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Grim warning over ‘deteriorating’ PCT cost-saving plans

PCT managers have saved almost £2bn by axeing staff and rationing care, but are well behind on their target to save to deliver £20bn of efficiency savings by 2015 say Government auditors.

The Audit Commission's NHS Financial Year Review found that PCTs saved a combined £1.9bn in 2010/11, but warned that ‘achievement of saving plans deteriorated', with one in five PCTs failing to deliver ‘overly ambitious' cost cutting measures.

GP leaders said the cuts were already impacting on primary care, and the report's authors warn that many of the cuts made were only ‘one-off' cost savings and that would make the next three years ‘much tougher' for PCTs and GP commissioners.

On the plus side, the report showed that the majority of PCTs balanced their books in 2010/11. Auditors reported that the NHS generated a £1.4bn surplus, the same as the previous year, with £476m coming from PCTs, £900m from SHAs and £122m from NHS Trusts.

However, the 2010/11 result represented only a 1.9% saving by PCTs - less than half of what PCTs and commissioning groups will be expected to deliver in 2011/12 as the NHS scrambles to deliver £20bn of efficiency savings by 2015.

The report showed that over half of the savings delivered by PCTs involved rationing or redesigning care, while a quarter involved culls on staffing levels that saw over 3,500 PCT managers and 35,000 non-management staff axed.

PCTs spent £221m in redundancy fees, with an average payoff of £40,000. The pressure on PCTs and clinical commissioning groups is set to intensify further this year as almost £1 in ever £4 saved in 2010/11 was a ‘one off' saving that will need to be found again in 2011/12.

The report says: ‘At the NHS bodies in our sample, 2010/11 plans have been more ambitious but less realistic than 2009/10. Consequently, achievement of the plans has deteriorated.'

The only two PCTs in the country who breached parliament's 'revenue resource limit' on spending were Cumbria Teaching PCT and Surrey PCT - both set to handover to pioneering clinical commissioning groups. Total underspend by PCTs was £476 million but over one in 10 PCTs was flagged up by auditors as having ‘weaknesses in the arrangements to secure financial resilience'.

Dr Chaand Nagpaul, a GPC negotiator and a GP in Stanmore, said:‘These financial pressures reflect the reality being experienced by GPs and our patients at a local level.'

'The formidable financial challenge is going to get harder but PCTs and emerging commissioning groups need to make sure that they do not disinvest in general practice to try and meet targets.'

‘We need a strong primary care infrastructure to help reduce hospital costs and meet this financial savings challenge. Yet, in some areas we have seen PCTs disinvest in enhanced services. That is an error and a misguided approach, that will only increase costs in the future.'

Jo Webber, NHS Confederation deputy director of policy, said:‘[We] are worried that this could be the calm before the storm. Many of our members have told us they are expecting the financial situation facing their organisations to be the worst they have ever experienced. There is pressure on finances now, and pressure mounting down the line.'

Andy McKeon, managing director of health at the Audit Commission, said:‘Tighter funding, and the need to continue to improve services and implement reforms will make the next three years much tougher.'