‘Unclear’ where NHS savings reinvested

While the NHS has managed to create substantial “efficiency savings” in recent years, these have come from easy areas such as cutting management costs and freezing pay and are under threat in the future, the Health Committee said.

The NHS was told by the Government in 2009 it must deliver up to £20bn of efficiency savings by 2014/15 while maintaining or improving the quality of patient services. The Department of Health has said every penny saved will be reinvested in patient care.

But today’s committee report found a lack of transparency over what the cash has actually been spent on.

MPs also warned that NHS trusts are at risk of failing to meet the savings target – named the Nicholson Challenge after outgoing NHS chief executive, David Nicholson. In the first years of the challenge, the NHS made savings of £5.8bn in 2011/12 and a further £5bn in 2012/13.

Plans for this financial year show expected savings of £4bn – 15 per cent below the target for the year.

Evidence from the think-tank the King’s Fund to the committee shows that NHS finance directors are not confident they can continue to meet the challenge.

MPs pointed to other warnings that the “quick wins” have already been included and that savings will become progressively harder to achieve over time.

They expressed concern that a “significant element of the progress so far has been delivered through pay restraint, reductions in the tariff and cuts in management costs rather than genuine improvements in productivity.

“We also reiterate our concern that too much emphasis has been placed on generating financial savings, rather than on improving the quality of services for patients.”

In evidence to the committee, economist John Appleby from the King’s Fund said the “real issue is not about saving money but what you spend that money on”.