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.
Shadow health secretary John Healey said: "With all eyes on the royal wedding, the government is trying to bury bad news on the NHS. This confirms that the combination of broken promises on NHS funding and reorganisation is putting a huge strain on hospitals. David Cameron must halt his high-risk, high-cost overhaul of the NHS."
A Monitor spokeswoman said: "The changes to the economic environment mean all trusts will need to plan accordingly and some savings will be required. However, we should be clear that these assumptions are a reflection of the risks in the external environment; they are not a directive to make cuts.
"Trusts will need to take account of the individual circumstances that exist within their local health economy, which could mean that they will need to take either a more optimistic or pessimistic approach than the one set out by Monitor."
Patrick Wintour, the Guardian