NHS Modernisation (Costs and Benefits)

Jeremy Hunt Excerpts

Thursday 18th July 2013 Written Statements

[The Secretary of State for Health (Mr Jeremy Hunt)]

The Government’s estimates of the costs and benefits of implementing policies in the Health and Social Care Act were contained in the “Coordinating document for the Impact Assessments and Equality Analysis” published in September 2011. These estimates reflected the changes that the Government made to their proposals following the listening exercise and the report of the NHS Future Forum.

Officials have continued to track closely the actual costs and benefits of the changes. Last September I reported to the House that the current estimate of costs was in the range £1.5 billion to £1.6 billion, which is equivalent to £1.6 billion to £1.7 billion in today’s prices. I can confirm today that I expect the costs—including spending on redundancy—to be no higher than announced last year. Indeed, the costs are likely to be nearer the estimate in the business case for the programme (£1.5 billion in today’s prices).

I can also announce that, up to 31 March 2013, costs of £1,096 million had been incurred across the health and care system on developing and establishing the new arrangements, comprising:

£435 million on staff redundancies;

£54 million on IT for the new organisations;

£42 million on estates costs of closing bodies and setting up new organisations;

£22 million on internal departmental costs (e.g. programme management);

£299 million on setting up clinical commissioning groups (excluding items above); and

£244 million on other costs of closing bodies (e.g. primary care trusts (PCTs)) and setting up new organisations.

In the impact assessment, long-term annual savings arising from the changes were estimated at £1.5 billion per year from 2014-15 onwards. Gross savings over the transition period (2010-11 to 2014-15) were estimated at £4.5 billion.

Annual savings are still expected to be £1.5 billion from 2014-15. Over the period 2010-11 to 2014-15, on a comparable basis with the impact assessment, the cumulative savings in administration costs arising from the reforms are still expected to be at least £5.5 billion. This sets aside administration costs of around £1.5 billion that are expected to be incurred on implementing the changes across this period.

I am today publishing “Business Case for the Health and Care Modernisation Transition Programme” which was prepared for the major programme established to take forward implementation of the reforms. A copy has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office. This publication meets a commitment made in “Health and Social Care Reforms: Transition Programme Scheme for Publication” (published in May 2012). The business case reflects the landscape that existed in December 2011, after the Government had responded to the listening exercise. Although the financial estimates in the business case are largely consistent with the impact assessment they took account of some costs (estimated at £127 million in total) that were excluded from the impact assessment either because they were out of scope (for example, because they related to measures not requiring legislation) or because they were redacted (for example, because they were commercially sensitive). The business case estimated the costs of implementing the changes at £1.5 billion at today’s prices