Health Foundation response to NHS provider deficit of £2.45bn

Responding to the news announced today by NHS Improvement that the NHS provider deficit has reached £2.45bn at the end of the 2015/16 financial year, Adam Roberts, Head of Economics at the Health Foundation, said:

'NHS finances are in a truly dreadful state. Today’s figures show NHS providers ended the year £2.45bn in the red. A staggering 85% of acute hospital trusts could not balance their books - only around 20 managed to spend within their budget. Significantly, the agency staffing bill for the year was £3.6bn, £1.4bn higher than expected. This is lower than it would have been without the cap on agency spend, but it is still a 7% real terms increase on the previous year. The deficit is clearly a systemic problem affecting the NHS as a whole and is directly the result of an unprecedented squeeze in funding for both health and social care.

'Three of the key problems behind the deficit are a shortage of trained NHS workers, problems discharging patients who are well enough to go home but will need support in the community, and changes to financial penalties from commissioners. The forces driving up costs are largely beyond the gift of individual hospitals to address - the solution requires national action. In particular, government and national agencies need to address poor national workforce planning and the subsequent staffing shortages.

'The £2.45bn deficit is just the tip of the iceberg. A heavy reliance on one-off savings such as using the capital budget to meet day-to-day running costs means the underlying financial position is likely to be much worse than the headline figures reported today.

'Sadly, the deficits as well as rising cost pressures from pensions and drugs mean that little of the additional funding given to the NHS for 2016-17 will be available to support the changes to patient care so badly needed if the NHS is to deliver the vision of the NHS’s Five Year Forward View, published just 18 months ago.'

Media contact

Creina Lilburne

E: creina.lilburne@health.org.uk

T: 020 7257 8027

M: 07826 671730

Notes to editors

The Health Foundation is an independent charity committed to bringing about better health and health care for people in the UK.  www.health.org.uk

The Government committed an extra £5.5bn for the NHS in the 2016/17 headline cash terms. This is the ‘front-loading’ of the £8bn of additional funding promised by the Government for the NHS. This £8bn, together with £22bn in efficiency saving from across the health service, is designed to address a £30bn predicted shortfall by 2020/21 as a result of increased activity.

The charts below show change to the deficit and agency costs over time.