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NHS chief admits to errors in costing of pay reform

BMJ 2006; 333 doi: https://doi.org/10.1136/bmj.333.7573.821 (Published 19 October 2006) Cite this as: BMJ 2006;333:821
  1. Adrian O'Dowd
  1. London

    The government miscalculated the full cost of the pay reforms in the NHS, its chief executive admitted to MPs this week.

    Mr Nicholson was giving evidence to the House of Commons Committee of Public Accounts as part of its one-off inquiry into the National Audit Office and Audit Commission report Financial Management in the NHS, which was published in June.

    “As far as the department is concerned we could be better at costing some of our policies,” he said. “There are some examples of policies we have costed that in practice have for a whole variety of reasons cost more.”

    This included the reforms of the pay system, he added. But although financial problems in the NHS had worsened in recent years NHS finances had become increasingly transparent.

    The committee's chairman, the Conservative MP Edward Leigh, highlighted the report's concerns about financial management capabilities at 30% of NHS organisations.

    Mr Nicholson admitted that some examples of poor management and financial practice could be found in the NHS. However, when asked whether or not trusts had sufficient financial management skills to cope he said: “Most organisations do balance their books and manage their financial affairs adequately, but there are some areas where we undoubtedly need improvement.”

    MPs asked whether he could ensure that essential NHS services would be maintained after the redundancies and ward closures caused by financial deficits. He replied, “We are satisfied that the development in health services in the NHS over the next 12 months will deliver the things we want it to deliver in terms of the major six priorities that the department has identified.

    “We are satisfied that vital services are being protected and, indeed, developed if not improved.”

    The chief executive was also quizzed about the fact that some medical and healthcare graduates were unable to find jobs and that this situation would worsen in three years' time, as the NHS would have a surplus of staff.

    “In terms of people coming out of colleges now what the NHS cannot do is guarantee a job to everybody who goes through that. We're not there to do that—we deliver health care. But we can do a lot to help and support people who are finding themselves in difficulty at the moment,” he said. Examples of that help included giving people part time work or more training or retraining.

    “There's no doubt that we have to take a long, hard look at the numbers and the workforce planning arrangements that we have in the NHS,” he said.

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