The Department of Health today published its accounts for 2015/16. The key figures and points to note are:
- Today’s annual accounts confirm that the Department of Health (DH) overspent the health budget set by the Treasury in 2015/16. DH overspent its Revenue Departmental Expenditure Limit (RDEL) by £207m.
- This is much lower than the recurrent underlying deficit in NHS providers which was £2.8bn. DH relied on a series of one-off accounting measures that are not repeatable or sustainable to bring down the total deficit.
- DH did not exceed the money voted in parliament due to an administrative error in the treatment of National Insurance receipts.
- Health spending in 2015/16 grew in real terms by 3.4% – the biggest spending increase since 2009/10.
- The 2015 Spending Review ‘front-loaded’ funding for the NHS. This year (2016/17) DH funding is increasing by £3.1bn – a 2.6% increase – within this NHS England’s budget is to increase by an even larger £5.4bn. This is with the aim of bringing providers back into balance and helping services transform.
- From 2017/18 to 2020/21 total health spending will grow by just 0.7% a year in real terms – less than a third of the rate of increase this year.
- At the end of 2015/16, 65% of NHS providers were in deficit. Despite the cash injection from the front-loaded Spending Review settlement, providers are heading towards a £0.55bn overspend for 2016/17.
- NHS Improvement has today acknowledged that achieving balance across the sector is not realistic and has set a less demanding target of a £250m deficit for 2016/17.
In response to this announcement, Anita Charlesworth, Director of Research and Economics at the Health Foundation, said:
'Today’s figures confirm the Department of Health overspent its budget – not surprising given the scale of financial difficulty across NHS providers, stemming from national failings in workforce planning and slow progress on productivity. To avoid a bigger overspend the Department relied on a large raid on the capital budget and one-off accounting measures that are not repeatable. As the NAO says, while this approach may be understandable, it is unsustainable. The cupboard is now bare.
'2015/16 and 2016/17 were supposed to be the years of relative plenty, with front-loaded budget increases designed to put NHS finances back in order and kick-start the Five year forward view. Despite this, providers are heading for a £0.55bn overspend in 2016/17. And time is running out – from next year, the financial position of the NHS only gets worse. The NHS urgently needs a strategy to improve its efficiency and crucially, to ensure it has the workforce needed to deliver high quality patient care.'
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