NHS overspend in third quarter


The figures announced today show that NHS providers have incurred deficits totalling £2.3m in the first three quarters of the year (i.e. to the end of December 2015), making it likely that the year-end position will be an overspend of at least £3bn. When this is combined with deteriorating clinical performance, eg 9% of patients waiting longer than four hours in A&E in Q3, it represents the worst quarterly performance since 2003.  

These results confirm the increasing pressures on the NHS, which leads in turn to three concerns:

  1. A return to centralised control. In a bid to resolve the immediate funding crisis, NHS regulators have stepped in to limit the former freedoms of organisations, particularly Foundation Trusts. Organisational control totals have now been issued with CFOs and Boards being put under significant pressure to achieve their share of the overall NHS position. Whilst this may well be the only tenable response in the short term, it is many miles from the 5YFV vision of a devolved NHS, and back to a system which will struggle to generate the local ownership of investment for the future which is required for the long term.
  2. Trouble is being stored up. Not only might untenable rates of spend be carried forward to 2016/17, but all the one-off means to help manage the expenditure position will be called into play this year and be unavailable in future. Added to this, increasing numbers of providers have called on external cash support for day-to-day expenditure such as paying staff. With much of this cash support coming in the form of repayable loans, a potential time bomb is ticking away.
  3. Short termism is back. In effect, the 2016/17 front-loaded resources are already being spent. It looks as if current problems will use up the front-loading in the recent settlement for health, leaving nothing for the preventative and transformative investments which are needed for the long run. That would amount to a failure to advance the Five Year Forward View’s vision of how to stabilise the position – and slip back instead into the year-on-year bailout mentality which the Forward View sought to move beyond.
Last week Monitor stated, correctly, that ‘the solutions to today’s problems lie in a radical upgrade of prevention and new models of service delivery’. Unfortunately that jars with the current reality of central control, short-term borrowing and the new money already committed elsewhere. It all points to the need (as called for by CIPFA six months ago in The Health of Health Finances) for the Government to take radical action to ensure that invest to save spending can occur.

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