Summary
The financial health of NHS trusts and NHS foundation trusts has significantly worsened in the last three financial years. Trusts had a net deficit of £843 million in 2014–15, which is a severe decline from trusts’ £91 million deficit in 2013–14, and £592 million surplus in 2012–13. Trusts’ finances look set to deteriorate further—halfway through 2015–16 three quarters of trusts had a deficit, and their total overspend could rise to around £2.5 billion. The Department of Health, NHS England and NHS Improvement have not taken action soon enough to keep trusts in financial balance. The target for trusts to make 4% efficiency savings across the board is unrealistic and better data is needed for more informed savings and efficiency targets. Failings in the system for paying providers need to be addressed as a matter of urgency, with NHS Improvement and NHS England acknowledging that the current system is not fit-for-purpose as it does not incentivise the right behaviours needed for joined-up healthcare services. Spending on agency staff has contributed to trusts’ financial distress, and action to tackle this problem is welcome, albeit late. The NHS will not solve the problem of reliance on agency staff until it solves its wider workforce planning issues. We recognise the immense challenge of achieving financial and service sustainability when demand is rising and budgets are tight, and acknowledge the ongoing efforts of NHS England and NHS Improvement to find solutions. But there is much to do to produce the convincing plan necessary for the NHS to get itself back into financial balance.
© Parliamentary copyright 2015
Prepared 10 March 2016