“Alarming” report shows NHS finances are diving into the red

BMJ 2014; 349 doi: (Published 11 November 2014) Cite this as: BMJ 2014;349:g6709
  1. Ingrid Torjesen
  1. 1London

The NHS in England is on the brink of deficit, and trusts responsible for hospitals and other services are already spending more than they receive from commissioners, says a report published by the National Audit Office.1

It says that the overall NHS surplus has fallen by two thirds in the space of a year, from £2.1bn (€2.7bn; $3.4bn) in 2012-132 to £722m in 2013-14, and that the NHS is forecasting a net deficit of £45m this financial year (2014-15).

In 2013-14 NHS England and clinical commissioning groups had a net surplus of £813m, while provider trusts ended the financial year £91m in deficit. By contrast, in 2012-13 provider trusts returned a surplus of £592m. A deficit was reported at the end of 2013-14 by 82 of the 456 NHS trusts, foundation trusts, and clinical commissioning groups in England.

Margaret Hodge, the Labour chair of the House of Commons Committee of Public Accounts, said that the report was “deeply alarming.” She added, “I do not believe it is an exaggeration to say that the future sustainability of our National Health Service is at risk.”

Last year foundation trusts made a surplus of £125m, but NHS trusts had an overall deficit of £216m. Organisations with private finance initiative (PFI) commitments that had the highest capital charges were the most likely to report weak financial results. Four of the six trusts with a deficit greater than £25m in 2013-14 had a PFI scheme.

The number of NHS trusts in deficit rose from five in 2012-13 to 22 in 2013-14, while the number of foundation trusts in deficit more than doubled from 20 to 41. Meanwhile the average surpluses returned by provider trusts in the black fell from £4m in 2012-13 to £3.6m in 2013-14.

Amyas Morse, head of the National Audit Office, said, “An increasing number of healthcare providers and commissioners are in financial difficulty. The growth trend for numbers of NHS trusts and foundation trusts in deficit is not sustainable.”

The situation for provider trusts is set to worsen. As at 30 June 2014, NHS trusts were forecasting a net deficit for 2014-15 of £404m and foundation trusts a net deficit of £108m.

The income that provider trusts are expecting to receive from commissioners is also increasingly greater than the amount that commissioners are planning to spend. In August 2014, forecasts of income by NHS and foundation trusts exceeded planned commissioning spending by £404m for 2014-15, and provisional figures indicated that the gap for 2015-16 would be £2.2bn, potentially rising to £8.7bn by 2018-19.

Provider trusts in severe financial difficulty are continuing to rely on cash support from the Department of Health to ensure that they have enough cash to pay staff and creditors. In 2013-14 the department issued £511m in cash support to 21 NHS trusts and 10 foundation trusts, more than double the £248m it provided in 2012-13.

Hodge said, “Things are getting worse rather than better, and we all know that when trusts are under this kind of financial stress it is the quality and safety of patient care that can suffer. An increasing proportion of foundation trusts cannot meet the terms of their licence, including meeting key measures of quality and outcomes, and the NHS Trust Development Agency had concerns about more than half, 55 of 98 NHS trusts.

“The Department [of Health], NHS England, Monitor, and the NHS Trust Development Authority between them must explain to my committee how they are going to get a grip on this wholly unsustainable situation and get our NHS back on track.”

NHS England underspent by £279m in 2013-14, but within this net total it overspent £377m on specialised services. The overspend was partly due to overambitious planning assumptions when these services transferred from strategic health authorities, the report said.

Clinical commissioning groups underspent by £716m in 2013-14, £101m more than planned. However, 49 clinical commissioning groups performed less well in 2013-14 than originally planned: 12 of these had forecast a surplus but ended the year in deficit. The report said that 19 of the 20 clinical commissioning groups with the tightest financial positions had received less than their target funding allocation (by 5% on average).


Cite this as: BMJ 2014;349:g6709


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