Figures published today by NHS Improvement show that NHS providers posted a net deficit of £461m for the first quarter of 2016/17, better than the planned net deficit of £466m. This is a dramatic improvement on the £930m deficit at the same point last year. Yet there are concerns about trusts missing their Cost Improvement Plans (CIPs) by £45m. These shifts coincide with the NHS receiving a relatively large increase in total spending, of 1.2% above inflation, as part of the funding settlement for the Five Year Forward View.

Spend on agency staff – a major contributor to last year’s deficit – fell during the quarter, and providers are on target to reduce the cost by £1bn by year-end, following the introduction of the agency cap. This was introduced in response to the significant increase in agency staff spending, rising by 35% between 2013/14 and 2015/16.

These improvements in finance contrast with the continued decline in some aspects of front-line patient care over the first quarter of 2016/17:

  • NHS providers treated 89.3% of patients within four hours of arrival at A&E, well below the same quarter last year and the 95% target
  • Waiting times for planned hospital treatment have increased, with 3.45 million people waiting at the end of the quarter – the highest level on record
  • The critical 62-day cancer target – from GP referral for suspected cancer to starting treatment – has not been met for the last 10 consecutive quarters (two and a half years).

In June, NHS leaders announced a package of measures designed to improve access and ensure a deficit of no more that £250m by the end of March 2017. With future years seeing close to flat real-terms funding growth achieving this is essential for the long-term sustainability of the NHS.

Adam Roberts, Head of Economics at the Health Foundation said:

'Today’s figures show some progress towards achieving financial balance in the NHS. While this is obviously welcome, the majority of providers are still struggling to live within their means and many are missing cost improvement plan targets. The true financial test will be whether providers can maintain this relative improvement through the winter.

'The further deterioration of performance is clearly a serious concern for patients, but also for finances. This year is absolutely critical for the NHS. Additional investment is available through the sustainability and transformation fund (STF), yet this is partly dependent on improvements in key services.

'While the agency cap appears to have had some positive impact on costs, it does not address the serious problems of staff shortages, and there remains an urgent need for a coherent workforce strategy to address these systemic issues.'
 

Media contact

Jenny Rushforth
T: 020 7257 8047
 

Additional information

Chart showing NHS net reported deficit at Q1, 2014-15 to 2016/17