Whole NHS budget under the microscope

Reports today suggest that the National Programme for IT (NPfIT) will be included in a review of all health budgets to ensure that every aspect of central spending is giving value for money. There are assurances, however, that existing commitments will be honoured.

The health secretary, Patricia Hewitt, confirmed the review during an interview on ITV’s Jonathan Dimbleby Programme on Sunday but also gave assurances on existing spending commitments. To what extent the £6.8 billion NHS IT programme is counted as an existing commitment is unclear.

Her position appeared at odds, however, with a report in The Observer on a leaked e-mail suggesting that officials should ignore ministers’ promises on spending. The e-mail states: “Commitment to spend by virtue of an announcement, including ministerial announcements, is not considered a commitment in this context.”

It also threatens staff with disciplinary action if they disobey an order to freeze new investment.

Written by Sarndrah Horsfall, chief of staff to Sir Liam Donaldson, the chief medical officer, the e-mail orders an “embargo on all new commitments” for this year and “all future years” covering “all programme budgets (capital and revenue)”.

The prime targets for the spending freezes called for in the leaked email appear to be public health programmes set up to tackle issues such rising trends in as alcohol abuse, sexually-transmitted diseases and obesity.

NPfIT is already under scrutiny by the National Audit Office (NAO), the public spending watchdog, which was due to report on its work last summer. Its much-delayed report has had its delivery date revised to March 2006.

In a separate development a new paper from the centre right think tank Reform predicts that the NHS is heading for a huge accumulated deficit of £7 billion by 2010 unless it can deliver a huge productivity improvements.

The report by Professor Nick Bosenquet says that soaring spending, extra staff, a huge hospital building programme, more drugs, generous contracts to GPs, consultants and other staff, and a rash of uncosted promises by ministers means the NHS faces a yawning deficit it can deliver a “productivity miracle”.

Prof. Bosenquet’s recommendations include stopping big Private Finance Initiative hospital building which are at an early stage on the grounds that they are too expensive and care could be more cost effectively delivered outside of hospitals.