Budget 2010: Department of Health contribution to operational efficiency and smarter government savings

The Budget has today reaffirmed the Government’s commitment to making £11bn of savings a year by 2012/13 from efficiency and streamlining the centre of Government. 

The £11bn of savings will contribute to halving net borrowing and protecting key public services. The savings will come following the work of the Operational Efficiency Programme and Putting the Frontline First: Smarter Government 1.  

The Department of Health and the NHS will meet this target through a range of activities including:

• Up to £1.5bn will be saved by driving down the costs of procurement through securing best prices for goods and services;
• £100m will be saved by taking a new approach to the National Programme for IT that offers greater choice to local hospitals; this is part of the £600m reduction in lifetime costs announced in December 2009;
• £60m will be saved by reducing the amount of energy the NHS uses, to deliver a 10 per cent cut in carbon emissions;
• Up to £70m will be saved from more efficient use of NHS estates; and
• Up to £555m by reducing staff sickness absence in the NHS.

Health Secretary Andy Burnham said:

“The NHS budget is in a strong position after a decade of record  investment. I am pleased that today’s Budget locks in that growth, guaranteeing that frontline NHS funding will rise with inflation in 2011-12 and 2012-13.  As a result of this funding, the NHS is today more resilient, has more capacity and provides better care than ever before.

“Today’s announcement is part of the challenge that I set out last December. To go from good to great, the NHS must become more preventative, more people-centred and more productive. We have already challenged the NHS to deliver efficiency savings of £15-20bn by 2013/14. By making tough efficiency savings, this will mean we can continue to increase real terms resources available for patient care year by year. Work on this has already begun and delivering these efficiencies will be an historic achievement.

“We are striving to put the patient at the heart of everything we do. New entitlements enshrined in the NHS Constitution will help guarantee fast access and top quality care for patients. This is right for our times as quality care is not always about high cost; it is about spending it in the right places. Better quality care is also better value care so the NHS will drive up the quality of patient care hand in hand with improving efficiency.”

The savings announced today as part of the cross-Government Operational Efficiency Programme and Smarter Government savings are elements of the wider £15-20bn quality and productivity challenge. The Budget announced specific areas in which NHS savings are achievable in meeting that challenge, including:

• £3.5bn through improving staff productivity, improving staff health and well-being and reducing dependency on agency staff;
• £2.7bn by transforming the lives of those with long-term conditions, through best practice in care planning and case management, empowering patients to self-care, reducing emergency admissions levels to be on a par with the best levels internationally and through providing more efficient, integrated community services;
• £1.5bn through more effective commissioning, by reducing unnecessary referrals and prescribing, and improving mental health services everywhere to ensure most effective interventions in the most effective settings; and
• £2bn through better procurement, savings in management and back office costs and more efficient use of the hospital estate.

1  http://www.hmg.gov.uk/frontlinefirst.aspx