The U.K.'s National Health Services (NHS) front-line spending will rise along with inflation, yet not without reforms across the public sector, including a reduction of £500 million (U.S. $812 million) from the NHS IT program, according to the 2009 Pre-Budget Report (PBR) presented by Chancellor of the Exchequer Alistair Darling yesterday.
The PBR is one of two wide-ranging economic reports presented to Parliament by the chancellor each year.
The 2009 PBR confirmed that the government will stick to planned levels of overall departmental spending in 2010-11 to help support the economy through the downturn, but from 2011-12 onwards, spending growth will be reduced to help halve the deficit over the next four years.
The report announced an additional 0.5 percent increase in employee, employer and self-employed rates of national insurance contributions. As a result, according to the report, public sector current expenditure will grow by an average of 0.8 percent a year from 2011-12 until 2014-15. Additionally, public sector net investment will move to 1.5 percent of the U.K. gross domestic product by 2013-14, remaining at that level in 2014-15.
A package was set to ensure that, in 2011-12 and 2012-13, NHS front-line spending–the 95 percent of spending that supports patient care–rises in line with inflation and spending on front-line schools rises by 0.7 percent annually in real terms.
However, the U.K. government looked at what other efficiencies could be achieved across the public sector through better procurement, or through cutting lower value or lower-priority programs or projects on the basis of the early findings of the Public Value Program (PVP).
These reforms include:
• £11 billion (U.S. $17.8 billion) of savings by 2012-13. For example, the report through rationalizing Arms Length Bodies, greater use of online systems for providing advice and information to the public, cutting consultancy spend by 50 percent and better management of government assets;
• £5 billion (U.S. $8.12 billion) of savings by 2012-13 from targeting and prioritizing spending including the reformation of the Criminal Justice System and legal aid, reducing lower priority provision within the adult skills budget, phasing out temporary employment programs and reducing the cost and scope of the NHS IT Program;
• A one percent cap on public sector pay settlements in 2011-12 and 2012-13, delivering £3.4 billion (U.S. $5.5 billion) of savings a year by 2012-13; and
• Reforms to public service pensions to save £1 billion (U.S. $1.6 billion) a year from 2012-13 onwards.
The U.K. government said it would continue to identify further opportunities for savings through the PVP.