Thursday, October 21, 2010

CSR special: Ring-fencing NHS, schools and aid

There are a number of departments that the government has protected from themselves (which is obviously very merciful). To much headlines the NHS, schools and DfID are all areas where the Comprehensive Spending Review has not bitten... or did it?

The NHS budget is protected with an extra ten billion over the next four years, the schools budget retained and to much trumpeting aid is, in fact, increasing. However, this is not the whole story.

Many health campaigners are understandably confused at the way the coalition say the NHS is safe in their hands but they still seem force to fight to retain services and fight privatisation. roughly one in five trusts admit that they have closed down a major service or department in the last few months. The privatisation is ongoing Tory/Labour policy but why should services be closing down if the money's protected?

The answer is three fold. First of all the overall budget is ring-fenced, not individual services and the rise (of 2.5%) is actually less than the increase needed to preserve services. That means if the money is moved into one area it inevitably has to move away from another. The government is very keen on an extraordinary overhaul of the structures of the health services which, in itself will cost money that would have been spent on other services, leaving aside whether that reorganisation would be a good idea.

Secondly the capital expenditure is being reduced by 17% and there are twenty billion pounds worth of 'efficiency savings' already in the pipeline.

Thirdly, the increasing cost of drugs in particular (as well as additional strain of obesity and an aging population) mean that certain areas of spending are eating up more than their fair share of the cake.

Public sector union UNISON was very clear on how the ring-fencing will still mean cuts when they said that; "Patients and staff will soon see through the facade that the NHS is being ring-fenced, when at the same time it has been told to make £20bn worth of savings.

“The NHS is not safe. Some hospitals are already cutting back on vital life-improving operations such as cataract, hip and knee replacements. The NHS needs extra funding just to stand still. It will not be able to keep up with the demands of a growing elderly population and the cost of increasingly expensive treatments and drugs.

“The Government’s latest NHS “reforms” will intensify the market and introduce more private sector provision. They will cost £3bn to implement and create havoc and instability just when the NHS can least afford it.

“Staff are facing a two year pay freeze, many vacancies are being left unfilled, pensions are under review and the number of managers will be cut by 45%. Another Tory broken promise – the NHS is under siege – it is not being protected."

So what about schools?

Well, this is slightly different. Back to UNISON; “The coalition is being dishonest by saying that the schools budget will be boosted. Schools also get vital funding and support services from local authorities, which are being hit by drastic cuts. Many will struggle to afford to help schools support children with special needs, or run truancy units. Schools will have to dip into their own funds to pay for these essential services.

“Up and down the country schools support staff are facing losing their jobs. It all adds up to mean cuts will disproportionately hit on children with additional needs in schools.”

Essentially the 'schools budget' makes up only a portion of the total moneys that schools receive which is why specialist services, like one to one tuition are under threat. Local authorities, as we have already seen, are under a huge amount of financial pressure and it would unbelievable if their contribution to schools did not suffer.

Oh, and then there's the lost funding of the Building Schools for the Future programme which lost billions in investment for schools in dire need of refurbishment. In fact, after the fiasco of the handling of BSF scrapping (which turned out to be a hell of a lot more popular than Gove expected) it's arguable that it would have been impossible to take more out of schools than they already have.


Now, surely I should be overjoyed to hear the news that there will be a significant increase in the aid budget? 37% over four years looks pretty good, especially in the context of the cuts. Well, let's take a closer look first.

Tucked away in the Foreign and Commonwealth Office cuts it turns out that a number of their projects will now be delivered by DfID, how many and how much they will cost is left unanswered as yet. More importantly while the FCO is to "increase its focus on championing British companies to win export" they also account for a good portion of the increase in Official Development Assistance (ODA).

After all while other, much more useful, quangos went to the wall the Export Credit Guarantee Department who love the shady world of arms exports, etc, and all that entails.

I'm intrigued as to whether there will be any slippage between meeting the Millennium Development Goals and maintaining British financial interests. I should point out I'm not being artful here, it genuinely unclear so far - however - Section 2.97 in the Review states "British international development policy [to be] more focused on boosting economic growth and wealth creation".

Continuing my concern that the aid budget may be being used with an eye to British interests is that 2.97 continues that 30% of the ODA is to be used in conflict countries "with particular focus on Afghanistan and Pakistan". I'm really sorry to be cynical and I'm not down playing the fact that these two countries desperately need aid but for the British State to focus on areas where British troops are in conflict with the locals is not a coincidence.

Anyway, while an increase in the aid budget is always welcome we should ensure that aid should be used as aid not as an adjunct to business interests or the military effort.

While we're talking about DfID it's to be welcomed that a *new* quango overseeing how the money is to be spent has been set up however I'm concerned by the idea that DfID is to be a "leaner organisation with a focus on managing aid efficiently and effectively, by seriously reducing back office costs." Sorry to be picky but cutting admin costs does not automatically make you more efficient and effective.

Indeed DfId had already been streamlined under Labour and this had resulted in severe restrictions in the number of projects they could manage. The consequences of this is that aid will tend to be delivered either by the very biggest NGOs or consortiums of large NGOs.

Smaller international development organisations (of which there are many) already find it extremely difficult to work directly with DfID because they simply do not have the capacity to work with the small fry. The Coalition's proposals will simply deepen this trend driving small specialist NGOs out of business while heaping money on their super-sized cousins.

All in all what I'm trying to say is that it is not surprising that the Coalition have tried to win as many good headlines as they can amid the carnage - but ring-fencing services does not, in this case, mean that the future of those services are secure.

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