NHS and healthcare to bear the brunt of 2009 budget cuts

The NHS and the Department of Health took the biggest hit yesterday as the labour government allocated its £5bn cut in public spending for next year, which it claims will be made up by efficiency savings.

The NHS has to make virtually half the savings – £2.3bn – on top of the 3 per cent a year savings with which it was already charged. Next year’s budget has been cut from a planned £104.6bn to £102.3bn, but that will still represent £4bn in growth over this year.

The reduction in health allocations was greeted with equanimity by Alan Johnson, the health secretary, who said the NHS was making the savings “in response to the current economic conditions” and already had plans in hand through shorter length of stay, better commissioning and better procurement.

The already announced allocations to primary care trusts for next year will not be affected, he said, and the department is sufficiently sure of its financial position to have released back to the Treasury an £500m contingency reserve.

The NHS Confederation, which represents health authorities and trusts, said it was “disappointed but not surprised” by a savings target larger than its share of public spending.

“The much bigger issue is the cut in planned public spending growth after next year,” Nigel Edwards, the confederation’s policy director, said. “Our fear is that 0.7 per cent growth in total spending is not going to translate into anything like 0.7 per cent for the NHS. If we are lucky it might be zero.”

The confederation said that would require “difficult decisions about priorities and change” if patient care were not to suffer through budgets being merely “salami sliced”.

Other sectors that bear a significant part of the £5bn cut are schools and families, which must find £650m, and work and pensions, which must find £120m even as its budget for the unemployed is boosted by £1.7bn.

Although health takes the biggest cash hit, analysis by the Institute for Fiscal Studies shows transport, the Home Office and environment facing the largest savings requirement as a percentage of budget.

From the Financial Times:

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