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Pay cuts are not sustainable way of improving NHS efficiency, say MPs

A damning report has warned that neither the NHS nor the Government should rely on the present rate of pay bill savings as a ‘sustainable reform of efficiency gain.’

The report on public expenditure on health and social care published yesterday by the House of Commons Health Committee says that it is ‘neither prudent nor just to plan for sustainable efficiency on the basis that NHS pay will continue to fall relative to pay elsewhere in the economy.’

It also calls for the Government to abolish restrictions on NHS spending to allow organisations to reinvest their cash savings into reforming services and it says that more progress must be made on developing more integrated health and social care services.

It says that the only way to sustain current service levels is to create ‘genuine and sustained service integration.’

Launching the report committee chair Stephen Dorrell said: ‘Services should be designed to treat people rather than conditions. They need to respond to individuals rather than expecting individuals to find their way round a bewildering range of specialist departments.

‘To make this ambition a reality, we need to develop a much more joined up approach to commissioning health and care services; we propose that responsibility for this process in a given area should be vested in the Health and Wellbeing Board.’

He said that joined up commissioning would ensure that resources were no longer treated as ‘belonging’ to a particular part of the system, but would become shared resources.

However, he warned that moving to such a system must not result in less overall funding for care services.

‘We therefore propose that the Government’s commitment to protect real-terms funding for health care should be extended to cover local authority social care services and that these funds should be ring fenced at current levels in real-terms,’ he said.

The report is also critical of measures NHS organisations are using to respond to the Nicholson efficiency challenge which it says too often represent short-term fixes rather than sustainable long-term service transformations.

Commenting on the report John Appleby chief economist at health thinktank The King’s Fund said:

‘Today’s report from the Health Select Committee hits the nail on the head by calling for fundamental change in health and social care.

‘Our own work shows the financial squeeze is beginning to bite hard in the NHS and efficiencies are becoming harder to deliver, as one-off savings such as cuts in management costs start to slow.

‘As the report points out, pay restraint and holding down prices paid to hospitals are no substitute for delivering genuine productivity improvements.’