Government buries bad news on royal wedding bank holiday as NHS regulator predicts further 50% hospital cuts

Monitor says hospitals may have to make efficiency savings of up to 50% higher than previous predictions, writes Patrick Wintour in the Guardian

Labour has accused health bosses of burying bad news on royal wedding day when it emerged that the health regulator Monitor had predicted hospitals would have to make efficiency savings up to 50% higher than previously envisaged. Monitor, in a letter to NHS foundation trusts dated 27 April and released on Thursday, said the higher efficiency savings were partly due to inflation rising above predicted levels.

Monitor oversees NHS foundation trusts and assesses applications for foundation status. It is due to become the overall regulator for the whole of the NHS under the government shakeup. It suggested average savings of up to 7% a year may be required in the acute sector over the next five years, compared with the 4% called for by the Department of Health as part of efforts to slash £20bn from running costs.

Monitor’s financial assumptions are used to assess trust applicants and to rate the risks of investments and transactions undertaken by existing NHS foundation trusts. It says it has revised its estimate owing to:

• A Treasury health settlement that “represents a substantial challenge to the NHS given expected demand growth”.

• Significant inflationary pressures noted in projections by the Office for Budget Responsibility before the 2011 budget.

• The impact of specific tariff rules

The ministry conceded Monitor’s assessment would be “challenging” for the NHS but said it was the “more pessimistic” of two scenarios set out by the regulator.

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Calm down, dear – it’s only a deficit emergency

It is becoming clear that Cameron and Osborne have shattered business and consumer confidence with their heavy-handed approach to reining in the national debt, writes Heather Stewart in the Guardian

In the glorious April sunshine the union flags were fluttering outside Westminster Abbey and scores of Royal rubber-neckers with tents and deckchairs were already reserving their pitches for the big day. Just around the corner, in the characterless Church House conference centre, the bunting was noticeably absent as Britain’s top statistician sombrely announced that the economy had been “on a plateau” for the past three quarters.

“It’s not been declining, but it’s not been growing either,” said Joe Grice, number-cruncher in chief for the Office for National Statistics, with typical understatement. Strip away his scrupulous objectivity and news that GDP expanded by 0.5% in the first three months of 2011 revealed an economy that is flat-lining.

Put it this way: if your usual take-home pay is £2,000, and you find yourself unexpectedly short by £100 one month (because of an unpaid “snow day” or two, perhaps) you don’t crack open the champagne if your wages are restored to normal a month later. With the snowdrifts cleared, output from the UK economy in the first three months of this year was exactly the same as in the third quarter of 2010, just after the coalition took the reins.

Grice admitted that, taken together, the figures were equivalent to two quarters of zero growth, or as Tony Dolphin of the Institute for Public Policy Research put it, “as close as it is possible to come to a recession without actually being in one”. The GDP data prompted an almighty bust-up in the Commons, with the prime minister insisting it was “good news,” and urging Labour’s Treasury spokeswoman Angela Eagle to “calm down, dear”.

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Fears for NHS services if providers go bust

MPs on public accounts committee hit out at free market model, saying there is ‘no contingency to ensure services continue’, writes Polly Curtis in the Guardian

MPs are demanding that the government urgently put in place plans to ensure vital health services continue if a hospital or other provider goes bust under its NHS reforms. In a report published on Wednesday, the public accounts committee says the proposals for the NHS do not include details of what will happen if providers fail in the new market model of healthcare provision.

Members of the committee dismissed claims by the most senior civil servant in the Department of Health, Una O’Brien, that the government was “not planning for failure”, and condemned the lack of contingency planning, suggesting that the proposals now pose an intolerable risk to value for money and quality of services.

Richard Bacon, the Conservative MP for South Norfolk, said: “In any organisation as large and complex as the NHS, things can and do go wrong, and the Department of Health has yet to establish a robust framework for dealing with failure in the system. The department must not only understand the danger of either a provider or a commissioner going ‘belly up’, but also toughen up its contingency plans, drawing upon strong, effective and clear chains of governance and accountability throughout the new NHS model.”

