Treasury bails out England’s health department

The UK Treasury has been forced to bail out the Department of Health for England with a £205m (€260m; $300m) cash injection for the 2015-16 financial year.

This means that the department’s budget for the year will rise from £98.7bn to £98.9bn. The Treasury, which announced the increase in funding as part of its annual supplementary estimates, blamed the extra funding on a shortfall in the Pharmaceutical Price Regulation Scheme payment for 2015-16 being £640m rather than the £796m expected when the budget was set.

Anita Charlesworth, director of research and economics at the think tank the Health Foundation, said that the bailout reflected the “dire state” of the health department’s finances. She said, “The capital transfer will help the NHS avoid an immediate crisis but will not solve its financial woes. The NHS urgently needs practical support to help it deliver productivity gains.

“But there must now be serious doubts about whether it can realise the £22bn of savings required by 2020-21 while also maintaining the quality and range of services on offer.”

The increase in the budget comes at a time when NHS productivity in acute care hospitals has fallen for the third year in a row, shows an analysis by the Health Foundation.1 The foundation discovered that productivity fell between 2013-14 and 2014-15 by 0.96%. This was an improvement on the previous year, when productivity fell by 1.92%. In 2012-13 productivity fell by 0.87%. Over the past five years productivity increased by 0.1% in total because of gains of 0.74% in 2010-11 and 3.37% in 2011-12.

The Health Foundation’s report warned that NHS hospitals were struggling to find savings and that the NHS needed a new approach if it was going to “reverse the recent deterioration in hospital productivity, make £22bn of efficiency savings, and transform the delivery of care for the long term.”

The report continued, “To achieve these improvements the NHS needs a clear policy framework—including a realistic tariff, a clear accountability framework, and multi-year budgets—but also financial and practical support to help realise recurrent efficiency savings and transform the delivery of care.”