NHS deficit widens to £2.3bn

19 Feb 16

NHS trusts racked up a deficit approaching £2.3bn in the first nine months of the current financial year – £622m worse than planned – analysis by Monitor and the NHS Trust Development Authority has revealed.

Three quarters of NHS providers reported a deficit, including 90% of acute trusts. The deficit is larger than the £1.6bn recorded in the first six months of the year.

In the figures, spending on agency and contract staff was £1bn more than the £2.72bn planned.

Savings also came in short of target. Although £1.94bn was generated, this was £257m less than had been planned. Providers said that delayed transfers to the care sector had cost them £104m so far this year, putting further pressure on NHS finances.

Jim Mackey, chief executive designate of NHS Improvement, which will replace Monitor and the TDA in April, said: “This performance will be very disappointing for providers, and shows the range of difficulties they’re facing. 

“Despite this, providers are making progress on improving their finances whilst also providing more treatment, to more patients with more complex care needs than ever before. However, further improvements will be required by the whole NHS at pace and scale to tackle the current financial and operational challenges it faces.”

The analysis also revealed that, between October and December 2015, the provider sector as a whole missed the A&E waiting time target of seeing 95% of patients within four hours.

Commenting on the figures, Jane Payling, CIPFA’s head of healthcare and integration, said: “This is worst NHS quarterly performance since 2003. Health providers look likely to overspend by £3bn this year and patient care is suffering.

“The government’s Five Year Forward View, which aims to stabilise the financial position of the NHS, is not gaining traction. Instead we see a return to the year-on-year bailout mentality.”

She warned that it was not sustainable to borrow money to cover day-to-day costs such as salaries.

Saffron Cordery, director of policy and strategy at NHS Providers, said trusts were doing all they can to avoid sinking into deficit.

“This is a system level problem, not one of poor trust performance,” she said.

“The combination of rising demand especially for urgent and emergency care and addressing systemic issues such as delayed transfers of care mean there are sustained financial and operational pressures on providers.”

She urged the different parts of the NHS to come together to create a “realistic and deliverable” financial stabilisation plan, but this would require fresh partnership between central and local health service bodies. 

At the King’s Fund, which yesterday predicted the £2.3bn nine-month deficit in its own quarterly analysis, chief economist John Appleby noted that since trusts submitted their estimates for the year-end position even more pressure to reduce spending and bring in more financial control.

“Despite this, there is evidence that many trusts will not be able to deliver the savings needed, making it unlikely [the £1.8bn deficit by year end] target can be achieved.

“This has significant implications - any shortfall will come out of next year's budget, eating into the extra funding provided in the Spending Review and leaving even less money for essential changes to services. If an end-of-year deficit approaches the worst case scenario laid out in these figures – £2.8bn – it is hard to see how the Department of Health will avoid overspending its budget for the year, something that has never happened before.”

  • Vivienne Russell

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

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