Understanding the NHS deficit and why it won’t go away

This briefing assesses the financial health of those providers by unpicking the headline figures presented in the official accounts to reveal the true underlying state of the NHS’s finances today, and to outline prospects for the next three to four years | Nuffield Trust

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Image source: Nuffield Trust

  • NHS trusts have begun the current financial year, 2017/18, on course for an underlying overspend or deficit of £5.9 billion. To meet their reported deficit target of £500 million, they will need to cut their operating costs by £3.6 billion and receive temporary extra funds of £1.8 billion.
  • This would require trusts to make savings in one year equivalent to 4.3 per cent of their operating costs – far in excess of any level achieved over recent years and likely to be almost impossible to deliver.
  • A more likely scenario is that they will make cost savings similar to the level made last year. That would collectively leave the trusts with an underlying deficit of around £3.5 billion.
  • The headline deficit for 2016/17 (which ended in March 2017) was £791 million. However, that figure was flattered by billions of pounds’ worth of one-off savings, temporary extra funding and accountancy changes that did nothing to improve the underlying state of provider finances. Once they are removed, the underlying deficit for 2016/17 is £3.7 billion.
  • This is compared to an underlying deficit the year before, 2015/16, of £4.3 billion. As trusts also had to soak up additional inflation costs in 2016/17, the reduction in the underlying deficit between 2015/16 and 2016/17 actually represents providers making £2.3 billion in permanent savings.
  • Projections of future years suggest that, even under optimistic assumptions for inflation and continued high levels of savings, NHS providers will continue to run a large collective underlying deficit until at least 2020/21.

Read the full briefing here

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NHS funding and privatisation: the facts

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A lecture and article by the scientist Professor Stephen Hawking outlining his views on the NHS have prompted a lively debate about a number of issues.

Here the Kings Fund looks at the facts about two of these: whether the NHS is being privatised and if it has been given the funding it needs:

Is the NHS being privatised?
The involvement of the private sector in the NHS is a hotly contested topic. Private companies have always played a role in the NHS, but critics claim that their increasing involvement is evidence of growing privatisation of care and is undermining the service’s core values.

Does the NHS need more money?
In recent years, spending on the NHS has been protected while other budgets, such as those for local government services and policing, have been subject to significant cuts. Despite this, health services are facing unprecedented financial and operational pressures, with many NHS organisations in deficit and key performance standards being missed.

Investment in NHS transformation projects

Secretary of State for Health and NHS England have announced £325m of capital investment for local projects that will help the NHS to modernise and transform care for patients.

Patients will see this investment deliver faster diagnosis for conditions like cancer, easier access to mental health care, expansion of A&Es, shorter waits for operations, and more services in GPs surgeries. This initial tranche of funding has been targeted at the strongest and most advanced schemes in STPs.

Read more via NHS England

Additional link: RCGP press release

Department of Health annual report

The annual report and accounts show how the department has funded its activities and used its resources in the period 2016 to 2017. | Department of Health

The annual report and accounts give an overview of the department’s resources and how it has used them to fulfill its statutory functions during the financial year 2016 to 2017.

The document describes DH’s performance against objectives and includes the Secretary of State’s annual report on the performance of the health service in England.

Department of Health annual report and accounts 2016 to 2017 (web version)

Department of Health annual report and accounts 2016 to 2017 (print version)

Additional link: Health Foundation press release

NHS Bursary Scheme rules 2017

Information about the NHS Bursary Scheme new rules applicable for the academic year 2017 to 2018, including 2 new schemes | DoH

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Students who began their studies before 1 September 2012 and are continuing training in the 2017 to 2018 academic year should refer to the NHS Bursary Scheme old rules (seventeenth edition).

Transitional Arrangements for 2017 to 2018 (first edition) is a scheme for new students beginning eligible pre-registration programmes between 1 August 2017 and 31 July 2018. Eligible programmes include postgraduate healthcare programmes, dental hygiene and dental therapy programmes and part-time programmes within the transitional capping arrangements.

Learning Support Fund for 2017 to 2018 (first edition) gives information about allowances for eligible students beginning pre-registration healthcare programmes on or after 1 August 2017. Allowances include:

  • Child Dependants Allowance
  • Exceptional Support Fund
  • Travel and dual accommodation expenses

NHS Bursary Scheme new rules for academic year 2017 to 2018

Financial challenges facing the NHS

The Healthcare Financial Management Association (HFMA) has published NHS financial temperature check: finance directors’ views on financial challenges facing the NHS in England. 

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This briefing draws on the responses of finance directors of trusts and foundation trusts and chief finance officers of CCGs.  It finds the financial performance of the NHS remains under significant financial pressure.

Trusts reported a combined deficit of £791m in 2016/17, after receiving additional funds of £1.8bn from the sustainability and transformation fund (STF).

The performance of CCGs, based on month 11 forecasts, looks better than that of trusts with a forecast in-year underspend of £250m, but this is after the release of the £800m risk reserve to CCGs’ bottom line.

Full document: NHS financial temperature check – briefing July 2017

Additional link: NHS Providers

Capital collaborations between the NHS and local authorities

The Chartered Institute of public Finance and Accountability and the Healthcare Financial Management Association have worked together to produce this briefing as an initial output from a joint workshop on capital funding in the NHS.

The briefing provides background on the local authority and NHS funding mechanisms, including the prudential code under which local authority treasury management and borrowing is determined.  It sets out the problems that NHS bodies currently face in relation to capital funding and identifies some opportunities for working together on capital projects.