NHS bodies not financially sustainable

The financial position of the NHS has worsened since 2012/13, with growing financial stress in NHS trusts and foundation trusts. These trends are not sustainable, says the National Audit Office.

Estimates for the current financial year planned for a net deficit of £425 million for NHS trusts and £20 million for foundation trusts. However, at the end of June 2014, NHS trusts were forecasting a net deficit of £404 million and foundation trusts a net deficit of £108 million.

A new report from the National Audit Office notes that financial risk is 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.

In 2013/14, over £0.5 billion extra money was issued to 21 NHS trusts and 10 foundation trusts to ensure that organisations in difficulty have the cash they need to pay staff and creditors.

Forty-nine clinical commissioning groups performed less well than originally planned: 12 of these had forecast a surplus but ended the year in deficit. The local auditor of clinical commissioning groups referred 19 bodies in deficit to the Secretary of State for spending more than their authorised resource limit.

To discourage unnecessary emergency admissions, trusts receive 30% of the full tariff payment for admissions above the level experienced during 2008-09. However, this arrangement has not contained demand. Increasing demands for emergency admissions will also reduce the resources commissioners have to invest in alternative primary or community care services.

Amyas Morse, Head of the National Audit Office, commented: “An increasing number of healthcare providers and commissioners are in financial difficulty. The growth trend for numbers of NHS trusts and foundation trusts in deficit is not sustainable. Until the Department can explain how it will work with bodies such as NHS England, Monitor and the NHS Trust Development Authority to address underlying financial pressures, quickly and without resorting to cash support, we cannot be confident that value for money will be achieved over the next five years.”