NHS overspends by £218 million in high energy costs

For immediate release

As the health and social care levy hits pay packets, the TaxPayers’ Alliance have found that NHS trusts could have saved £218 million in gas and electricity costs. This would have paid for 9 new nurses at each hospital in the UK.

Analysis of NHS data shows that if all trusts had paid the lowest price for electricity (6.7 pence per kilowatt-hour), they would have saved £150 million in 2019-20. In the same year, if they paid the lowest price for gas (1.6 pence per kilowatt-hour), trusts would have saved £68 million. With energy costs rapidly rising during the cost of living crisis, these figures are now likely to be even higher.

The research challenges the claim that hospitals funded by private finance initiative (PFI) have higher running costs, with PFI hospitals having lower energy costs. 

The analysis also compares hospital trusts spending on laundry, portering, and food. It found that hospitals could make savings on the cost of food, with some large general hospitals paying well over the odds at more than £10 per meal, with no marked improvement in quality. The paper also found a large disparity in the cost of laundry. The Midlands region alone, where laundry can cost between 27p and 73p per item, would have saved £10 million in laundry costs in 2019-20. 

With the new health and social care levy and energy prices skyrocketing, the TaxPayers’ Alliance is calling on NHS bosses to ramp up efficiencies and deliver value for patients and taxpayers.

CLICK HERE TO READ THE RESEARCH

Key findings:

• Energy costs would have been £150 million lower in 2019-20 if all trusts had paid the lowest price per kilowatt hour for electricity. For gas, it could be a saving of £68 million in 2019-20.
  
  
• During 2019-20, PFI hospitals have been shown to have a slightly lower unit cost for electricity compared to non-PFI hospitals.
  
  
• Energy usage increased with size and more modern trust buildings are generally more energy efficient, although it can be hard to say that it has an important effect on energy usage overall. There was very little relationship between the amount of backlog repairs – a proxy for how well a building is managed – and energy usage. Trusts with older buildings or a larger backlog of repairs did not necessarily see higher energy usage. It is hard to say that there is a correlation between older buildings, more repairs and higher usage, however intuitive this correlation may seem.
  
  
• There was no relationship between the spending on and the perceived quality of hospital food. This was also true for both PFI and non-PFI hospitals. Many large general hospitals were spending £10 per meal or more.
  
  
• Between 2015-16 and 2019-20, London had the lowest average cost for laundry in English NHS trusts. If all hospitals achieved the lowest cost for laundry items, then the saving could be £10 million in the Midlands in 2019-20 alone. Hospitals such as Nottingham University performed well, whereas Dudley Group and University Hospitals Coventry & Warwickshire performed badly.
  
  
• Smaller hospitals with newer buildings, less floor space and no London weighting paid less for portering than other trusts. Sheffield Teaching Hospitals and Leeds Teaching Hospitals had consistently lower than average costs. King's College Hospital and Barking, Havering and Redbridge had consistently higher than average costs.

CLICK HERE TO READ THE RESEARCH

John O’Connell, chief executive of the TaxPayers' Alliance, said:

"These findings raise questions about the huge spending disparities between hospitals on essential items.

“With the new health and social care levy coming into force and energy prices skyrocketing, struggling taxpayers need the NHS to be driving down these inefficiencies.

"Hospital bosses should ensure they are offering value for money for patients and taxpayers in every pound spent."

TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)

Media contact:

Danielle Boxall
Media Campaign Manager, TaxPayers' Alliance
[email protected]
24-hour media hotline: 07795 084 113 (no texts)

Notes to editors:

1. Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
   
   
2. TaxPayers' Alliance's advisory council.
   
   
3. TaxPayers’ Alliance analysis showed huge spending disparities between NHS trusts on overseas recruitment.