It is the latest in a series of critiques of the scale and pace of NHS reforms, after opposition from doctors, healthcare specialists and even the Liberal Democrats. The programme is currently on a two-month “pause” to allow the health secretary, Andrew Lansley, to conduct a “listening exercise”. No 10 has ruled out any significant changes, but there is mounting speculation in Westminster that they could be preparing to reverse that position to avoid a clash over the NHS.

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Why the Tories want us all to live in Downton Abbey

David Cameron hankers for a society in which everyone knows their place, writes Deborah Orr in the Guardian

George Bush Sr, while seeking re-election as US president in 1992, said: “We are going to keep on trying to strengthen the American family, to make American families a lot more like the Waltons and a lot less like the Simpsons.” Over here, 20 years on, David Cameron has ambitions that seem even more absurd. He appears to want Britain to be a lot more Downton Abbey and a lot less Four Lions – the former being assumed as a sound prophylactic against the latter.

Last year, when Downton Abbey became a huge Sunday-evening hit for ITV, some argued that the popularity of the series, set on a country estate early in the 20th century, might be culturally significant, signalling a nostalgia for a time when Britain had a more settled class identity. The show certainly offers a rose-tinted picture of life under the wing of the English aristocracy, as conjured up by Downton’s creator, Julian Fellowes. (He was made a Conservative peer in the last New Year’s Honours List, for services to coalition cabinet fantasy.) But there are few signs of a hunger to doff the cap in real life.

The coalition’s rhetoric, the insistence that “we are all in this together”, building a “big society”, is often dismissed as meaningless, or even sinister – a mendacious cover for an ideologically driven economic rout against the people of Britain, on behalf of the wealthy elites. My suspicion, however, is that these inchoate phrases really represent a perfectly genuine ache in the Tory soul for a vision of Britain – especially of England – in which the Women’s Institute runs the fete on the village green, there is honey, still, for tea, and everyone is content because everyone knows their place. Cameron is not dangerous because he is cynical. He is dangerous because he is sentimental. Politicians often are, the idiots.

The trouble with the big society is not that it is a hollow excuse, dreamed up to shift responsibility for deficit-reducing cuts from the state to the people. It’s that it is a genuine and heartfelt nostalgic dream. Hopes that the big society will quickly become a reality are supplying an unfounded optimism within government about the shape of things to come. They actually think it’s all going to turn out OK. Of course they do. That’s why they are in such a hurry to get some results before the next election.

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Birmingham City Council social care cuts ruled unlawful by High Court

Judges have ruled that Birmingham City Council’s plans to limit social care for disabled people are unlawful. The families of four severely disabled people took the case to the High Court sitting in Birmingham. The test case is the first in a series of possible legal challenges to councils around the UK mounted by those facing cuts to social care.

Birmingham City Council is planning to reduce care packages to about 4,000 people over the next three years. The authority, a Conservative-Liberal coalition, says it needs to make the cuts to help slash £118m from its adult and communities directorate. In total, a spokeswoman said, it needs to save £308m from its budget.

It explained that only those whose needs had been assessed as “critical” would qualify for council-funded care. But the judges ruled that the council business plan was unlawful because it failed to comply with Section 49a of the Disability Discrimination Act. The four people, who cannot be named for legal reasons, include a 65-year-old woman with severe learning difficulties who receives 24-hour care in a home paid for by the council. They also include a 25-year-old man with a rare genetic disorder and severe learning disabilities who receives overnight respite care, also funded by the council. Both were set to lose their council-funded care.

The sister-in-law of the 65-year-old woman said: “I’m deeply concerned about what impact this will have and it’s important to take a stand here. She relies on the council’s support to assist her with daily living skills and to support and promote her independence, including assisting with personal care tasks, preparation of meals and safely accessing the community. The care is hugely beneficial and without it her quality of life would fall dramatically.”

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George Osborne backs 61 PFI projects despite previous doubts about costing

The use of PFI peaked when Tony Blair was in power, with 67 projects being signed off, or reaching “financial completion”, in 2000. Those projects were worth £4.6bn. While in opposition, Osborne described the PFI as a “discredited” model, while Cable said it was “a dishonest system of accounting, designed to hide taxpayers’ liabilities”.

