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With all acute trusts in deficit, NHS warns £22bn savings ‘unattainable’

The NHS has crashed so intensely that for the first time, all 156 acute hospital trusts are set to end the financial year in the red. This means an extra £8bn will not be enough to rescue the service, NHS finance chiefs have warned.

A poll of more than 200 chief finance officers and finance directors at provider trusts and CCGs suggests the £2bn deficit already forecast for the end 2015-16 is optimistic, and that the health service will need much more than the government’s £8bn injection to survive.

The poll, for the Healthcare Financial Management Association (HFMA), found that 84% said they would not have enough resources to implement current plans without extra support.

And 88% of those polled said they were ‘not confident’ their organisation could deliver the 2-3% annual productivity gains outlined in the Five Year Forward View to realise the £22bn of “efficiency savings” by 2020.

Almost all of the finance chiefs (94%) said the £8bn would already be needed within the next 18 months, calling for cash to be ‘frontloaded’ – with as much of it as possible announced in the Spending Review next week and provided from April 2016, to pay for building up new services outside hospitals.

But, even more starkly, 43% of the 123 finance bosses from provider trusts and 86 CCGs said the health service will not be able to deliver current levels of provision even with additional cash.

Confirming that NHS financial problems are systemic, HFMA policy director, Paul Briddock, said: “With just days left before the Spending Review, finance directors are telling us they’re not confident in the current plans and need more clarity.

“While they’re not convinced the promised £8bn in funding is sufficient to address the whole financial problem, it is clear that it is needed now and many want to know if it will come with conditions attached to it.

“Providers also need realistic efficiency targets with adequate funding for new demands and cost pressures facing them. Today’s report tells us it’s time to think about what Plan B is, if all else fails.”

But any alternative approach would also need extra funding, he said.

Briddock cited the fact that trusts finished the first three months of 2015-16 with a combined deficit of almost £1bn, larger than the deficit reported for the whole of the previous year. Every acute trust is also now predicting a year-end deficit, compared to 77% just four months ago.

“Combined with our new research, this tells us that the much reported year-end trust deficit of £2bn for 2015-16 is very optimistic indeed – with finance directors reporting that their financial plans are at medium to high risk of not being achieved and that there is slippage against savings plans, its’s likely the actual year-end deficit will be larger,” he continued.

Polled finance directors also questioned Lord Carter’s plan to find up to £5bn of efficiency savings within the NHS, with almost half of them saying they are not confident that this can be done.

Similarly, the majority of those surveyed believe that the new care models piloted at Vanguard sites cannot deliver the financial benefits required to meet the estimated remaining NHS funding gap.

‘We are committed to the values of the NHS’

The NHS Confederation said the report’s findings were the latest message to the chancellor about all the risks to the NHS if the government’s £8bn are not available within two years.

Paul Healy, its senior policy advisor on economics and regulation, said: “Even with £8bn of investment, it is undeniable that the NHS faces a huge challenge finding the required efficiency savings.

“The only chance the service has of meeting these efficiency savings is if we have certainty and clarity of funding from the government in the upcoming Spending Review.”

But a Department of Health spokesman said the NHS is still expected to achieve the promised £22bn of savings and get by with the extra cash.

“We are committed to the values of the NHS, which is why we have invested £10bn to fund the NHS’s own plan for the future, and spending as a proportion of government spend has increased in every year since 2010.

“While the NHS is busy, the cost-controlling measures we have introduced like clamping down on rip-off staffing agencies and expensive management consultants will help to support finance directors and the NHS to ensure every penny is spent on patient care.”