NHS Finance

31.05.18

NHS £1bn year-end deficit ‘not the consequence of a few bad months’

An “unprecedented” surge in demand during the worst winter in a decade has impacted on the performance of the NHS in key areas, according to new end-of-year financial and performance figures from NHS Improvement.

January, February and March alone already saw more than 5.87 million people attend A&E - over 200,000 more than the previous year. Performance against the target to see 95% of patients in A&E within four hours slipped to 88.4%, compared to 89.1% the previous year.

Planned operations were cancelled in order to meet the winter pressures, and temporary staff were hired to combat vacancies and staff sickness.

At the end of the financial year the vacancy rate was at 8%, including almost 36,000 nursing gaps and almost 10,000 empty doctor posts, leading to £976m more being spent on NHS bank staff than planned. However, 18% less was spent on temporary staff from expensive agencies compared to the previous year.

This high level of demand led to an overspend just short of £1bn, which the King’s Fund’s chief analyst, Siva Anandaciva, branded “another clear warning” that the health service can no longer deliver the expected standards of care within the current funding package.

“The cost of the pressures on frontline services is not just financial but is seen in patients having their operations cancelled or facing longer waits for urgent and planned care,” he added.

Despite more than two-thirds of providers finishing the year either equal to or better than planned financially, the sector as a whole ended the financial year with a deficit of £960m – £464m more than anticipated at the start of the year, and £30m higher than anticipated at the end of December.

“The fact that staffing budgets were overspent by nearly £1.5bn during a year where pay was held down and spending on agency staff was cut underlines the huge pressures on overstretched staff who are delivering more care than ever before despite staff vacancies now reaching 100,000,” continued Anandaciva.

“It is now an open secret that the system for managing NHS finances is fundamentally broken. Many NHS organisations are being set annual financial targets they have no realistic hope of achieving, while providers of community, mental health and ambulance services are effectively underwriting substantial overspends in acute hospitals.”

And while the difficult winter “no doubt had some effect” on this outlook, the challenges facing the NHS “are not the consequence of a few bad months,” the King’s Fund explained. Rather, they are the direct result of growing demand, austerity and an escalating workforce crisis – urgent issues that must be met by Theresa May’s upcoming long-term funding settlement lest the service continue to deteriorate.

The increased A&E demand over winter has meant that acute hospitals are largely responsible for the deficit, and 12 of the most financially challenged trusts are receiving intensive financial support from NHS Improvement (NHSI).

Evidence of a system under strain

Ian Dalton, chief executive of NHSI, praised NHS staff for their “incredible resilience” during the difficult winter. “More than two-thirds of providers ended the year on budget or better than planned. Given rising demand and record vacancies, this is an important achievement,” he said.

But Niall Dickson, chief executive of NHS Confederation, said that in spite of these heroic efforts from staff, the figures are evidence of a system under strain, which is inevitably letting down patients. “This is not just about hospitals. The whole system is struggling to cope,” stated the Confed boss.

Referring to the recent Institute for Fiscal Studies report, which argued that the current system is unsustainable, he added: “Without new ways of delivering services and sustained investment, NHS and social care services will not cope, and we will face a decade – let alone a winter – of misery in which the old, the sick and the vulnerable will be let down.”

Chris Hopson, chief executive of NHS Providers, agreed that the figures reflect a “worrying gap” between expectations of what the NHS should deliver and the resources available, adding: “And we must remember that today’s figure masks the full underlying deficit which is much higher, and how reliant the NHS continues to be on one-off savings.

Chief analyst at the King’s Fund, Siva Anandaciva, said that overspend by frontline NHS providers is a “clear warning that the NHS can no longer deliver the standards of care expected of it within the current funding settlement”.

Royal College of Physicians president, Professor Jane Dacre, praised the dedication shown by NHS staff, but reiterated that it should not be taken for granted, nor should the effects of burnout be underestimated.

“To prepare for next winter, we need to support the workforce as much as we can.  This includes relaxing restrictions on visas so that doctors from overseas who are queueing up to work in our NHS can begin working here as soon as possible, and working hard to keep doctors from the EU from leaving due to Brexit,” she said.

Top image: Steve Parsons/PA Wire/PA Images

 

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