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NHS Modernisation

Volume 551: debated on Thursday 18 October 2012

The Government’s estimates of the costs and benefits of implementing those policies in the Health and Social Care Act 2012 that required legislation were contained in the “Coordinating Document for the Impact Assessments and Equality Analysis” published in September 2011. These estimates reflected the changes that the Government made to their proposals following the listening exercise and the report of the NHS Future Forum.

Officials have been tracking closely the actual costs and benefits of the changes. The publication of the Department’s annual report and accounts for 2011-12 provides an opportunity to give an update on these figures. I can now report to the House that the current estimate of costs is in the range £1.5 billion to £1.6 billion. Although higher than the most likely estimate made in the impact assessment (£1.2 billion to £1.3 billion), the costs remain within the wider possible range published in the co-ordinating document (£1.0 billion to £1.5 billion), after taking account of some costs (estimated at £127 million in total) that were excluded from the impact assessment either because they were out of scope (for example, because they related to measures not requiring legislation) or because they were redacted (for example, because they were commercially sensitive).

Within this forecast I now expect redundancy costs to be around £630 million, which is £360 million lower than the highest estimate in the impact assessment and some £180 million lower than the most likely estimate.

In the impact assessment, long-term annual savings arising from the changes were estimated at £1.5 billion per year from 2014-15 onwards. Gross savings over the transition period (2010-11 to 2014-15) were estimated at £4.5 billion.

Annual savings are still expected to be £1.5 billion from 2014-15 but the cumulative savings over the transition period are now forecast to be £1 billion higher, at £5.5 billion.

For comparability with the impact assessment, all the figures above are stated using 2010-11 prices.