It’s dangerous I know, but I’m going to stick my neck out and make my Big Budget Prediction for 2009: Alistair Darling will use the term “confidence”, oh, let’s say, at least five times. Hmm, maybe I should hedge this a bit. Alistair Darling, or someone else from government, or a prominent Labour MP, will make prolific use of the C word.
That master of spin, Peter Mandleson, was at it on Newsnight a couple of weeks ago. Talking on the subject of the latest bailout, I spotted at least four in the space of a 10 minute interview. It was like watching Tony Blair’s word-games in the 1990s: all those “news” and “hard-working families” (etymologically linked, yet philosophically distinct from those sometimes-inconvenient working-class families).
But will tomorrow’s Budget buy banker and investor confidence in UK PLC at the expense of public services?
Unattributed Treasury briefings to the nationals are already talking about “£15bn of cuts” over the next three years. It looks like that includes the £5bn in 2010-11 we already knew about. So, would a further £5bn in the two years after that be manageable and, dare I say it, possibly not as bad as some envisioned? (The Audit Commission’s Andy McKeon wrote in HSJ last week he wouldn’t be surprised if the cut for 2010-11 was more than £5bn). Or is “£15bn” just the headline, behind which £billions more hide?
Already today the Treasury have told me they expect the annual saving from slashing back office and procurement costs to rise to £9bn by 2013-14; stretching the £15bn to at least £24bn over four years. Oh, and by-the-way, the £5bn for 2010-11 is now being referred to as “£5bn to £6bn”…
*** updated: see below ***
Whatever the final sum is, all are watching to see what will the NHS’s share will be? HSJ has been told the Department of Health has been trying to negotiate the Treasury down from an upper limit of around £2.5bn for 2010-11 – somewhat higher than the £1.4bn to £2.1bn ballpark NHS finance watchers were expecting when the cut was first pencilled into the Pre-Budget Report last November.
The question will then be: can this be achieved without revisiting the primary care trust allocations for 2010-11?
Over the last few years the DH has increased PCT allocations by less than its over all departmental settlement, which means it could be holding on to a war chest of around £1.4bn. But it’s possible that other Treasury sneakies around capital spending and international financial reporting standards will eat into that.
If the DH cannot fund the cuts centrally, it will have some word-games of its own to play. Both chief executive David Nicholson and health secretary Alan Johnson have described the allocations for 2010-11 as “not planning assumptions [but] real allocations” (Nicholson) and as “locked in” (Johnson).
If they have to back-track on that, some of the clever money is on the department radically curtailing any uplift on the hospital tariff which will in turn cause PCTs to generate higher surpluses which will be clawed back via tight “control totals” which limit the amount of surplus PCTs are able to carry forward. In effect, that will mean the DH can spread the 2010-11 allocations into 2011-12.
Indeed, some PCTs such as Rotherham and Eastern and Coastal Kent are already assuming there will be zero cash inflation on their acute tariff spend by 2011-12.
Let’s hope we don’t need to wait until next year’s operating framework to find out what the plan is.
In the mean time, a general election is in the mix and the scramble is on to identify public sector waste – witness the Taxpayers’ Alliance’s campaign against so called public sector “non-jobs”. Included amongst the apparently extraneous public sector posts are those concerned with increasing breast feeding, child dental health and falls prevention for elderly people. Now, there’s a tried-and-tested method for making short-term public spending savings we can all be confident in…
*** update: 16:00 April 21 ***
The Treasury has now published its operating efficiency programme report, which says that the following savings can be made “a year” compared to 2007-08:
£4bn out of the £18bn public sector back office spend (a 22 per cent cut)
£3.2bn out of the £16bn IT spend (a cut of a fifth)
£6.1bn out of the £89bn spent on procurement (a six per cent saving)
£1.5bn out of the £25bn cost of running the estate (a six per cent saving).
Although the Treasury describes these as “annual savings” the figure appears to refer simply to the 2007-08 benchmark year, which implies the year-on-year cuts will be more modest.
The report explains that the £5bn in planned spending cuts for 2010-11 has now been extended to £6bn. And it says a further £5bn in “additional savings” will be found in 2011-12. The report says the annual saving made will be £9bn by 2013-14, but if that is based on the 2007-08 benchmark that would mean that only £4bn of the 2013-14 target will be new.