In a report published today, the public spending watchdog confirmed that NHS commissioners, NHS trusts and NHS foundation trusts reported a combined deficit of £1.85bn. This is a greater than three-fold increase in the deficit position of £574m reported in 2014-15.
The analysis paints a bleak picture of NHS finances the day before the chancellor Philip Hammond announces the Autumn Statement. It contains the latest in a barrage of gloomy statistics that suggest the NHS is heading for its worst winter ever in financial terms. Also, concerns have been raised regarding the sustainability of transformation and sustainability plans, while adult social care is deemed to be nearing crisis point.
According to NAO, provider trusts’ overall deficit grew by 185% to £2.45bn, up from £859m in 2014-15, against total income of £75.97bn. Also, two thirds of NHS trusts (65%) and NHS foundation trusts (66%) reported a deficit in 2015-16, up from 44% and 51%, respectively, last year.
The number of clinical commissioning groups reporting cumulative deficits was 32 in 2015-16, up from 19 in both 2014-15 and the previous year.
The report noted the NHS entered 2016-17 from a worse than expected start point. This year’s plans were based on trusts ending 2015-16 with a combined deficit of £1.8bn. The larger deficit means they will, overall, need to make more savings than planned to even reach the intended starting position.
Trusts and foundation trusts under financial stress continue to rely on support from the Department of Health and NHS England, according to the review, which provided a total of £2.4bn in financial support funding. This represents an increase of 32% from £1.8bn in 2014-15.
There are also indications that the financial stress is having a negative impact on access to services and quality of care. Trusts’ performance against important NHS access targets has got worse. Moreover, the NAO found an association between trust’s financial performance and their overall Care Quality Commission rating, with those achieving lower quality ratings also reporting poorer financial performance.
Growth in spending on agency and contract staff has slowed but is still significant, at £3.7bn in 2015-16, compared with £3.3bn in the previous financial year. Addressing workforce issues around the successful recruitment and retention of permanent staff, and reducing the need for agency staff, “may take years,” the NAO stated.
Together, the DoH, NHS England and NHS Improvement estimate they can make efficiencies of around £6.7bn through capping public sector pay, renegotiating contracts, and reducing running costs. Also, they estimate that trusts and commissioners can make a further £14.9bn worth of savings through moderating the growth in demand for healthcare and achieving 2% productivity and efficiency.
Commenting on the report, Amyas Morse, head of the NAO, noted these were “aggressive efficiency targets”.
He added: “The DoH, NHS England and NHS Improvement have put considerable effort and funding toward stabilising the system, but have a way to go to demonstrate that they have balanced resources and achieved stability as a result of this effort.”
“Therefore, value for money from these collective actions has not yet been demonstrated,” he concluded.
Richard Murray, the director of policy at the King’s Fund, said the NAO was right to be concerned about NHS finances.
“There is already strong evidence that patient care is being affected by financial pressures and we share the NAO’s concerns about capital funding being used to plug short term financial gaps,” he said.
‘The government will need to look again at NHS funding in future financial statements. In particular, the pressures will peak in 2018/19 and 2019/20, when there is almost no planned growth in real-terms NHS funding.”
