spend it on what we know works best for patients.”

The bodies emphasised the need for a realistic plan for what can be achieved, as well as a funding plan for social care.

They said the plan should identify “what we could stop doing to remain sustainable in the future”; set realistic levels of efficiency targets; support collaboration by removing financial and regulatory barriers; outline support for the current and future workforce; and focus on prevention and reducing health inequalities.

The Nuffield Trust told HSJ that the £11bn gap was broadly similar to its own estimates.

Sally Gainsbury, a senior policy analyst at the Nuffield Trust, said: “This would imply annual efficiencies for the system of about 2 per cent, which is a much more comfortable place than the NHS has been in for several years.

“What’s needed is a slow and steady recovery, but we are concerned that there will be unrealistic expectations put on providers in the early years of the plan. If the provider sector is expected to balance in 2019-20, the first year of the settlement, then they will still be chasing impossible numbers.”

A spokesman for the Department of Health and Social Care said: “The funding settlement is a major investment which will support the NHS to make the right decisions for the long term, setting it on a sustainable path to deliver significant improvements in care and patient outcomes.”

NHS England was also contacted for comment.