NHS ‘financially unsustainable’, auditors warn

7 Nov 14

The NHS is in a financially unsustainable position following a deterioration over the last two financial years, the National Audit Office has concluded.

In an examination of sustainability of the health service, auditors found that in June, NHS hospital trusts were forecasting a net deficit for the current financial year of £404m, while foundation trusts were forecasting a gap of £108m.

These are both increases from initial financial forecasts from the trusts for aggregate deficits of £425m and £20m respectively.

In addition, 49 clinical commissioning groups had performed less well in 2013/14 than originally planned, including 12 of those who had forecast a surplus ending the year in deficit.

Auditor general Amyas Morse said this showed that an increasing number of providers and commissioners were in financial difficulty compared to 2012/13.

‘The growth trend for numbers of NHS trusts and foundation trusts in deficit is not sustainable,’ he added.

‘Until the Department of Health can explain how it will work with bodies such as NHS England, Monitor and the NHS Trust Development Authority to address underlying financial pressures, quickly and without resorting to cash support, we cannot be confident that value for money will be achieved over the next five years.’

The report also found the number of trusts in surplus is expected to fall in 2014/15, following falls in their number from 222 in 2012/13 to 182 in 2013/14.

In addition, more trusts are relying on in-year cash support from the department. More than £500m was issued to 21 NHS trusts and 10 foundation trusts in 2013/14 to ensure organisations in difficulty had the cash they needed to pay staff and creditors, the report stated.

Auditors also highlighted that there remains considerable uncertainty about the impact of the government’s Better Care Fund, which is now expected to merge £5.3bn of health and care funding in a bid to improve services. Both the DoH and NHS England expect the scheme will reduce demand for acute hospital services, but the NAO said it would revisit this in 2015.

Responding to the report, a DoH spokesman said that the government was set to have increased the NHS budget by £12.7bn over this Parliament and 178 of 244 of hospital trusts and 192 of 211 CCGs remained in surplus.

‘Financial discipline must be as important as safe care and good performance. Many NHS organisations are already achieving this and all understand the need for greater efficiency,’ he added.

‘Our reforms put power in the hands of local doctors and nurses to make decisions and control their own budgets to make sure patients receive the best services.’

Public Accounts Committee chair Margaret Hodge said the report was ‘deeply alarming’.

She added: ‘I do not believe it is any exaggeration to say that the future sustainability of our National Health Service is at risk.

‘You just need to look at these figures: 22 NHS trusts in deficit at the end of March this year compared to five the year before. The number of foundation trusts in deficit has more than doubled from 20 to 41. The gross deficit of NHS and foundation trusts is up by an extraordinary 150%, from £297. m in 2012/13 to £743.3m in 2013/14.

‘The Department, NHS England, Monitor and the NHS Trust Development Authority between them must explain to my Committee how they are going to get a grip on this wholly unsustainable situation and get our NHS back on track.’

NHS Confederation chief executive Rob Webster said the report confirmed that the NHS was under incredible stress.

‘The NHS has reached a point where finances could collapse quickly,’ he warned.

‘We would welcome the government addressing the pressures facing the NHS it its Autumn Statement. This would provide breathing space to prepare for the significant service changes required in the medium term.’

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