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Cost of NHS reforms rises by £400m

The estimated cost of the Government’s reforms to the NHS has soared to between £1.5-1.6bn, but are due to generate savings of £5.5bn, ministers have revealed.  

Health Secretary Jeremy Hunt said the figure, which exceeds the initial projections of £1.2-1.3bn, had been calculated based on the Department of Health’s annual report and accounts for 2011-12.

The BMA said the costs were ‘particularly galling’ in the context of the increased squeeze on NHS budgets and rationing of services, and questioned whether the savings projections were realistic.

In a written statement to the House of Commons Mr Hunt said: ‘I can now report to the House that the current estimate of costs is in the range £1.5bn to £1.6bn.

‘Although higher than the most likely estimate made in the impact assessment (£1.2bn to £1.3bn), the costs remain within the wider possible range published in the co-ordinating document (£1.0bn to £1.5bn), after taking account of some costs (estimated at £127m in total) that were excluded from the impact assessment either because they were out of scope (for example, because they related to measures not requiring legislation) or because they were redacted (for example, because they were commercially sensitive).’

Mr Hunt said he expected redundancy costs to be ‘around £630m’, some £360m lower than the highest estimate in the impact assessment.

He added that annual savings ‘are still expected to be £1.5 billion from 2014-15 but the cumulative savings over the transition period are now forecast to be £1 billion higher, at £5.5 billion’.

Dr Mark Porter, BMA chair, said: ‘The huge costs of this largely unnecessary reorganisation are particularly galling given that patient services are being rationed. 

‘The NHS has been tasked with saving £20 billion by 2015, and that could go up. Achieving savings on this scale was always going to be a steep challenge, but it is being made even harder by the fact that time, energy and resources have been taken up by massive structural change.’

He added: ‘It is difficult to believe that the changes will generate cumulative savings of £5.5 billion. While some costs have been reduced through frontloaded reductions in administrative spending, these are unlikely to be sustainable on the same scale in the longer term.’

Readers' comments (1)

  • A mixture of truth and fiction. The truth is that the 'reforms' have cost millions of pounds that could have saved some lives. The fiction is that the reforms have saved money. Most of the savings we have seen are those that could have been saved in any case had there been a simple cost reduction exercise.

    Governernment rules on expenditure leads to millions of pounds in wasted money each year as organisations seek to meet targets at year end. At the same time we employ double the admin staff we need to satisfy commissioner/provider economy requirements. Oh...we give away valuable interest on cash balances in accounts because NHS organisations actually pay each other (a private organisation would never do this).

    Waste waste waste......

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