Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Accepted
DHSC and NHSE show lack of readiness for radical, long-term NHS financial transformation.
Conclusion
Despite having last published a plan in January 2019, and the major disruption caused by Covid to the NHS since, DHSC and NHSE are yet to recognise the scale of transformation needed to make the NHS financially sustainable. The Government’s desire to publish a new 10- year plan is a golden opportunity to take significant decisions for the longer-term benefit of the nation’s health and the sustainability of the NHS. Yet there seems a lack of readiness amongst senior health officials to take the radical steps needed. DHSC’s and NHSE’s approach 3 to NHS finances is typified by short-termism. NHSE needed £4.5 billion in extra funding from the government in 2023–24 to deal with issues such as staff pay and industrial action. DHSC has continued to prop up day-to-day spending by raiding precious capital budgets, reallocating £0.9 billion in 2023–24. We welcome the fact that new HM Treasury rules mean it will no longer be able to do this in future. There is a confidence among the NHS’s senior leadership that in the event of a significant challenge, such as another pandemic, government would provide all the extra funding the NHS needed. It appears that no one at the top of DHSC and NHSE has been preparing the NHS for the future for example by putting together a revised strategy or plans as part of the recovery following the pandemic when it was clear that the Long Term Plan 2019 was no longer valid. The Government’s aims to shift towards prevention, community and digital are not new, with previous plans and strategies having similar objectives but often failing to deliver as intended. Officials acknowledged that these changes are difficult and should take place only slowly, over the long term, and not at the expense of patients now. Even as they write the new 10-year plan for the NHS, DHSC and NHSE have not convinced us that they are ready to give the three big shifts desired by government the priority they need. This left the impression that there was no real urgent motivat
Government Response Summary
The government welcomes the decision against capital-to-revenue switches and states record capital investment is agreed for 2025-26. It commits that every provider has been sent a bespoke pack for productivity opportunities for 2025-26, and a plan for 2026-27 will be set out after the Spending Review.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. principles set out in ‘Consolidated Budgeting Guidance’ and in agreement with HM Treasury, to meet financial pressures and protect frontline care. The fiscal rules set out by the Chancellor at the Autumn Budget 2024 mean that no further capital-to-revenue transfers will be used. The department and NHSE welcome the Chancellor’s decision not to allow further capital to revenue switches and recognise the importance of capital investment in the NHS in delivering an effective and productive healthcare system. In 2025-26, record levels of capital investment into health have been agreed, with a budget of £13.6 billion. Excluding years affected by the Covid-19 pandemic, this settlement represents the highest DHSC capital budget in real terms since 2010. The NHS has lived within its overall budget in every recent financial year. NHS systems must now agree credible operational and financial plans for the year and deliver on those plans, under rigorous scrutiny and oversight from Ministers, DHSC and NHS England. billion in 2024-25. Substantive staff retention has improved, supported by the National Retention Programme. In November 2024, the leaver rate was 6.8%, which is below the Long Term Workforce Plan target range. • Technology-enabled transformation – maximising the use of data and digital to improve the efficiency of services. Deploying Electronic Patient Record (EPR) systems and investment in the NHS App and other patient-facing services to free-up staff time. • Moving care to the right setting and improving prevention – realise savings by treating patients in less resource intensive settings and avoiding expensive hospital admissions. • Maximising the value of our spending – for example in medicines spending, driving uptake of best value biosimilar medicines with an ambition to save £1bn by 2029. 3.4 For 2025-26, every provider has been sent a bespoke pack identifying productivity and efficiency opportunities. The plan for delivering productivity improvements from 2026-27 will be set out following Phase 2 of the Spending Review.