Efficiency savings will test NHS 'to the limit'

The NHS and social services will be tested "to the limit" by the Government's efficiency saving requirements over the next four years, ministers were warned today.

The influential Health Select Committee said that the spending review settlement represented a "significant challenge" for the NHS.

Unprecedented levels of efficiencies would be needed to avoid cuts in services, it concluded in a report published today.

The cross-party committee was not convinced either that present levels of social care could be maintained with the funding being made available.

Its chairman, Conservative MP Stephen Dorrell, said the NHS savings needed over the next four years - estimated to be 4% annually - had never been achieved in the NHS before.

Social service departments would need to deliver efficiency gains of 2% to 3.5% each year to avoid service reductions, he said.

"The Government's plans for health and social care are based on assumptions which will test these services to the limit," he added.

The MP added: "There is no precedent for efficiency gain on this scale in the history of the NHS, nor has any precedent yet been found of any healthcare system anywhere in the world doing anything similar."

In its report, the committee warned that the Government was not providing "a clear enough narrative" about how savings were to be made without hitting services.

It called on ministers to provide an estimate of how much money would be soaked up by reorganisation in the NHS which was creating additional uncertainty about budgets.

"The health settlement represents a significant challenge to the NHS, requiring efficiency savings on an unprecedented scale," it said.

"It is vital that these savings are made by efficiency gains rather than making cuts.

"Unfortunately, we do not believe that the Government is providing a clear enough narrative on its vision of how these savings are to be made."

In social care, there would be "an inevitable impact" on provision from the local government settlement, the committee went on.

Ministers' assurances that councils would have enough money to maintain services given a two-year pay freeze were not supported by the evidence, it said.

"The evidence submitted to us, including the evidence submitted by the Government itself, does not allow us to agree," it said.

"Councils will need to sustain further efficiency savings of up to 3.5% per annum to avoid reducing their levels of care, and this will not be easy."

It said better interaction between health and social care was "critical" to achieving cost savings but the "institutional (and) policy structures" were not had not been geared up for that.

"It is not enough for the Government to exhort change in this area: there must be a formal policy infrastructure that recognises the importance of achieving a better overall interface between the two sectors," the committee said.

The Department of Health insisted that an additional £1.3 billion next April, rising to £2 billion in 2014/15, on top of social care grants would "make it possible to protect people's access to care, without tightening eligibility".

"The Government is committed to the NHS - to sustain and to improve services in the face of a tough economic climate," a spokeswoman said.

"But even with this commitment, in order to meet demand and improve the quality of services, the NHS needs to make up to £20 billion of efficiency savings by 2015.

"Reform isn't an option, it's a necessity in order to sustain and improve our NHS. We have been clear that the NHS must cut back on bureaucracy, not on frontline care."

The spokeswoman added: "Councils and NHS partners will need to work harder to improve efficiency and achieve improved value for money."

Liberal Democrat Health Minister Paul Burstow told BBC Radio 4's Today programme that NHS staff were already rising to the challenge.

"This is a challenge that's being worked through on the ground by NHS staff up and down the country," he said.

Cost-saving measures already under way include reducing the length of stays in hospital, reducing the number of unplanned and unscheduled attendances at A&E departments and reducing hospital infections, Mr Burstow said.

"All of these things, by relentless focus on quality, actually save resources," he said.

Mr Burstow added: "In the last 13 years the approach hasn't been particularly focused on efficiency or effectiveness, it's been focused on pouring more money into the NHS and hoping that we got better results.

"We know we haven't achieved that. If you look at cancer survival rates, mortality rates in respect of heart attacks and so on, the NHS is not performing at its best."

Shadow health secretary John Healey said: "The select committee has rightly raised very serious concerns about Andrew Lansley's plans for the health service. The last thing the NHS needs is a high-cost, high-risk reorganisation at a time when, in the Government's own words, it is attempting to make 'unprecedented' efficiency savings.

"But of equal concern is that the plans follow promises made both before the election and in the Coalition Agreement that there would be no more top-down reorganisations in the NHS - promises that have now been broken by a Health Secretary operating in isolation in Whitehall and running a rogue department."