Treasury war on waste sets new efficiency savings target for NHS

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Prime Minister Boris Johnson has instructed the Chancellor, Rishi Sunak, to lead a new drive on efficiency, effectiveness and economy in government spending. The crackdown will see the annual NHS efficiency target doubled to 2.2%, which will release £4.75 billion to be invested in NHS priority areas. Arm's Length Bodies will also be expected to find at least £800m.

The efficiency drive will be spearheaded by a new committee, the 'Efficiency and Value for Money Committee', to be chaired by the Chancellor. It will be responsible for ensuring the 5% efficiency target set at the 2021 Spending Review is met across Whitehall, and scrutinise strategies to prevent fraud and error.

The government believes it is possible to cut £5.5 billion worth of waste from spending, and is promising the savings will be used to fund vital public services.

The NHS savings are expected to come as a result of a range of programmes, including the digitisation of diagnostic and frontline services - which has been shown to reduce cost per admission by up to 13% - improving the efficiency of surgical hubs and developing digital tools to cut time spent by staff on administrative tasks. 

For some Trusts, this level of saving is unprecedented, and for most it will be extremely challenging, especially given the need to reduce the elective care backlog whilst coping with COVID-19 infections which are on the rise again and inflationary pressures.

Saffron Cordery, Deputy Chief Executive of NHS Providers, insists that whilst NHS Trust leaders are aware of their duty to maximise taxpayer value for the investment being made in the NHS, there needs to be an awareness of how challenging this latest task will be.  

"They [Trust leaders] are working hard to find efficiencies, reduce costs and identify savings," she says. "Even before this announcement, many were concerned about the scale of savings they would be expected to make in the coming financial year, especially given the need to tackle care backlogs, meet rising demand for services and deal with the ongoing impact of COVID-19 at a time of widespread workforce shortages.

"The impact of inflationary pressures, including energy and fuel costs, could make their savings requirement even more stretching."

The £4.75 billion savings agreed with the Department of Health and Social Care will come into effect in financial year 2022/23.

The Chancellor's Spring Budget follows tomorrow (Wednesday, March 23).



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