Andrew Lansley and the cost of NHS Bureaucracy

After a long stint shadowing the role, Andrew Lansley delivered his first speech to the Conservative Party conference as Health Secretary this morning.

All those years keeping tabs on a string of Labour Health Secretaries meant Mr Lansley was bound to turn to where he felt his predecessors had got it wrong on health — and so it was as he took aim at the amount of money spent on management and administration in the NHS.

The Claim

"When the number of managers was rising at six times the rate of nurses, when administration costs increased under the last year of Labour by £346 million, and when consultancy costs increased by 80% in just the last two years, then change is needed. "

Given the on-going debate on the cost of services frequently lumped together as 'NHS bureaucracy' in the time of tight budgets, Full Fact took a closer look at his figures…

Analysis

With the Health Secretary cramming three eye-catching claims into one stat-packed sentence, we decided to address each in turn.

Managers vs Nurses

Here, the Health Secretary's figures check out, if, as previously highlighted over at Channel 4 Fact-Check, the figures are for the final year of the Labour Government.

The records show that in September 2009 were 375,505 qualified nurses, up 1.9 per cent (or 6,268) from the previous September. The number of managers on the other hand rose by 4,748, 11.9 per cent to 44,661.

So while the stat is accurate, it is worth keeping in mind the overall proportion of nurses and managers in the NHS. Despite the difference in percentage increases, more nurses were still taken on than managers.

Increased Admin Costs

The big question here is what Mr Lansley means by administration costs. When we called the Department of Health they were unable to provide us with a figure for "administration" costs, but instead pointed us in the direction of numbers covering management costs.

It is these, it would appear, that the Health Secretary is quoting. In 2008-9 total management costs of Primary Care Trusts and Strategic Health Authorities was £1.509 billion. By 2009-10 this had indeed gone up by the £346 million to £1.855 billion.

But the questions of whether 'management' is the same as 'administration' is more than semantics — particularly because at the end of the last year the Conservatives published figures showing that the cost of administration at PCTs was much higher: £2.14 billion, even by 2008.

This was an estimate that included both administrative and management costs.

If we are to take costs of clerical/admin jobs combined with management jobs a different picture emerges.

While overall costs have indeed increased, figures given in the House of Lords show that as a proportion of the spending by NHS trusts, administration costs have remained broadly stable in recent years at 10 per cent. It is true to say admin costs have been rising, but these figures suggest they have been proportionate to recent increases in the NHS budget.

Consultants' costs

This seems to be a rehashing of a figure released to the press last month, which claimed to show that spending on management consultants had gone up by 80 per cent over two years.

At the time the figure was questioned by the CEO of the of the Management Consultancies Association, who pointed out that the figure quoted included architecture, PR and legal advice as well as management consultants costs.

At least in his speech today, Mr Lansley simply referred to 'consultancy costs' rather than management consultancy specifically.

However, it is worth keeping mind that last time we looked into the figure the Department of Health were unwilling to comment on it due the "political" nature of the figures,

Conclusion

Mr Lansley's remarks, while broadly backed up by the figures, do highlight an issue that is bound to come up time and again as the Coalition looks to streamline the health service.

While the kinds of figures quoted by the Health Secretary sound huge, in the context of the gargantuan sums the Government spends on health, the strength of these trends is open to interpretation.