NHS trusts overspend by £770m despite bailout funding
NHS Trusts are failing to limit overspending to £580m but make inroads into previous year’s £2.45bn figure.
NHS trusts overspent by £770m last year in the latest sign that hospitals are finding it impossible to meet fast-rising demand for care while their finances are facing an unprecedented squeeze.
That total is £190m more than the £580m maximum that health service bosses had sought from England’s 236 NHS trusts in 2016-17.
The £770m has emerged from analysis of the trusts’ own official figures showing their financial performance in 2016-17 obtained by the Health Service Journal. Its publication sparked a fresh debate about whether the government is giving the NHS enough money to do its job properly.
About 100 of England’s 235 acute, mental health, community services and ambulance trusts ended the year in the red and dozens more only escaped recording a deficit through one-off savings or technical accounting measures, HSJ found.
The £770m is a lot less than the record £2.45bn overspend trusts incurred in 2015-16. However, NHS finance experts said that that headline figure had been “flattered” by trusts receiving £1.8bn of bailout funding during 2016-17 and so the true deficit was around £2.5bn.
Ministers were accused last Friday of hiding inconvenient information about the true state of NHS finances by delaying the publication of the latest official figures by the regulator NHS Improvement until after the general election. However, its figures are understood to be close to, though less than, those collated by the HSJ.
Chris Hopson, the chief executive of NHS Providers, which represents hospital trusts, said the big drop represented their genuine success at cutting their costs.
“There was a significant improvement in NHS trusts’ finances last year. That was [from] a combination of taking out £750m from the cost of agency staffing and delivering almost another £1bn in efficiency gains,” said Hopson.
New research by his own organisation has found that trusts ended 2016-17 with a combined deficit of £700m-£750m. “That figure would be bigger than that without the £1.8bn sustainability and transformation fund money. That money has clearly been very helpful, too,” Hopson said.
But Sally Gainsbury, a senior policy analyst at the Nuffield Trust health thinktank, said: “The £770m is a very poor measure of how much the NHS is actually overspending by. In reality, the NHS overspent by significantly more than the £770m that HSJ reports because the £770m only comes after a whole series of one-off accountancy adjustments, such as deferring payment of bills from last year into this year and changing the valuation of property [owned by the trust].
“And there is also the £1.8bn emergency bailout funding from the Treasury. Without it, NHS overspending would probably be in the region of £2.5bn.”
However, Gainsbury added, the NHS’s real deficit at the end of 2015-16 was about £3.7bn, once bailouts were included, so trusts did genuinely improve their finances by £1.2bn during last year.
“The underlying NHS overspend, whatever it turns out to be once NHS Improvement publish their figures, is more a measure of underfunding than of NHS profligacy,” she said.
HSJ’s figures are based on figures contained in board reports for 217 of the 236 trusts and trusts’ responses to its direct requests for information.
Siva Anandaciva, the chief analyst at the King’s Fund health think tank, said trusts ending the year £770m in the red was an “impressive” performance, given how demanding last winter had been.
But, he added: “Set against the original ambition for 1st year’s deficit and given the heavy reliance on sustainability and transformation funding and other financial support, the NHS provider sector clearly remains some way from a balanced financial footing.
“Most worrying is the amount of one-off actions that have been used to improve the 2016-17 position. Delaying payments to suppliers, deferring capital spending and selling land do not address the underlying financial problems facing the NHS each year.”
NHS trusts would only regain control of their finances when “the fundamental imbalance between funding and rising demand is rectified”, he added.
NHS finance experts say that none of the three major political parties’ manifesto pledges of extra money for the NHS during the next parliament will be enough to let it maintain quality of care, meet treatment waiting time targets, improve cancer and mental health services and transform the way it looks after patients.
Key bodies, such as the National Audit Office and the Commons health select committee, have claimed in recent months that the NHS’s finances are unsustainable and need to be put on a stable footing.