NHS poised to record worst financial performance with £2bn-plus deficit

Deficit was already £1.6bn after the first six months of the financial year
Expensive agency staff were blamed so Government introduced pay cap
But some trusts have complained it has led to staffing difficulties
Experts warn efficiencies can not be made at same rate as funds being cut

Kate Pickles For Mailonline

Published:
01:48 EST, 20 May 2016

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Updated:
02:57 EST, 20 May 2016

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The NHS is expected to record its worst financial performance in a single year, with a deficit set to exceed £2 billion.

Figures published today for 2015/16 are set to show a slight improvement on the worst case scenario deficit – but it will still be the poorest on record.

High spending on expensive agency staff and the rising demand from patients have been blamed for trusts in England falling into the red.

In February, a report containing the first nine months’ worth of figures said the NHS was on track for a £2.8 billion deficit across the year.

It said if savings could be made in the final three months of the financial year, the figure may fall to around £2.4 billion.

Figures are expected to reveal a massive NHS deficit after recording a deficit of £1.6bn in the first six months

Data published just before Christmas showed NHS trusts had racked up a deficit of £1.6 billion in just the first six months and 156 out of 239 NHS trusts expected to end the year in deficit.

In the entire previous year, the NHS overspend stood at a comparatively small £820 million.

High spending on expensive agency staff has been blamed for having a serious detrimental effect on the financial position of NHS trusts.

The Government has capped agency spending, with new hourly price caps limiting the amount of money various types of agency staff working in the NHS can earn.

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Controls on spending on expensive management consultants also came into force over the summer and were expected to have had an impact by the end of the financial year.

But some trusts have argued they are struggling to fill rota gaps and are finding it difficult to keep within the agency cap.

Over the last five months, NHS trusts have come under increased pressure to change the way they present their deficits in their accounts in a bid to balance the books.

The Department of Health is keen to keep the deficit as low as possible to keep within – or close to – spending limits set by the Treasury.

The Nuffield Trust said trusts had made ‘accountancy adjustments’ to bring the deficits down, including reclassifying capital budgets as revenue, claiming for five quarters (15 months) worth of VAT rebates and reviewing accounting policies.

In the entire previous year, the NHS overspend stood at a comparatively small £820 million

Its senior policy analyst, Sally Gainsbury, said of the expected data: ‘These figures are expected to show NHS trust performance improving from the start of the year, when they ran up a deficit of nearly £1 billion in just three months.

‘However, this is the result of accountancy adjustments which have not changed the underlying £3.5 billion gap between the costs of providing hospital and community health services and the funds those services receive.’

She said the targets for efficiency savings demanded by the Government looked further away than ever.

She added: ‘NHS trusts have made cost efficiencies, but not as fast as their funds have been cut.

‘In order to eliminate the underlying deficit by the end of next financial year, providers will need to make year on year cost cuts of four per cent: twice the rate of at which Lord Carter’s recent report on hospital efficiency found was possible, and higher than any year in the last decade.’

The influential King’s Fund think-tank has previously said many trusts would not be able to deliver the cuts needed to get the overall deficit down to £1.8 billion by the end of March.

It said a shortfall will come out of the 2016/17 budget, eating into the extra funding provided in the Government’s spending review.