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DH and NHS England balance finances ‘on a technicality’

More warnings have been issued about the unsustainable financial situation of the NHS after the Department of Health (DH) and NHS England published their annual accounts for this year.

The department overspent its total Treasury controls by £0.1bn, while NHS England delivered an underspend of £599m.

However, in his overview of the department’s accounts, Sir Amyas Morse, head of the National Audit Office (NAO), said that a worse financial situation was only avoided by unsustainable efficiency measures.

Richard Murray, director of policy at the King’s Fund, said: “The news that the DH overspent its budget last year is further evidence of the serious financial crisis engulfing the NHS. Although the department avoided breaching controls set by Parliament on a technicality, the strong rebuke issued by the NAO underlines the significance of this.”

The DH’s financial problems were largely caused by the increasing number of NHS trusts going into deficit, which rose from 78 to 101.

It was partially able to offset this with an unexpected extra £417m from National Insurance contributions and a £100m ‘super dividend’ from the Medical and Healthcare Products Authority.

It also received a non-repeatable £150m because of changes to the European Economic Area liabilities, which are paid to the department for healthcare provided to EU citizens in the UK.

However, the department still had to raid the capital budget for £950m, which Sir Amyas warned could mean planned service improvements were less likely to happen in the future.

He said: “None of the transactions described would be at the core of a comprehensive plan to secure the financial sustainability of the NHS in England. Meeting the annual budgetary controls through mechanisms like these is understandable in the absence of the plan both I and the Committee of Public Accounts have recommended but they are unsustainable.

“The availability of these areas to create favourable budgetary control impacts necessarily reduces through time. And they are unlikely, in my view, to be able to continue to answer in 2016-17.”

Health secretary Jeremy Hunt, presenting the accounts and annual report to Parliament, said that NHS England had made “good progress” in managing its progress and meeting its objectives this year. But he added that there was “much more to do” in order for the NHS to meet its £22bn efficiency target.

NHS England announced today that it will impose new financial penalties on trusts and CCGs that fail to meet targets on financial performance as part of a plan to improve finances.

However, Murray said that the measures would still leave “large numbers” of trusts “struggling to balance the books and meet key performance targets.”

He added: “It is no longer credible to argue that the NHS can continue to meet demand for services, deliver current standards of care and stay within its budget. If the government is serious about restoring financial balance, it must review its priorities for the NHS and be honest with the public about what in can deliver with the money it has been allocated.”

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