NHS deficit tripled in size to £2.45bn in 2015-16

20 May 16

NHS providers in England ended 2015-16 with a £2.45bn deficit, the second successive year it has been plunged into the red, raising concerns that the Department of Health’s spending limit will be breached.

End-of-year figures published by NHS Improvement today show the deficit is £461m worse than planned and three times the size of the previous year’s deficit.

Two thirds (65%) of 240 NHS providers reported a deficit, mostly acute trusts. Delayed transfers to care are estimated to have cost the sector £145m, while £751m was paid out in fines and readmission penalties to commissioners.

A total of £3.64bn was spent on agency and contract staff, £1.4bn more than planned.

Savings also undershot target. Providers managed to secure £2.9bn in savings, but this was £316m less than forecast, and the sector as a whole missed the four-hour A&E waiting time target between January and March this year. A record 21 million emergency patients were seen last year.

NHS Improvement chief executive Jim Mackey said there was evidence that the sector was beginning to turn the corner, citing progress on curbing spending on agency staff and management consultants.

The watchdog also launched its Financial Improvement Programme today, which offers external expert help to providers and will be a means of sharing good practice across the NHS. It is expected to save £50m.

 “We know there is still much work to be done to deliver the services that patients want in the most affordable way possible,” Mackey said.

“Today’s figures demonstrate that through programmes such as the Financial Improvement Programme and the measures to reduce spending on agency staff, we are starting to help providers make real progress.

“When we consider where we were six months ago, NHS providers have done a great job in reducing the planned deficit.”

Paul Briddock, director of policy at the Healthcare Financial Management Association called the figures “distressing” and said they confirmed what many people had feared.

“This figure exceeds what was originally forecast, and follows the same downwards financial pattern of previous quarters in 2015-16. The deficit on the provider side of the NHS is incredibly worrying and given this year end figure, may now call into question if it is still feasible to balance the Department Expenditure Limit when all the numbers have been calculated,” he said.

At the King’s Fund, policy director Richard Murray labelled the figures “unprecedented”.

He said: “Despite additional funding and a huge effort to reduce deficits, record numbers of NHS trusts overspent their budgets last year and the overall deficit is about three times higher than in 2014-15.

“Overspending on this scale is not down to mismanagement or inefficiency in individual trusts - it shows a health system buckling under huge financial and operational pressures.

“'We will have to wait until the summer to see whether this record NHS trust overspend causes the Department of Health to exceed its spending limit for last year, a serious breach of parliamentary protocol.”

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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