Efficiency savings will free up money for NHS priority areas
"The need to tackle care backlogs while meeting rising demand for services, against a backdrop of ongoing pressures from COVID-19, widespread workforce shortages and staff burnout, are all taking their toll on the health service. These pressures won’t go away anytime soon." Saffron Corderey, deputy chief executive, NHS Providers
The chancellor, Rishi Sunak, has said the NHS must make £4.75bn efficiency savings in the next three years to cut waste.
Sunak made the announcement in his spring statement as part of a wider commitment to tackling waste and inefficiency across the public sector. The requirement will entail doubling the annual NHS efficiency target to 2.2%. “The current level of waste across government is simply not acceptable,” Sunak said. He added that the money freed up would be spent on NHS priority areas, making sure that the extra funding raised by the Health and Social Care Levy was well spent.
The new levy, which takes the form of an increase in National Insurance (NI) payments comes into force in April. “Every penny collected from the levy goes directly to the NHS and social care,” Sunak said. He also announced, however, that the threshold for making NI payments would rise from £9,880 to £12,570 in July, saying that the government “has been clear that the majority of the cost should be borne by those with the broadest shoulders.” Describing the higher threshold as “the largest increase in a basic rate threshold ever,” he said it would “ease the burden on hard-working taxpayers, allowing people to keep more of their earned income.”
Taking both the National Insurance rise and the raised threshold into account, workers who earn up to £36-37,000 per year will be better off, while workers who earn more than that will be worse off. On average, lower-wage earners will save £330 a year.
It is not yet clear whether more money will be coming into the exchequer from National Insurance or not, but either way the promised £12bn extra for the NHS and social care has been ringfenced. “A long-term funding solution for the NHS and social care is not incompatible with reducing taxes on working families,” Sunak said.
In a statement issued before the spring statement, Pat Cullen, general secretary of the Royal College of Nursing, criticised the demand for more efficiency savings: “Trying to squeeze even more out of the same staff will not work. The existing shortages already mean nursing staff work unpaid overtime to keep the NHS running.” Saffron Corderey, deputy chief executive of NHS Providers, expressed a similar concern: “The need to tackle care backlogs while meeting rising demand for services, against a backdrop of ongoing pressures from COVID-19, widespread workforce shortages and staff burnout, are all taking their toll on the health service. These pressures won’t go away anytime soon.”
The chancellor also announced a temporary 5p cut to fuel duty. The cut will benefit domiciliary care workers who drive to clients’ homes and have been hit hard by the recent steep increase in the price of fuel. “We know that increasing fuel prices have had a real impact on key NHS staff, including community health teams,” Corderey said. “These staff travel thousands of miles every year to see patients in their own homes, often covering long distances in rural areas. While the 5p cut per litre is welcome, we are keen to see that they are better reimbursed for the petrol they buy through both mileage rate reimbursements and business tax relief.”