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In the balance

Will ending 2007 with a surplus of £2bn bring the NHS back from the brink?

Will ending 2007 with a surplus of £2bn bring the NHS back from the brink?

This year will go down as the year the NHS clawed back from disaster into financial balance. Next year will be dominated by ideas flowing from the NHS Review by Professor Lord Darzi.

We began 2007 with the dismal situation where the NHS had overspent by around a £1bn. Primary Care Trusts (PCTs) and Trusts, particularly acute Trusts, were faced with staggering debts. Some London PCTs, such as Hillingdon and Brent, were particularly strapped for cash.

The response in many health economies was to slash and burn. Services were curtailed or stopped, recruitment frozen and all training budgets cut to the bone. There were stories all year about newly qualified nurses and therapists not being able to get jobs and this was nicely rounded off with a massive cock-up in filling training posts for doctors. The public watched the NHS with incredulity.

Government has been spending record amounts on health, yet the service seemed in total crisis.

NHS bosses knew one thing for sure in 2007: bring the finances under control or face the sack. As a result, pressures in many parts of the NHS were intense, leading to some knee jerk reactions made on a very short-term basis that were often damaging to staff morale.

While all this was happening, thousands of NHS managers in PCT land were made redundant and paid off with shed loads of cash due to yet another restructure in the NHS. The end result was that in November, David Nicholson reported to parliament that the NHS was projected to end the financial year with a £2bn surplus.

This amazing turnaround in health service finances might look good, but how will it play with the public or an unemployed nurse or physiotherapist?

We know the performance of the NHS finance departments is variable. In some parts of the health service in 2007 the books looked like Kafka, with uncertainty over many millions of pounds of public money and acute hospital activity levels that were dubious. With this track record, just how robust is the projected surplus of £2bn? Staff and the public will be distinctly cautious about such claims and many hold the view that the NHS remains under-funded, despite record investment.

Questions also need to be asked about what the NHS will do with the reported surplus in 2008. Does it go on a spending spree? Does it use the surplus to write off the worst debts in acute hospitals? Or does it sit on the money for a rainy year?

As the Darzi review becomes clearer next year, pressures to reconfigure acute hospital services, and beef up primary care and GP services are likely to become more real. PCT structures should have bedded in and commissioning will become more stable and, hopefully, better focused. In communities throughout England and other parts of the UK unpopular choices will have to be sold to a sceptical public and many health professionals. How will government and NHS leaders handle this?

I attended a public meeting in East Sussex to consider acute hospital changes. At the meeting the Liberal Democrat MP, Norman Baker, grandstanded against proposed changes and clearly hoped for political capital. He is a hugely effective local figure and is obviously likely to back views that seem popular with the public, even if they are clinically unsound. As an MP not in government, why should he not oppose policy? But it becomes even more difficult for Darzi to sell new ideas when Hazel Blears, a government minister, joins a protest against reshaping services in Salford.

The prime minister and health secretary had better get some discipline in government during 2008 if the Darzi review is to have a prayer of success. If Labour backbenchers see a minister taking to the streets to oppose NHS change, the message it sends to them is clear; take to the streets as soon as change seems unpopular with voters.

An emerging theme in health service debates is the growing inequalities in health. A child born in the poorest electoral wards of Manchester, Hackney or Liverpool is likely to live a shorter and unhealthier life than a child born in Woking or Chelsea. How can a nationally funded service continue to tolerate such sharp divisions, which are frankly scandalous? I expect the Darzi review to tackle these issues head on and to ensure health professionals, including GPs, start focusing on those communities with the poorest health prospects.

If GPs and other publicly funded providers fail to demonstrate a willingness to work in these deprived areas of the country, then the government and commissioners will call on alternative providers to fill the gaps.

The government will stick to the underlying founding principles of the NHS - funded through taxation and free at the point of need, but be more relaxed as to who might actually provide services to the patients. Foundation Trust (FT) status is set to loom large during 2008 as the government-stated aim is for all acute and specialist Trusts to become FTs by the end of next year. This will cause friction between Monitor, the FT regulator and ministers. While ministers may want to rush through greater numbers of FTs, the regulator will not want to lower the barriers to FT status at the expense of rigour and good business standards for FTs. We, more than likely, will find out if community FTs will be allowed as PCTs move towards divesting themselves of their provider functions to concentrate on commissioning.

Within the UK we are now witnessing very different approaches to running the NHS. Scotland has very little by way of a market model, with all services under the Stalinist style regimes of the Scottish health boards. Scotland also has a new SNP government that seems hostile to the idea of private sector providers getting involved in the NHS. Wales too has a less market-driven NHS, but retains a commissioner and provider split. In Northern Ireland new structures in the NHS should settle, but it is unlikely that a Unionist and Sinn Fein-led government will see the English model of marketised services as a solution to its unique problems.

The stark differences across the UK in how the NHS is planned, managed and delivered will become sharper in 2008 and will become highly politicised as the prime minister draws closer to the time when an election is due.

The pharma sector should have a more settled set of NHS customers in 2008 and a health spend that will continue to grow, albeit not as fast as in recent years. England is likely to press on with reform, enhanced commissioning and clearer direction from the Darzi review. Companies need to ensure that they are both offering views to the Darzi review and carefully tracking recommendations. Darzi is unlikely to recommend the same model for all parts of England. It will not be a one-size-fits-all approach. Regional variations in England are likely post-Darzi and good local intelligence in each English SHA will be vital in understanding the needs of NHS customers in 2008.

In Scotland, and to some degree in Wales, access to NHS customers is likely to remain tough. The new SNP health minister has made it plain that she sees very little room for the private sector in the NHS and is likely to be less than warm to pharma. In Wales, where the nationalist voice is now much stronger in the Assembly, firms will also face some negative attitudes. Smart companies should ensure that they have a strong presence at SNP and Plaid Cymru meetings/events and that they actively seek to tell nationalist parties what they can offer communities above and beyond the selling of medicines, ie, R&D, innovation, education, wealth creation, job creation, socially responsible investment etc. Northern Ireland will be harder to read, but again, good local intelligence on the ground will be needed.

Next year will be the crucial test for Gordon Brown. As we approach the end of 2007 his popularity seems at an all time low and the Brown bounce, praised during the early months of his premiership, seems to have lost momentum. The Brown image of the clunking fist and the best guardian of matters economic and governmental seem less secure, especially after the collapse of Northern Rock and the case of the missing discs from the Inland Revenue. Brown will want his competence reframed in 2008 if he is to get an election victory on his own terms.

By comparison David Cameron seems far more sure footed as 2007 comes to a close. His position in the Conservative Party looks secure and his party is seeing its best polling figures in decades, now showing a clear lead over Labour. For the first time in many years a Labour victory no longer seems a sure fire bet. Smart companies will want to stay close to government thinking, but relationships with Her Majesty's Opposition may well need more urgency in 2008.

The Author
Ray Rowden is a health policy analyst and former special adviser to the Commons Health Select Committee.

10th December 2007


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