NHS spending watchdog spends £500k asking management consultants to clarify its 'purpose'

Shadow Health Secretary describes sums spent by NHS Improvement as 'alarming'

Watchdog enforces strict spending targets for NHS trusts and approves their consultancy spending (PA)

The health service’s financial watchdog will spend £500k on private management consultants to help define its “purpose”, just two years after spending £630k on a similar consultancy project when it was set up.

NHS Improvement is responsible for managing NHS hospitals spending, including taking action against those trusts that fail to hit increasingly tough spending targets.

It also monitors hospital spending on areas like consultancy services, with any deals over £50,000 needing its prior approval.

But in a message to its employees, sent last week, NHS Improvement said it has struck a deal with consultancy McKinsey for a sum 10 times this amount.

The note, seen by the Health Service Journal (HSJ), said the new partnership with McKinsey will “develop our internal organisational development work”, to clarify NHS Improvement’s “purpose and operating model”.

NHS Improvement was created less than two years ago, merging two existing entities: the Trust Development Authority and price-setting watchdog Monitor.

As one of his first acts, then chief executive Jim Mackey struck a £1m deal with management consultancy firm KPMG, for a similar project on defining the organisation’s role and how the two entities would work together.

NHS Improvement said the final spending in the first project had only been £630,000 and that the new deal was intended to determine how the organisation would operate in the future now it had been established.

The splurge on management consultants comes less than a month after a study showed trusts that spent millions on consultancy became less financially efficient.

Shadow Health Secretary Jonathan Ashworth said the sums spent by NHS Improvement were “alarming”, especially when the NHS was being asked to work under severe financial restraint, and called for a “clampdown”.

“The ballooning costs of consultancy fees is entirely unacceptable, especially given the scandalous findings recently that management consultants are in many cases making the NHS less efficient,” he said.

“This Government has overseen a devastating decline in NHS finances, culminating in the worst winter crisis on record.

“Theresa May should be ashamed that money is spent so fruitlessly when NHS staff working round the clock are struggling under a lack of resources and adequate funding.”

An NHS Improvement spokesperson said: “The NHS is facing the challenge of delivering services as efficiently as possible at the same time as meeting the growing demand from an ageing population. The way we as NHS Improvement operate has to change to support trusts to meet that challenge.

“As a learning organisation, we are also well aware that there are things we could do better.

“Using the Crown Commercial Framework, we’ve hired McKinsey to look at and challenge our operating model and how we interact with trusts to ensure we’re supporting them in the best way possible.”

Update. This article has been corrected. It originally suggested that £500 million had been spend on the rebranding exercise. The figure in fact was £500,000.