Watchdog paints stark picture of NHS finances

National Audit Office finds trust deficits becoming “normal practice” 

By John Ashmore

16 Dec 2015

The finances of NHS acute hospital trusts have seriously declined in the last year, according to the National Audit Office.

In a report published today the public spending watchdog warns that trusts’ deficit has shot up from £91m in 2013-14 to £843m in 2014-15.  

Overall NHS commissioners, trusts and foundation trusts moved from a surplus of £722m in 2013-14 to a deficit of £471m in the last financial year.

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The picture looks equally tough for the current financial year, with 76% of trusts and foundation trusts reporting deficits in the first six months of 2015-16.

Chancellor George Osborne has announced a £6bn increase in NHS funding at his recent Autumn Statement. The extra cash is the first tranche of a total extra spend of £10bn on the service from now until 2020.

The NAO also warns that action taken by the Government may not be enough to improve the health service’s financial outlook for the financial year to April 2016.

The body says the situation is being made worse by “conflicts” of priorities between central government and the trusts themselves.

It cites agency nurses as one example, with ministers wanting trusts to reduce spending on agency staff while trusts need to recruit extra nurses to meet safe staffing guidelines.

NAO head Amyas Morse warned that running a deficit was now seen as “normal practice” for acute trusts.

“There is a risk that poor financial performance is seen as the least worst option compared with poor healthcare provision,” he said.

However, he also said the Tory commitment to provide an extra £10bn of NHS funding “could be a significant step towards financial sustainability”, so long as the money is not tied up dealing with new costs.

“Continued demand for healthcare services means that the pressure on acute trusts will not go away. Until there is a clear pathway for trusts to get back to financial stability, we cannot be confident that value for money will be achieved,” Mr Morse added. 

Health minister David Prior pointed to the government's decision to bring forward £6bn of investment in the NHS.

Prior said: "Hospitals must now show tight financial grip and fully introduce our measures to reduce expensive temporary staffing and drive through the productivity and efficiency improvements identified by Lord Carter

"The impact of these measures will be reflected later in the year and NHS finances will be in a much stronger position in 2016-17.” 

Labour claimed report showed the NHS’ finances were “spiralling out of control” as a direct result of government policies.

Shadow Health Secretary Heidi Alexander said: “The uncomfortable truth for ministers is that this is a crisis of their own making. The NHS is under pressure as a direct result of decisions they have made.

“Cuts to nurse training places have forced hospitals to drain resources hiring expensive agency staff, while cuts to social care services has led to rising demand on hospitals.”

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