Some of the poorest areas of London with the worst health problems are to bear the brunt of a fresh round of spending cuts imposed by the new NHS chief executive, David Nicholson, to try to drag the service out of the red.
Health budgets for east London are being slashed in a further wave of savings designed to meet a persisting £70m shortfall in NHS funding in the capital. Tower Hamlets is to lose £2.4m, Newham £2.5m, and City and Hackney £4.4m. Further east, Barking and Dagenham must hand back as much as £6.7m.
In another controversial part of the cuts package, all London NHS trusts that provide services and which balanced their books last year must forfeit any surplus they carried forward. Half of the 16 trusts affected are mental health providers, which together must surrender £14.4m, cash they saved and were reinvesting.
The cuts have been set out in an internal letter from Mr Nicholson dated July 27, the day he was appointed NHS chief executive, and written in his former role of chief executive of the strategic health authority for London.
The letter, seen by the Guardian, warns that yet more economies could be in the pipeline. Referring to the impact of London's share of certain central Department of Health budgets now being discussed, Mr Nicholson says: "This does not offer any help towards bridging our financial gap. In fact it adds considerably to our risk."
London accounts for almost £11bn of the NHS budget. The capital's primary care trusts had already been instructed to make 3% savings this year in response to the service's financial crisis.
The cuts will take a further average 0.3% from PCTs, but the impact will fall heavily on those in east London, which will lose an average of 0.8%. Barking and Dagenham's new cut is 2.8%, meaning it is now taking almost 6% out of the budget it first planned.
East London is suffering most because it had been due relatively high increases in funding this year as part of a long-term adjustment of NHS cash allocations in line with population change and assessed local needs - a process that will now be set back. And though all PCTs will still be left with more resources, the latest cuts come four months into the financial year with spending programmes firmly in place.
One PCT chief executive said: "I have a large contract with a foundation [independent] trust: you just can't undo that. I expect we'll be raiding our reserves, and we'll not start things we were about to start. I doubt we've heard the last of this."
Jon Cruddas, Labour MP for Dagenham, said the news was deeply disappointing for his constituency, where rapid population growth was far outstripping the census-based figures on which the original cash allocation was based. "We have a legacy of health inequalities and now they are going to grow even more acute," Mr Cruddas said. "A lot of people I represent are going to be affected by this."
Mr Nicholson's strategy is causing anger among PCTs and provider trusts that have stayed in the black but are having to bail out others that have failed to do so.
Trusts that did balance their books in 2005-06 were already required this year to make a 1% surplus and hand it back; now they must also surrender the equivalent of last year's surpluses, amounting to a total of £28.2m.
Among the hospital trusts, Barts and the London is being required to hand over a total £8.4m, Chelsea and Westminster £4.6m, and Great Ormond Street children's hospital £4m. Of the 16 trusts affected eight are mental health providers. Proportionally, mental health stands to lose more than three times as much as the acute sector.
