2 Monitor's view on the NHS financial
7. The Committee's recent report into Public Expenditure
discusses the NHS financial position in detail. At this year's
accountability hearing the Committee gave Monitor the opportunity
to provide its views on the current financial situation facing
the NHS, and in particular to discuss Monitor's recent publication
Closing the NHS Funding Gap.
In its written evidence to the Public Expenditure inquiry Monitor
On the basis of the track record of Foundation
Trusts in recent years, the Annual Plan Review indicates the sector
will continue to be resilient in the short term.However, we know
that the number of foundation trusts in financial distress has
increased, as has the number struggling to meet operational demands.The
outlook on overall funding is uncertain and the spending review
has confirmed that financial pressures will increase beyond 2015/16....
....Without transformational change, for example
through integration of services and service redesign, efficiency
opportunities are likely to become increasingly difficult to identify
and deliver which may lead to increasing financial distress across
the FT sector.
8. Monitor reported that the percentage of acute
NHS FTs subject to regulatory action grew from 13% in April 2011
to 24% at the end of October 2013.
9. Dr Bennett told the Committee that one of the
important messages of Closing the NHS Funding Gap was that
the funding gap "can only be closed if there is a lot of
innovation-a lot of new approaches-to the provision of health
care, approaches that we have not seen today, or certainly have
not seen in this country." He also stated that in his view,
"it is going to be a big stretch to get there".
10. When asked whether there was a single health
economy that they could identify where good progress was being
made, Dr Bennett replied that while "you see examples of
good practice in many health economies", he was "not
sure there is really good evidence of any health economy that
has all the different pieces together in a coherent way".
Funding Pressures in 2015-16
11. Dr Bennett highlighted "a particular problem
when the Government plans that the Better Care Fund should transfer
£2bn from traditional NHS providers to community based health
and social care provision. He told the Committee that Monitor
expects that this transfer will result in reduced funding for
NHS acute care providers:
In 2015-16, as you will know, there is an additional
£2 billion taken from the NHS to be put into the integration
transformation fund. That is expected mostly to come out of the
acute sector, which means that the acute trusts in particular
are going to face a very significant funding squeeze in 2015-16.
So, although there is this challenge we were talking about earlier
of, "How do you get yourself to a position where you can
deal with a situation, say, in 2021-22?" just dealing with
2015-16, I think, is going to be a huge challenge particularly
because of the need to get there very quickly. We are in intensive
discussions now with NHS England, with the TDA and with the Department
of Health to try and work out how that gap between underlying
costs and funding can be closed in 2015-16.
12. The Committee
drew two conclusions from the evidence presented by Monitor:
a) It remains
concerned that the model of care provided by the health and care
system is not changing quickly enough with the result that pressures
continue to build, threatening the financial stability of individual
providers, and therefore the quality of care provided;
pressures are likely to be particularly marked in the acute sector
as plans are prepared and implemented to achieve the resource
transfer required by the introduction of the Better Care Fund
from April 2015.
7 Closing the NHS Funding Gap - how to get better value health care for patients,
Monitor, October 2013 Back
Monitor (PEX 0018) para 2.2 Back
Monitor (PEX 0018) para 2.6 Back
Monitor (AMO 0010) para 3.20 Back