The NHS’ budget deficit — the shortfall between its funding and what it spends — more than tripled to £1.85 billion in 2016, according to new government figures, with widening deficits leading to worsening care.
The deficit figure papers over an even more acute crisis in emergency and hospital care. Hospitals and emergency services providers posted a deficit of £2.45 billion.
The National Audit Office (NAO) warned on Tuesday: “The financial performance of NHS bodies worsened considerably in 2015-16 and this trend is not sustainable.”
It added: “There are indications that financial stress is having an impact on access to services and quality of care.” The 14 NHS trusts rated “inadequate” had a net deficit of 10.4% of income in 2015-16.
The head of the NAO blamed the government’s “aggressive efficiency targets” for the ballooning deficits and warned that problems in the healthcare system are “endemic.”
Labour Shadow Health Secretary Jon Ashworth wrote in the Daily Mirror: “The policies pursued by Theresa May and her predecessor have led to the biggest cash crisis in the NHS’s 68-year history.” He called for Chancellor Philip Hammond “to do the right thing by our NHS” and announce more funding for the public healthcare system in Wednesday’s Autumn Statement.
The NAO report depicts a health service in serious financial crisis. Here are just some of the figures:
- The NHS reported a combined deficit of £1.85 billion, a huge jump from 2014-15’s figure of £574 million;
- Provider trusts, which oversee hospital care, emergency services, and mental health services, had an 185% increase in their combined deficit to £2.45 billion;
- 65% of NHS trusts and 66% of NHS foundation trusts reported deficits in 2015-16, up from 44% and 51% in 2014-15;
- 32 clinical commissioning groups, which plan and commission healthcare services in local areas, reported cumulative deficits in 2015-16, up from 19 in 2014-15 and 2013-14;
- NHS trusts and foundation trusts had to ask the Department of Health and NHS England for £2.4 billion to plug deficits in 2015-16, up from £1.8 billion in 2014-15;
- The NHS has already run up a £461 million deficit since the start of the new financial year in April.
The NAO said that the NHS will “need to make more savings than planned” as a result of the deficit, but warned that “many of the savings made by NHS England in 2015-16 were one-off in nature.” The NHS has to make target savings of £14.9 billion by 2020-21 to close an estimated £22 billion gap between patients’ needs and resources.
However, these savings and cuts look like they will have a detrimental effect on healthcare. The Guardian reported on Saturday that new NHS transformation plans released by trusts suggest thousands of hospital beds will be lost across the country as services are centralised. A&E, cancer, and maternity services are also set to be reduced.
Amyas Morse, head of the NAO, said in a statement on Tuesday:
“With more than two-thirds of trusts in deficit in 2015-16 and an increasing number of clinical commissioning groups unable to keep their spending within budget, we repeat our view that financial problems are endemic and this is not sustainable. It is fair to say aggressive efficiency targets have helped to swell the ranks of trusts in deficit over the last few years.
“The Department, 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.”
A spokesperson for the Department of Health told Business Insider:
“We know finances are challenging for some parts of the NHS, which is why we have a strong plan to get back on track. We are already seeing progress, with 40 fewer trusts in deficit compared to this time last year.
“We are also investing an extra £4 billion in the NHS this year to transform services and improve standards of care, which will rise to an extra £10 billion per year by 2020/21.”