NHS Finance

19.07.16

NHS lacks funding and plan to deliver FYFV – Health Committee

Initiatives to tackle the unprecedented financial pressures on the NHS are not on track to meet their targets, according to the latest report from the Health Select Committee.

The report said that government promises of increased NHS funding in the Spending Review are misleading, and short-term efficiencies such as cutting the tariff price, pay restraint, agency price caps and reduced capital spending are not sustainable in the long term.

NHS England has also failed to adequately set out how it will deliver £22bn of savings through the Five Year Forward View. The committee recommended that NHS England, with the Department of Health, sets out a detailed plan explaining the savings expected of different bodies.

The report concludes: “Given the scale of rising demand and costs we are not confident that the efficiency challenge is achievable. We are concerned about the failure to plan for the consequences if the current plan for savings is not achieved.”

Janet Davies, chief executive and general secretary of the Royal College of Nursing, said: “The Five Year Forward View set out a radical vision for the future of the NHS and social care and it’s extremely worrying, but not entirely unexpected, to hear that continuing financial pressures and short termism could halt its progress. 

"Unless the government finally gets to grips with the tremendous financial pressures facing the NHS, then no initiative or plan will ever fully get off the ground and the NHS will lurch from crisis to crisis.

“A new government is a chance for a fresh approach, and nowhere is this more needed than the health service. Years of squeezing more and more out of an overstretched workforce has left the NHS in a perilous position. Long term, sustained investment is the only way to ensure our health and care system can cope with the challenges ahead.”

The committee raised serious concerns that the financial situation in the NHS is so poor, with spending experiencing a historically low rise of 1.1% in 2009-16, that there is a risk that a trust running a deficit is no longer taken as a serious warning sign.

Spending Review figures were misleading

In the 2015 Spending Review the government suggested it would increase health spending by £8.4bn, but the committee said this was misleading, because the government changed the definition of health spending to apply only to the NHS.

Including spending for areas such as public health, which is being cut, the total spending increase is £4.5bn.

The committee said this was not sufficient to fund the FYFV and called on the government to explain why it had changed the definition.

Nigel Edwards, chief executive of the Nuffield Trust, said the charity had warned at the time that the funding in the Spending Review was “partly based on taking money away with one hand to give back with the other”.

He added today: “This report puts into sharp relief the situation now facing the service. Heroic savings are required against a backdrop of struggling social care and rising patient numbers.”

The report also found that short-term efficiency measures are contributing to the financial problems of the NHS. For example, raids on the capital budget are masking the extent of the problems, whilst pay freezes will cause long-term problems in recruitment and retention and increase the reliance on agency staff.

Edwards said that the “disconnect” between the expectations of NHS managers and staff and the reality of their work is also contributing to poor staff morale.

The report said that the current payment system does not drive greater efficiency because it offers incentives for inappropriate hospital admission.

It also warned that sustainability and transformation plans are being incorrectly used to ‘sustain’ existing spending despite financial pressures, instead of delivering long-term transformations and greater integration of care.

Damning indictment of social care

In addition, the report raised concerns about cuts to public health and social care spending. The committee warned that social care funding has experienced so many cuts that it has “exhausted” its capacity for further efficiency savings, and raised particular concerns about the fact that no officials were able to quantify the financial impact of delayed transfers of care on the NHS.

Janet Morrison, chief executive of Independent Age, said: “This is a frankly damning indictment of the state of care and support for hundreds of thousands of elderly and disabled people, and the new government must take urgent steps to arrest it rather than wait for promised new cash to arrive in 2018.”

The report also called on Theresa May’s government to publish and implement the delayed childhood obesity strategy as soon as possible.

A Department of Health spokesperson said the department ‘rejected’ the report’s conclusions, insisting that it had provided enough funding for the NHS in the Spending Review.

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