Professor Alan Maynard OBE wonders why the NHS fails to prepare for the worst, when facing dire economic circumstances

Where are the UK’s finances now?
The current economic situation is grim, and this must inform our planning to ensure that we protect as best we can both the volume and quality of healthcare delivered to the local population.

Here are two key issues to bear in mind:
i) last week Standard and Poor (S&P) indicated that the risk rating of UK bonds might be downgraded, with the UK being the first major economy to face the prospect of both having to pay more to borrow and risking difficulty selling bonds needed to fund the Government’s deficit. Basically, our bankers are worrying about the Government’s ability to pay interest and repay its debt
ii) it is likely S&P will await the general election to determine how we are risk-rated. If it sees a government that responds weakly to the public sector deficit and fails to cut public expenditure, it may increase our risk rating. This will affect the UK’s capacity to borrow; may cause a run on the pound; and risks us having the International Monetary Fund arriving to bail us out. A condition of an IMF bail-out would be severe cuts in public expenditure. Many of you will remember the 1970s, when the IMF last visited our shores!

The implications for the public sector
Recently I was talking to the leader of a county council in the Midlands. His “intelligence” from Conservative sources was that David Cameron was asking councils to address the question of “what is essential and what can be cut”. This council leader was beginning scenario planning that includes a 40 per cent cut in funding.

"We must plan for 5, 10 and 20 per cent cuts in funding - and address the question of what services will be removed if such pessimistic scenarios come to pass"

Hopefully, this awful scenario will not come to pass. That said, we must plan for 5, 10 and 20 per cent cuts in funding - and address the question of what services will be removed if such pessimistic scenarios come to pass.

How can such cuts, even if down the lower end of these ranges, be managed?

Before the general election, we can expect copious helpings of evasion and fudge as politicians seek to survive the electoral “cut”. This time next year, if there is a government with a robust majority (be it Labour, Conservative or whatever), the primary question will be wage cuts and / or redundancies in the public sector.

In the car industry, we are seeing trade union leaders standing up and saying, ‘we accept wage cuts to save jobs’. Union leaders, be they in Unison or the British Medical Association, will have to confront this issue in the NHS. With falling income, the only way we could staff our wards safely for instance, would be for staff to take pay cuts.

Furthermore, some specialisms may have to contract or even cease to deliver care. This could occasion redundancies across the board, including medical staffing and management.

The NHS is a labour-intensive industry (and local councils are even more labour-intensive). If funding declines, staffing will have to be reduced or its price must fall - i.e. wage cuts. Given the lessons of Mid-Staffordshire, we need detailed planning to ensure that any cuts affect the safety, quality and volume of patient care as little as is possible

How to proceed?
Hopefully my pessimism will be ill-founded. It would be nice to be right about that! However, the rational need is to debate this - and to put in place arrangements to manage such a crisis.

For instance:
i) we have to dispose urgently of our growth mentality. The Blair-Brown culture of almost careless growth in public sector funding is at an end. Frugality now has to replace elements of profligacy - such as pay settlements which consumed so much growth money with little or no quid pro quo in terms of improved care and better outcomes for patients. Can we afford to hire more staff - be they consultants, nurses or managers? Is the “wish list” in recent documentation now clearly unaffordable?
ii) scenario planning involving reductions in real funding levels is needed urgently. Current annual plans for 2009-10 should not ignore what is on the horizon - even if our political masters do practice the Nelson touch by putting their telescopes to their blind eye!
iii) whoever we get to rule us after the general election, there will be a need to cut public sector budgets and a temptation to implement cuts by delegating decision-making to local pay and staffing bargaining processes. We should prepare for this; with human resources staff developing plans in collaboration with unions.
iv) we should discuss urgently with other public sector organisations the pooling of resources e.g. “back office capacity”. The NHS (i.e. hospitals and PCTs) should be discussing urgently the scope for cooperation and cost-cutting with local councils and the police. Put simply, would a single, integrated payroll and HR system for these organisations run by one organisation reduce expenditure? Such discussions can not and should not wait until after the election

Is this crying wolf when none exists?
Individuals can make their own judgements; but management is required to ensure that care for patients is timely and of the highest quality.
To fulfil these duties, we cannot and must not ignore the abyss opening up before us.

Hopefully, the abyss that we face will turn into a mere crevice – one that we can hurdle. But if what we face is a yawning and unhurdle-able orifice, like good boy scouts and girl guides we must ‘be prepared’ by responding now to the unthinkable - and for politicians, the unmentionable