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CCGs and trusts are complacent over deficits, says watchdog

BMJ 2019; 364 doi: https://doi.org/10.1136/bmj.l187 (Published 11 January 2019) Cite this as: BMJ 2019;364:l187
  1. Matthew Limb
  1. London, UK

Auditors’ “red flag” warnings about financial instability in NHS and other public bodies are being met with “inadequate or complacent responses,” the financial watchdog has said.

The National Audit Office (NAO) said the number of organisations in England with “significant weaknesses” in their arrangements for delivering value for money was “unacceptably high and increasing.”

Aymas Morse, who heads the NAO, said, “I am shocked by the persistent high level of qualified audit reports at local public bodies. A qualification is a judgment that something is seriously wrong.”

He said local and national bodies must take seriously, and act appropriately, when local auditors highlight weaknesses or concerns to maintain public confidence.

A NAO report on local auditor reporting in England in 2018 was published on 10 January.1 It covers 442 NHS organisations and 495 local councils, local police, and local fire authorities, which together were responsible for £154bn (€171bn; $198bn) net revenue spending in 2017-18.

Each year, local auditors give an opinion on whether public bodies’ financial statements are accurate and comply with reporting requirements, and whether the bodies have arrangements to properly manage their business and finances.

The latest analysis shows that local public bodies have given a “true and fair view” of the financial position.

But more auditors have qualified their conclusion on arrangements to secure value for money over concerns about weaknesses.

In 2017-18, auditors qualified 168 (38%) of local NHS bodies’ conclusions—up from 130 (29%) in 2015-16. The proportion of qualified conclusions in 2017-18 was highest in NHS trusts.

The watchdog said that the current level of qualified conclusions indicated that a “significant number are failing to meet both their annual and longer term financial targets.”

Emma Knowles, head of policy and research at the Healthcare Financial Management Association (HFMA) which represents NHS finance staff, said there were “no surprises” in the NAO’s report and that the current financial challenges facing the NHS were well documented.

She told The BMJ, “The number of qualified value for money opinions given by auditors is directly related to the number of NHS organisations reporting deficits.”

The NAO said that among clinical commissioning groups (CCGs), the rise in qualified conclusions for poor financial performance was “particularly steep”—increasing from 21 CCGs (10%) in 2015-16 to 67 CCGs (32%) in 2017-18.

Henry Black, who co-chairs NHS clinical commissioners’ finance forum and is chief financial officer of NHS North East London Commissioning Alliance, said this reflected increasing financial pressures faced by organisations across the health sector resulting in cumulative overspends.

“CCGs are working hard to live within their means at a time of ever increasing demand in the NHS,” he said.

The NAO report said that there has been an increase in the percentage of CCGs and trusts being referred to the secretary of state since 2015-16 because of failure to meet statutory financial targets.

Local bodies had said they were taking action to tackle the areas identified, but the NAO said that they should do more.

“While auditors are increasingly raising red flags, some of these are met with inadequate or complacent responses,” the watchdog said.

Morse said, “Let us hear no cries of ‘where were the auditors?’ when things go wrong. The answer will be ‘they did the job but you weren’t listening’.”

Meg Hillier, who chairs the Public Accounts Committee, said citizens deserved to know that there were effective arrangements in place to make sure they were getting value for money.

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