NHS finances must be restored next year, says Mackey

10 Dec 15

The next financial year is a “firebreak” year for the NHS in which it must get itself back into balance, the service’s finance managers have been told.

Addressing the Healthcare Financial Management Association’s annual conference in London today, Jim Mackey, chief executive designate of NHS Improvement, outlined the “really serious deterioration” in the NHS’s finances this year. By the end of the second quarter, the service had racked up a £1.6bn deficit, and Mackey said a lot of energy was being consumed in trying to manage this.

But the 25 November Spending Review settlement, which has given the NHS an additional £8bn over the next five years, was a “great result” for the service.

“It was a better deal than expected and a better deal than most other departments got,” Mackey told HFMA delegates. It provided the health service with some much-needed breathing space and a chance to arrest the decline of the last couple of years.

“We’ve got to get a grip, get in control and start doing the things we want to do,” he said.

The provider system “can and should” get into balance next year, Mackey added, pledging that NHS Improvement would work with trusts to “throw the kitchen sink” at the problem.

“We can’t let this year get away from us,” he said, but warned that the process would be a painful one.

Mackey’s message was echoed by Bob Alexander, chief executive of the NHS Trust Development Authority, which is soon to be subsumed into the new NHS Improvement body.

Alexander observed that the NHS is in a “desperate place” financially, but the Spending Review settlement offered a “window of opportunity” and some “genuine hope for the future”.

He stressed that the health service’s good settlement was not an excuse to sit back and relax.

“There is money there that can be targeted at getting providers to a better place,” Alexander told conference delegates. But, he added, “the focus on finance is going to be absolute”.

Paul Baumann, chief finance officer at NHS England, told the event that the Spending Review settlement had been hard fought, revealing that negotiations had gone down to the eleventh hour.

“It helps refloat the NHS after a couple of years that had taken us to the limit of our financial resources,” he said.

But he warned that the service would need to pace itself and live within its means, particularly in the early years of the Spending Review period.

The settlement was the best that could have been expected in the circumstances but was “far from being a bonanza”, Baumann said.

“It lays down the gauntlet for the finance profession,” he concluded.

  • Vivienne Russell

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

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