Background to the report

The Department of Health & Social Care (DHSC) has overall responsibility for healthcare services. It is accountable to Parliament for ensuring that its spending, as well as spending by NHS England, NHS Improvement, other arm’s-length bodies and local NHS bodies, is contained within the overall budget authorised by Parliament.

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DHSC is responsible for ensuring that those organisations perform effectively and provide value for money. It made NHS England and NHS Improvement responsible for ensuring that the NHS balances its budget. From April 2019, NHS England and NHS Improvement (NHSE&I) came together to act as a single organisation.

Content and scope of the report

This is our eighth report on the financial sustainability of the NHS. To be sustainable, the NHS needs to manage patient demand (including how long patients wait) and the quality and safety of services within the resources given to it.

In this report we:

  • summarise the financial and operational performance of the NHS as a whole in England in 2018-19
  • examine the financial performance of local NHS organisations
  • examine NHS service transformation and sustainability

Report conclusions

The NHS is treating more patients but has not yet achieved the fundamental transformation in services and finance regime needed to meet rising demand. The short‑term fixes that DHSC, NHS England and NHS Improvement put in place to manage resources in a constrained financial environment are not sustainable. The extra money brought in to stabilise the finances of NHS bodies has continued to drive volatility and variability among trusts, while patient waiting times continue to deteriorate and the number of people waiting for treatment continues to increase.

Years of short-term funding decisions for the health sector means that resources have moved away from areas of investment in the future, such as the workforce, public health and capital. This will need to be rebalanced to ensure that the ambitions set out in The NHS Long Term Plan are realised.

To bring about lasting stability, the NHS needs a financial restructuring programme not just a recovery programme. If integrated care systems are to be successful, funding mechanisms and incentives need to support collaborative behaviours. The delivery of long-term financial sustainability is at risk unless every organisation is on a realistic path to breaking even. Until the Department and NHSE&I have implemented more sustainable solutions and dispensed with short-term financial fixes, we cannot conclude that they have delivered value for money through their collective actions.

“The short-term fixes that were introduced to manage the NHS’ finances are not sustainable. The Department of Health and Social Care continues to provide some trusts with short-term loans just to meet their day-to-day costs with little hope they will be repaid. This is not a sustainable way to run public bodies.

“To bring about lasting stability, the Department and NHS England and NHS Improvement need to move away from short-term financial fixes and provide longer-term solutions.”

Gareth Davies, head of the NAO


Publication details

Press release

View press release (5 Feb 2020)

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