Life after the spending boom

Jonn Elledge reports on the implications for GPs of any health funding revision.

It may not have felt like it, but the past few years have been a boom for the health service.

For half a decade the government raced to raise health spending to the European average, increasing the NHS budget by nearly 7 per cent a year.

So used to this did we become that, when last year's spending review cut future growth to 3.5 per cent - still faster than any other part of the public sector - experts were fretting about whether the NHS could cope.

Recent developments suggest money will become a lot tighter. The government has not outlined plans for health spending after 2011, but it has made clear that it wants to reduce public spending as a whole.

The pre-budget report pledged to find £5 billion in efficiency savings by 2011; experts predict as much as half of this could come from the NHS. Trust managers are starting to sweat that the Treasury might claw back the £2 billion of surpluses they have built up. 'The upshot,' says King's Fund economist John Appleby, 'is that the NHS is going to have to get a bigger bang for its buck.'

Not all bad news
Paradoxically, some have welcomed this. For one thing, the recession means the government has moved forward plans to invest £100 million in expanding practice premises, as it attempts to kick-start the economy.

For another, the squeeze could finally break the acute sector's dominance of the NHS.

'If you keep people out of hospital and focus investment on primary care, you will save money,' argues Professor Steve Field, chair of the RCGP.

Tighter health spending could push the government into placing well-funded general practice at the heart of the NHS, if only to save money elsewhere.

'When we confronted Lord Darzi with the evidence on this, he listened,' adds Professor Field.

The key to making this happen, according to NAPC president Dr James Kingsland, is to embrace practice-based commissioning. 'I'm signed up to the heresy that there's enough money in the NHS,' he says. 'It's just not managed very well.'

Putting more commissioning power in the hands of GPs, he argues, would allow practices to expand services within their community, grow their business and profits, and save the NHS money. 'Fund holding delivered 3 to 4 per cent efficiency savings year on year,' he says.

Pay rises unlikely
All this, however, will likely be overshadowed by the fact that the recession has probably ruled out any serious pay rise for the foreseeable future.

'Inflation may be a thing of the past for the next three years,' says Stuart Williamson, an accountant with Williamson West. 'So in the public mind, there may be no justification for any increase.'

Even if capitalism were not imploding, a big rise would seem unlikely. GP pay, says Mr Williamson, has historically slipped back over time, then received a major boost when a new contract comes along, as in 1978, 1990 and 2004. If that pattern holds, GPs can expect the next big pay rise sometime around 2016.

Meanwhile, any new money is likely to be tied to performance measures such as directed enhanced services and the quality framework.

One influential source, who asked not to be named, argues that, however unfairly, the public sees GPs as generously rewarded already. There is likely to be more pressure on the government to keep practice profits down.

'Any rise will have to be portrayed as more pay for more work,' he says. 'The media will make it impossible to portray anything as simply a pay rise.'

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