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Cost of health reform rises to £1.6bn

19 October 2012

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The government has admitted the costs of its health reforms have risen by £300m.

Healthcare unions have reacted angrily to the admission by the Health Secretary Jeremy Hunt in a written statement to the House of Commons that the costs of implementing the Health and Social Care Act has risen to £1.6bn.

Earlier estimates put the cost of the reorganisation at between £1.2bn and £1.3bn.

Dr Mark Porter, chair of the British Medical Association (BMA) Council, said the “huge costs” of the “largely unnecessary reorganisation” are “particularly galling” given that patient services “are being rationed”.

“The NHS has been tasked with saving £20 billion by 2015, and that could go up,” he said.

“Achieving savings on this scale was always going to be a steep challenge, but it is being made even harder by the fact that time, energy and resources have been taken up by massive structural change.

“The Health and Social Care Act is likely to result in more fragmentation, and it is much harder to achieve efficiency savings when different bits of the NHS are being forced to compete rather than co-operate.”

Dr Porter also expressed doubt the reforms will generate savings of £5.5bn.

“While some costs have been reduced through frontloaded reductions in administrative spending, these are unlikely to be sustainable on the same scale in the longer term,” he said.

Dr Peter Carter, chief executive and general secretary of the Royal College of Nursing, said the reforms were a “waste of money” and announced his concern that costs would “spiral further”.

“The RCN has frequently stated its concerns over the bill – not only is it creating major upheaval, which will prevent the NHS from delivering quality care, it has done so at a huge expense,” he said.

A spokesperson from the Department of Health said: “These are one-off costs. By investing in these changes we will be able to reduce unnecessary bureaucracy and free up extra resources – £5.5 billion during this Parliament and £1.5 billion every year thereafter — for patient care.”

“We were concerned that there would be hidden costs involved in such a large reorganisation and it is becoming clear that the government has not properly estimated how much money this would cost.”