Election '97: Labour plans 'threaten 5,000 NHS jobs'

At least 5,000 jobs are threatened by Labour's plans to save pounds 100m for patient care by cutting back on NHS bureaucracy, experts predicted yesterday.

Savings of this magnitude could not be achieved without merging NHS trusts and closing hospitals, health policy analysts said.

Although this was desirable to improve the efficiency with which health care was delivered, it would be certain to generate fierce local opposition.

Labour is pledged to end the NHS internal market and the "paper mountain" of invoices that it generates.

In a letter to Alan Langlands, chief executive of the NHS, last week, Chris Smith, shadow health secretary, said Labour would appoint a 'bureaucracy buster" to ensure health authorities and trusts achieved target reductions in management costs to bring them down to the level of the lowest spending 25 per cent.

Figures published by the NHS executive last month show that management costs for acute hospital trusts range from 3.5 per cent at the Norfolk and Norwich hospital, Norwich, to 7 per cent at Queen Mary's hospital, Sidcup.

For health authorities the range is pounds 7 per head of population in Avon to pounds 13 per head in Hillingdon, west London.

Managers justify the variation by saying that some trusts deal with more health authorities and GP fundholders than others; are spread over several sites and offer more services. Some health authorities have higher population turnover and deal with more trusts.

Labour say overall management costs have grown from 9-10 per cent to 12-13 per cent since the NHS reforms were introduced leading to an explosion of men in grey suits.

Stephen Dorrell, the health secretary, responded by ordering a 5 per cent cut in management costs last year followed by a further 2.7 per cent cut this year, amounting to pounds 186m over two years.

The Institute of Health Services Management said: "There is no slack left in the system - we are down to the skeleton. If Labour cuts another 10 per cent the system will collapse. The reality is that the only way to cut management costs further is by wholesale mergers of NHS trusts."

Nick Mays, health policy analyst at the Kings Fund, said saving pounds 100m would have to mean cutting jobs. At an average pounds 20,000 salary for a manager that would mean 5,000 posts.

"Labour are not looking at reducing the stationery budget. But it is an awful lot of jobs. It is very hard to see how they can do it without merging trusts. That means hospital closures and we know how long they take."

Labour said turnover among NHS administrative staff was running at 15 per cent and the reduction in management costs could be achieved by natural wastage. Mr Smith said it was "a much tougher target than that set by the government but I believe it is achievable."

Labour are also committed to replacing GP fundholding with local commissioning in which all GPs are involved in buying hospital services. About 500 groups are envisaged, five or six in each health authority.

Professor Angela Coulter, director of the Kings Fund Development Centre, said: "There will have to be administrative costs in involving all GPs. Fundholding already costs a lot and that is not going to go away. I would have thought it would create administrative jobs. I can't see how it is going to save them."