Labour's pounds 2 billion plan to shut down hospitals

Labour is drawing up plans for a programme of hospital closures to save pounds 2bn which it wants to use for free dental checks, less rationing of treatment, and better salaries for doctors and nurses.

The programme would mean closing or merging hospitals in areas where similar facilities are offered on more than one site, but providing transport for patients to travel between towns for treatment and for relatives to travel for visits.

Although Labour believes its scheme could lead to large savings over a number of years for other projects, some experts said last night that the reduction in costs would be negligible.

Last night Labour's health spokesman, Chris Smith, confirmed that the party would try to save money by merging the managements of National Health Service trusts. No decisions would be made while Labour was in opposition, he added, and the closure programme would have to be made on a case by case basis.

"In relation to the merger of trust hierarchies, I am sure there is scope for this without losing facilities by simply removing unnecessary streams of bureaucracy.

"I think any sensible government is going to want to look at this sort of question. What we have strongly said is that we will be removing great swathes of bureaucracy from the system by our reforms of the internal market," he said.

Gordon Brown, the shadow Chancellor, has promised to meet the Conservatives' spending targets in the first year of a Labour government and to review the situation in the second year, but that leaves Mr Smith facing a very tight budget for his department.

In a television interview yesterday, Mr Brown said Labour hoped to cut administrative costs in the health service from between 12 and 13 per cent to below 10 per cent. He also commended the action of Labour's spokesman on Scottish affairs, George Robertson, who has already told the NHS trusts running hospitals in Scotland to "start immediate consultations" on reducing their numbers from 45 to 25 .

"He is going to merge a number of them, saving pounds 30m in Scotland alone. These are the sort of changes we must make to get money back to where it should be," Mr Brown said.

He added that some of the savings generated by Labour's programme to get 250,000 young people off benefit and into work would be used to cut the budget deficit.

Some government officials are said to believe that hospital closures are now the only answer to the growing problem of how to fund the NHS.

However, sources claim that Labour is planning to go further than Mr Smith suggested and to make much bigger savings than he could hope to achieve simply by removing layers of bureaucracy.

Labour has said that wherever a proposal is made to remove a hospital or one of its facilities, a local public health hearing will be set up. If the party goes ahead with a large number of hospital closures, this system is likely to be tested to its limits.

Hospital closures are always controversial and are bound to cause public outrage wherever they are proposed.

Last night James Johnson chairman of the British Medical Association's consultants' committee, said that the revelation did not come as a surprise but that it would be bound to cause controversy.

"Politically, closing down hospitals is about the worst thing you can do short of becoming a self-confessed child molester," he said.

Although the BMA would look at proposals case by case, a recent study had shown that mergers of hospitals with more than around 350 beds each did not save money, he said.

The proposals were based on the "fairly simplistic" view that the only way to stop hospitals from overspending was to close them, he suggested. At present, most trusts are in the red because they have continued to perform operations after their budgets have run out.

Anthony Harrison, a fellow in health policy analysis with the King's Fund agreed that simple mergers of trust boards would save "peanuts".

"The evidence is lousy. To save money you have to close whole sites, but there will be great political pressure not to do that," he said.

However, the Audit Commission had identified some 30 small hospitals where there was an argument for closure on the grounds that they could not deliver treatment of a high enough quality, he added.

He said the idea of providing transport services was a sound one, though in cases where accident and emergency departments were closed the extra ambulance costs were prohibitive.