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Editor's blog Wednesday 20 October 2010: The economics of cuts

Last week, the iridescent Professor John Appleby, chief economist of the Kings Fund, wrote this excellent ten-point checklist about the Comprehensive Spending Review (CSR), due at 12.30 today.

He points out a plethora of inconvenient truths: that healthcare cost inflation is generally higher then the rate of the general economy (whether using RPI or CPI indices); that the NHS budget for the current finanical year (2010-11) is £4 billion lower than was indicated in the 2007 CSR; and that (as you of course already know) cuts in social care are certain to increase activity and cost pressures on the NHS.

The photograph of Treasury prompt book / summary of the deals struck, photographed yesterday in the hands of Lib Dem chief secretary to the Treasury Danny Alexander, reveals official expectations that 480,000 public sector jobs will go unless cuts to pay, hours and terms and conditions are agreed, as decoded by Paul Waugh of the Evening Standard.

I doubt I am alone in thinking that the leaving open of the document at this page may not have been wholly accidental.

So ... interesting times. And economic detail-watchers will be eagle-eyed to understand how the NHS settlement works in practice.

Appleby's engaging posts on Twitter recently revealed that on new 'aligned' NHS spending figures for England, the service appears to havegot a real rise of zero for the current financial year ( John has promised to provide further graphic information to back this claim).

The Times' David Rose reports that the DH baseline figure for any NHS increase for England is £103.1 billion. The higher figures of £120+ billion include the devolved administations' NHS budgets.

Meanwhile, Health Service Journal publishes Professor Nick Bosanquet's forecast of the likely NHS financial crisis, and how to avoid it. Liberatin' Lansley will not like Nick's prescription, which involves the keeping of PCTs "for the foreseeable future"as consortia development organisations with GPs on the board.

Yes, like primary care groups.

Back to the future? Here we go again ...