Page last updated at 13:12 GMT, Tuesday, 16 December 2008

NHS ' faces financial challenge'

By Branwen Jeffreys
BBC News health correspondent

The recession could up demand for the NHS

The NHS is facing its biggest financial challenge for more than a decade, warn senior health service figures.

They said the current surplus in England will only act as a temporary cushion as public spending is reduced to cope with the economic down turn.

Speaking at a debate in London, Nigel Edwards, of the NHS Confederation, warned demand for healthcare may rise during a recession.

And he said public expectation had outstripped the rise in NHS funding.

The NHS has an opportunity if it works extremely hard to keep ahead of the tiger
Stephen Dorrell
The financial plans for the health service, confirmed recently in the operating framework, promise an average increase of 5.5% for England in the next two financial years.

After that spending on the health service is likely to stall and similar financial pressures will be felt across the UK.

At the debate hosted by the NHS Confederation two former health secretaries, Patricia Hewitt and Stephen Dorrell, urged NHS managers to use the current surplus and two years of above inflation increases to speed up the pace of change within the health service.

Tough decisions

Patricia Hewitt said there would be tough decisions ahead for Primary Care Trusts, who manage 80% of the NHS budget in England.

The number of health service organisations carrying an historic debt has fallen, but she said in those areas where deficits remain there will be extra problems going into an economic downturn.

She said PCTs had to concentrate on what would deliver the best outcomes for the patients in their area, rather than being overly concerned with the financial consequences of their decisions for local health organisations.

At a time when the health service will be under pressure to prioritise effective care Patricia Hewitt also called for the clinical and cost effectiveness watchdog NICE (the National Institute for Health and Clinical Excellence) to make much bolder efforts to explain its role to the public.

She said that while its work was internationally copied it was poorly understood at home.

"NICE needs very badly to strengthen its public legitimacy. Its deep but narrow engagement with the public is not very visible," she said.


Former Conservative Health Secretary Stephen Dorrell said he was more pessimistic about what he described as the "cash stress" facing the NHS.

These are challenging times for the NHS
David Nicholson
NHS chief executive

He warned the severe economic downturn could lead to growing demands as long term poverty, stress and depression took their toll on the population.

He warned NHS managers that as the largest public service it could be asked to shoulder a significant share of the 5bn of efficiency savings contained in the pre budget spending report as a counter balance to tax cuts.

Mr Dorrell said there should be a renewed focus on public health and a step change in the pace of reconfiguring NHS services despite the political sensitivity of making changes to the way care is delivered.

"The NHS has an opportunity if it works extremely hard to keep ahead of the tiger," he said.

David Nicholson, chief executive of the NHS said: "These are challenging times for the NHS, but we are confident that the additional resources and the reforms we have put in place over the last 10 years mean we can continue to deliver improvements in care for patients.

"2009/10 must be the year in which we consolidate our strong financial position and start to put in place the actions that will transform services to deliver high quality care for patients and value for money for the taxpayer."

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