NAO: More NHS organisations in financial difficulty

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The NHS's financial position has worsened since 2012/13, with more trusts and foundation trusts reporting deficits in 2013/14 than the previous year, National Audit Office (NAO) figures show.

Financial risk is also increasing in NHS trusts and foundation trusts, and those in severe financial difficulty "continue to rely on in-year cash support from the Department of Health", the latest report from the public spending watchdog says.

The financial sustainability of NHS bodiesthe NAO's third report on the NHS's financial position, warns that such trends are unsustainable.

Stark warning

The report follows a stark warning by the NHS Confederation last week that the health service has reached a point at which finances could collapse quickly.

In written evidence to an inquiry into public expenditure on health and care, the organisation said there is “considerable unease” over the financial situation, with the NHS and public equally concerned about what impact future funding decisions might have.

"We would welcome the Government addressing the pressures facing the NHS it its Autumn Statement," the NHS Confederation's chief executive, Rob Webster, said on Friday. "This would provide breathing space to prepare for the significant service changes required in the medium term." 

Among the report's findings are:

  • In 2013/14 NHS bodies achieved a net surplus of £722 million, made up of an £813 million underspend by commissioners and a £91 million net deficit by NHS trusts and foundation trusts.
  • Trusts in surplus in 2013/14 were likely to have a lower surplus than they had in 2012/13.
  • Based on forecasts at 30 June 2014, NHS trusts were forecasting a net deficit in 2014/15 of £404 million and foundation trusts a net deficit of £108 million. 
  • Providers and commissioners in financial difficulty have not matched pressures on funding with equivalent reductions in expenditure.
  • Despite payment for emergency admissions at a 30 per cent marginal rate, demand continues to increase.
  • NHS England underspent by £279 million compared with its original plan but, within this net total, it overspent £377 million on directly commissioned specialised services. 
  • The clinical commissioning groups with the largest deficits are those with the widest gap between their target funding allocation and the income they received. 
  • Financial plans submitted by commissioners and providers covering the two years 2014/15 and 2015/16 have had to be revised and 2015/16 plans are not yet finalised.

'Breathing space'

Mr Webster was clear that the much-needed 'breathing space' will require tough political choices, now and in the next electoral cycle.      "[This] is why we asked politicians in the 2015 Challenge Manifesto to support a care system fit for all patients. This will need certainty, and we welcome the NAO calls for longer term funding and planning. 

"A fixed-term Parliament could allow for five-year settlements, and we are calling for a ten-year commitment on funding to enable commissioners and providers to plan more effectively for future health needs." 

Find out more

Access the report from the National Audit Office website.

View the NHS Confederation's stark warning to MPs over the state of NHS finances.

Download the NHS finances: a service at boiling point infographic and discover how the Confederation is supporting members to rise to the financial challenges.

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