Common denominator politics

So was that just the Conservative Party’s Bank of England moment?

You will recall that one of the first actions of the New Labour government in 1997 was to grant independence to the Bank. It was a key moment in ending business paranoia that a Labour government would be scary socialists and meddle in a boom and bust economy.  Ahem.

The big fear about the Tories by contrast is a slash and burn approach to the public services. This week shadow health secretary Andrew Lansley tried to dispel those fears by picking that most common denominator of public services (we all get born, and most of us in NHS facilities) and pledging to give it “real terms” funding increases, notwithstanding global recession, public finance crisis and a concomitant need to own up to plans to make massive cuts to the rest of public services, bar international development (currently 1.8 per cent of total resources, and, by the way, an area of spending vulnerable to fudging and reclassification: think bad debt write-offs, MOD spending on post-war reconstruction in Iraq and Afghanistan and Home Office spend on asylum seekers).

Mr Lansley’s original comments on the Today programme included a pledge to count education amongst the privileged protected “real terms growth” areas, but shadow chief secretary to the Treasury Philip Hammond later said Mr Lansley was confused. (While we all get born, not all of us go on to give birth to children that require educating.)

He confirmed the rest of it, however, leaving the NHS in a bizarre situation: JUST as its administrative leaders in the Department of Health have finally bit the bullet and admitted publicly the coming years will be “extraordinarily tough”, its likely political leaders are denying it.

On Wednesday at the NHS Confederation conference NHS chief executive David Nicholson painted a grim picture of what would happen if the NHS stuck its collective head in the sand and ignored the impending financial restraints for another year or so.

“It will be winter then and there will be lots of ambulances waiting outside hospitals. The waiting lists will start to bulge; managers and clinicians will be at loggerheads” he said, topping it off with the warning politicians would take that as their cue for another “massive reorganisation”.

Mr Nicholson can’t say he doesn’t believe Mr Lansley – he’s likely to be his next boss. But he came as close as he possibly could do by advising: “Sometimes there are downside cases and we need to make sure we cover these downside cases.”

Audit Commission chair Michael O’Higgins has just come pretty close too, telling the conference: “I think that’s pretty unlikely.”

Luckily for Mr Nicholson, however, few in the health service seem to believe the Conservatives’ pledge.

The frontrunner for what they really mean is they will give NHS purchasers – the PCT commissioners – something close to flat cash in the years ahead (remember Mr Lansley told HSJ earlier this month he couldn’t commit to the 2010-11 PCT increase of 5.5 per cent, so whatever he means by “real terms increase” it’s likely to be below that). They will then slash the hospital tariff by half a per cent or more and call that an “efficiency saving”.

The difference between PCT purchasing power and the hospital prices will then be presented as a “real terms” spending increase. Magic!

It’s what NHS Confederation policy director Nigel Edwards calls “pass the parcel with the deficit” by shifting all the pressure onto the acute sector, just as they are also having, in theory, to cope with a loss of patient volume as PCTs get their acts together and start shifting services out of hospital. (I did say “in theory”.)

But the public might even buy it if politicians are careful enough to argue the tariff cuts are enabled by new technologies and a bonfire of those awful NHS bureaucrats and red-tape regulators.

And if that doesn’t work, the fallback option remains a public display of shock and awe sometime next summer when they finally get into their Whitehall offices and open the public finance books to find the hole is even bigger than they thought.

The Conservatives have been getting access to Whitehall departments since January, but I’m told they are judiciously avoiding looking too closely at the finances in order to preserve for themselves that get-out-of-jail-free card.

Of course, with the Treasury still messing about with what precisely it’s going to do with its private finance initiative billions, and financial statements based as much on the need to maintain confidence in UK PLC as anything else, it might just be the sensible approach after all.