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‘Efficiency savings’ for the NHS, cuts for everyone else

Isn't it about time the government dropped the words

This is a tale of two organisations. They are based in the same part of the country and spend a similar amount each year – yet their incomes will fall this year, and for every year for the next four years. I chose these two organisations at random – the only criteria was that their annual budget was roughly the same. You can find similar organisations all over the country. For one of these organisations, these changes in finances are called cuts; for the other organisation they are called efficiency savings. The changes in their finances is roughly the same, but the linguistics is different.

The first organisation is Worcestershire County Council. This has an annual budget of £368m. Under Eric Pickles' plans the council has to cut 7.1% out of its budget every year for four years (a total of £70m). When the government settlement was announced the council said:

"Worcestershire County Council has been notified that it faces cuts in grant funding of over £9.5m (revenue £3.2m, capital £2m, LAA Reward Grant £4.4m)."

The word cuts is prominent, it is explicit. There will be less money and this is due to a cut in income. The consequence of this is that services will be cut, and jobs will be cut (estimated at 750 jobs).

The second organisation is Worcestershire Acute Hospitals NHS Trust. This hospital has an annual income of £313m (annual report 2009/10). Like all hospital trusts, Worcestershire will be affected by the reduction in the tariff (the fixed-price payment for about half of procedures) by 1.5% compared to last year. Like all hospital trusts, they have to withstand the reduced numbers of patients through the McKinsey report recommendation to do more work in the community rather than in hospitals. NHS Worcestershire (the local PCT) estimates that the number of patients will fall by 14%.

Board papers show that the income of the hospital will fall over the next few years:

Outline Financial Plan

2011/12
(£m)

2012/13
(£m)

2013/14
(£m)

Total Income

317.4

307.8

304.9

This is a fall in income, but how is it described? Efficiency savings. The income of the hospital will fall, yet nowhere do you ever see the word cut.

The annual report for the trust says that they must "deliver over £55m of efficiency savings over the next five years", similar in percentage terms to the "cuts" that the county council have to make. NHS organisations also use the euphemism Cost Improvement Plan (CIP), and Worcestershire Acute Hospitals Trust says that the CIP for workforce is a saving of £16.8m in 2011/12. In 2009/10 the trust spent £157m on the salaries of 4,744 staff. The CIP is 9% of that salary bill, and while there may be some savings from reducing the number of agency staff, clearly the permanent staff will be affected. False Economy has been unable to obtain an estimate of the possible job cuts over the next few years, but at a recent board meeting, John Rostill, chief executive of the trust, said that he was unable to make any promises about protecting jobs:

"I would be foolish, as would of anyone else, to categorically confirm that there is no prospect of redundancies in this part of the NHS, in this part of the county in the next few years."

It is clear that cuts and savings are synonyms. Councils use the former, hospitals use the latter, but they mean the same thing.

The final bit of linguistics we need to investigate is the word reinvest. Whenever the government talks about the reduction in NHS funds they always use the word reinvest. For example, on the Today programme a month ago, health secretary Andrew Lansley said:

"But because of the nature of the demands on the NHS, if we can secure those efficiency savings, we can reinvest them in the NHS to deliver improving outcomes for the public."

As you can see from the finances of Worcestershire, the savings have to be made because the money is not there. Their income is falling. The savings are cuts. So how can they reinvest money that does not exist? Nowhere have I seen Worcester County Council saying that they are cutting to reinvest; it would sound silly. Isn't it about time the government dropped the words savings and reinvest and instead be honest?

Richard Blogger writes about the NHS and social policy at NHS Vault.

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