The NHS is treating more patients, but has not yet achieved the fundamental transformation in services and finance regime needed to meet rising demand. Short-term fixes have made some parts of the NHS seriously financially unstable, according to the NAO.
The National Audit Office has today published two reports. The first, NHS financial management and sustainability, looks at the financial and operational performance of the NHS as a whole as well as the financial performance of local NHS organisations. The second, Review of capital expenditure in the NHS, examines the use of the NHS capital budget, which is for replacing and maintaining equipment and buildings.
NHS provider trusts reported a combined deficit of £827 million and clinical commissioning groups1 (CCGs) failed to balance their books again, reporting a £150 million deficit in the financial year ending 31 March 2019. Trusts are becoming increasingly reliant on short-term measures, including one-off savings (rather than more permanent year-on-year savings) to meet yearly financial targets.2 These deficits were offset by a centrally managed NHS England underspend.
The NAO finds that the extra money brought in by government to stabilise the finances of individual NHS bodies has not been fully effective. Although the NHS treated more people in 2018-19, it has struggled to transform services. Patient waiting times continue to get worse and the number of people waiting for treatment continues to increase. Trusts in financial difficulty are increasingly relying on short-terms loans from the Department of Health & Social Care (DHSC). These are effectively being treated as income by these organisations and they have built up a level of unsustainable debts (£10.9 billion in March 2019) which they are unlikely to ever repay.
In the past five years, the government has transferred £4.3 billion from capital to revenue budgets to cope with day to day pressures facing the NHS. It has been unable to clearly say how this has affected patient services and acknowledges its approach to capital funding requires reform. The rising demand for capital spending and the growing maintenance backlog means there is an increasing risk of harm to patients.
Over the last three years, NHS providers have requested on average £1.1 billion more for buildings and equipment than their spending limits allow. Fourteen per cent of NHS buildings are older than when the NHS was formed (in 1948). The backlog of maintenance work to get all buildings up to standard currently stands at about £6.5 billion.3
The NAO concludes that DHSC, NHS England and NHS Improvement should revamp the way the system is funded. This includes developing a clear long-term capital funding strategy and establishing a more stable funding system that is not reliant on loans.