Meg Hillier, chair of the Public Accounts Committee, has asked the Department of Health to explain how productivity could be increased in the NHS, following the Treasury’s concession that it is prepared to be flexible on pay “in return for improvements in public sector productivity”.
Sir Chris Wormald, permanent secretary at DoH, recently told the PAC that productivity levels vary between NHS trusts and that if processes used in the best hospitals are adopted more widely that could free up cash for a pay rise of above 1%.
In a letter to Wormald published today, Hillier asked him to provide more information and examples on how productivity can be increased in the NHS. She also called on the department to improve its oversight of the investment needs of healthcare infrastructure.
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The letter, which follows a PAC hearing on the department’s accounts earlier this month, set out MPs’ concerns about the financial sustainability of NHS England, and the lack of clarity about the impact of using capital budgets to support day-to-day spending.
It also covered tensions arising from the decisions of some CCGs to restrict access to services – such as Vale of York CCG’s policy to delay planned operations for smokers until they could demonstrate they had stopped smoking – and the budget implications of relaxing the 1% public sector pay cap for NHS staff.
During the PAC hearing, Wormald told MPs that pay rises would be linked to productivity gains. The Treasury has told pay review bodies that “the government recognises that in some parts of the public sector, particularly in areas of skill shortage, more flexibility may be required to deliver world class public services including in return for improvements in public sector productivity”.
Hillier asked Wormald to “provide more information, and examples, about how you envisage productivity increasing in the NHS”.
Recapping the PAC hearing, Hillier said Wormald had been unclear about the impact of increasing pay on the health budget as discussions with the Treasury are still underway. She highlighted that the cost of lifting the cap could be £0.5bn for each 1% rise.
“The decision on public sector pay is welcome but this places huge pressure on already struggling budgets if the commitment is not supported by additional funding,” she said, adding that the committee would seek to hear more on this matter in future.
Hillier also called on the department to strengthen its oversight of spending by NHS trusts, following an admission by David Williams, the department's director general finance, that Whitehall’s “line of sight through the system on the core capital budget is quite opaque”. This was in response to questioning about the impact of switching £1.2bn out of the total £4.8bn NHS capital budget into the revenue budget, which is used for day-to-day spending.
In response to this Hillier wrote: “Whilst local NHS organisations remain responsible for planning and managing their activities, the department and you as accounting officer should ensure that the condition and investment needs of the infrastructure of healthcare systems are much more clearly understood so future decision making is more fully informed.”
In addition, she asked the department to ensure its accounts are presented in a timely fashion in future, after its annual report for 2016-17 was published just two days before summer recess this year, which hinders parliamentarians’ “ability to scrutinise what is happening”.
She acknowledged that the department has put better winter planning in place this year, but expressed concerns about “the seriousness of the potential risks from influenza, delayed transfers of care and the continuing growth in demand”. She reminded Wormald to highlight to the committee any examples of local NHS trusts working successfully to tackle delayed transfers of care and other issues.