Bitter pill for NHS as years of austerity loom

PROTECTING NHS services from cuts was a landmark election pledge by the Conservatives and healthcare is expected to escape the worst impact of swingeing spending reductions which will hit other parts of the public sector.

But the health service still faces years of austerity amid growing fears of NHS financial instability partly due to much smaller increases in budgets because of the public finance crisis, coupled with Tory plans for the biggest shake-up in health service organisation since 1948.

The Conservatives have promised "real-terms" increases in NHS spending but in reality these are expected to be around two per cent annually, well below inflation and in stark contrast to the past decade when the NHS has enjoyed increases of around six per cent each year.

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Pressure on finances will be eased since all but the lowest paid NHS staff will have their pay frozen for two years from April – although many staff automatically receive increments as they move up pay scales.

The biggest pressure is likely to come in a continuing rise in demand for services. There are already signs of strain on budgets with unscheduled hospital visits and costs of continuing care for the long-term ill rising significantly, leading to concerns over the finances of some primary care trusts even before they must make do with less.

NHS Sheffield, which is rated as among the best-run PCTs in the country, last week revealed it was battling a predicted deficit of 11m in 2010-11 and plans to curb access to some pain-relief treatments and minor surgery.

The issue is further complicated since PCTs and regional health authorities will be abolished in the next two-and-a-half years under plans by the Government to hand control of 80bn in NHS spending to GPs.

PCTs bosses have also been ordered to make immediate cuts of over 40 per cent in management costs while organising the handover of finances which could cost as much as 3bn.

At the same time, those staff remaining are being asked to find efficiencies worth 15-20bn in hospitals, GP and community services, which will change the scale and shape of the NHS forever.

There may also be a knock-on impact on the NHS from cuts to local council budgets as people denied social care find themselves with greater health needs. It could mean more delayed discharges from hospital and a return to bed blocking.

A Government spokesman said: "The current funding for social care will become increasingly unsustainable. Therefore the Government has announced that as a first step to reform, it will establish an independent commission to look at the funding of long-term care. The commission has been tasked to advise on a sustainable settlement."