George Osborne, the chancellor, is pressing ahead with private finance initiative (PFI) projects on a multibillion-pound scale despite having dismissed the infrastructure funding mechanism as “discredited” when he was in opposition, research has revealed. A report on Channel 4 News shows 61 PFI projects, worth a total of £6.9bn, have been taken forward since the general election. This is despite claims that private sector borrowing costs currently make PFI particularly poor value for money.

Of the 61 projects being negotiated, 39 are due to be signed off this year, against 32 in 2008 and 38 in 2009, when Gordon Brown was prime minister. Although the Treasury claims that the new PFI contracts will be better value for money than some of the old ones, the figures will reignite the long-standing controversy about the merits of paying the private sector to take charge of building and maintenance projects that used to be managed by government.

The Labour government, which massively expanded the use of PFI after it was developed by the last Tory government, defended it on the grounds that public sector procurement schemes often came in late and over budget and that, under PFI, the costs associated with these risks were transferred to the private sector. But, in opposition, Osborne and his Lib Dem counterpart, Vince Cable, complained that PFI was poor value for the taxpayer.

Mark Hellowell, a PFI specialist at the University of Edinburgh, told Channel 4 News that the large gap between the cost of private sector borrowing and the cost of public sector borrowing meant that PFI now represented particularly poor value for money. “The truth is the coalition government have made a decision that they want to expand PFI at a time when the value for money credentials of the system have never been weaker,” he said. “The government is very concerned to keep the headline rates of deficit and debt down, so it’s looking to use an increasingly expensive form of borrowing through an intermediary knowing the investment costs won’t immediately show up on their budgets.”

In response to the Channel 4 News findings, to be broadcast at 7pm tonight, the Treasury said that PFI was only one method used to finance infrastructure projects and that schemes had to be “good value for money” to get approval. “There is clear evidence of excesses in some of the older PFI contracts,” a Treasury spokesman said. “We are determined to save money where we can, which is why we are running a savings pilot at Queen’s hospital, Romford. The PFI contract is being examined to identify ways of reducing ongoing costs in this contract. Lessons learned will be used to drive savings across the full portfolio of PFI contracts.”

Andrew Sparrow, the Guardian

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The great debt lie & the myth of the structural deficit

The case for austerity measures rests on these two stories. Firstly, some facts which blow apart the fallacy that the present economic crisis is the result of excessive spending leading to unsustainable debt:

• Average annual spending and taxation were both lower as a proportion of GDP under the last 3 Labour Governments (38% and 35.4%) than under the 4 Conservative governments which preceded them (40% and 35.5%).

• National debt was lower as a proportion of GDP at the start of the financial crisis in 1998 (36%) than in 1997, the last year of John Major’s Conservative government (42%).

• In 2010, the UK’s national debt as a proportion of GDP (52%) was the second lowest of the G7 countries.

Secondly, the budget deficit is no more “structural” than an overdraft in your bank account when you spend more than you earn. There is either a real deficit or not, and if there is, then it is due to either excessive spending or an inadequate tax take.

Since it can easily be demonstrated that the problem is not the former, then it must be the latter – caused by the financial crisis and consequent recession and likely to be aggravated when taxes are cut later during this parliament to the benefit of high earners, corporations and banks.

As The Investors Chronicle put it (15th February 2010): “The idea of a structural deficit serves a political rather than analytical function. It’s a pseudo-scientific concept which serves to legitimate what is in fact a pure judgment call – that borrowing needs cutting.”

Osborne began to revive the myth of the structural deficit in June 2010, when it was becoming clear that the deficit would be under £155 billion, well below the Treasury’s £178 billion estimate made six months earlier. In other words, the deficit was narrowing after Labour increased spending in 2009.

The fact that the US, which has made no serious deficit reductions, has suffered almost the smallest recession of any major developed economy whereas Ireland and Greece have suffered the worst because of drastic spending cuts further undermines the government’s claim that radical austerity measures are needed – and shows that Osborne’s main aim is not to reduce the deficit but to accelerate the transfer of wealth to the already rich.

And if anyone still wants to talk about a “structural” deficit, then they should remember that the last 3 Labour governments managed to earn enough to cover their spending for 4 of their 13 years in office, whereas Thatcher and Major only managed balance the books for 2 out of 17 years.

Nobody Likes a Tory (Facebook page)

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