Rising NHS operational and financial pressures

April–November 2014

Over the course of 2014, key stakeholders expressed concerns over NHS financial and operational issues.

The Health Select Committee and the Government

In its response to the Health Select Committee report into Public Expenditure on Health and Social Care, published on 4 April 2014, the government agreed with the committee's conclusion that the NHS was facing a serious financial challenge.

While the government accepted that the financial pressures remained great, it disagreed with the Health Select Committee's view that the savings made by the NHS during the first 2 years of the Quality, Innovation, Productivity and Prevention (QIPP) challenge were unsustainable. The government stated that its work on integrating health and social care through the Better Care Fund (BCF), and its commitment to protecting the health budget in real terms, should contribute to long-term financial sustainability.

Alongside establishing the BCF, to reduce the financial pressures on the NHS, the government had negotiated with the pharmaceutical industry to cap the NHS drugs bill and taken action to ensure migrants and visitors paid for their use of services.

The government stated that the savings made through QIPP had been spent in meeting the rising demands for services, arising as a result of an ageing population, while maintaining the quality of NHS services. The government emphasised that its approach to health and social care services was to design services around the needs of communities, rather than through mandated, top-down administration.

NHS England Board

In May, papers produced by NHSE for its board meeting generated media attention, as they openly suggested that the 2014/15 financial year would be extremely challenging. The consolidated 2013/14 finance report outlined the 2013/14 financial results across all commissioners prior to external audit.

Clinical Commissioning Groups (CCGs) had marginally underspent and services directly commissioned by NHS England had overspent by £347m. 19 CCGs ended the year in deficit, with 44 of the 211 CCGs overspending against their financial plan.

'We face a very challenging financial environment in 2014/15 and beyond, and this will be made significantly more acute in 2015/16, when £1.9bn additional investment is made from CCG allocations into the Better Care Fund.'

The Public Accounts Committee

The Public Accounts Committee published its sixth report of the session on regulating NHS foundation trusts on 4 July. The Committee raised concerns about the numbers of foundation trusts in financial difficulty, noting that by December 2013, one in six foundation trusts were in breach of the conditions set when they were authorised.

The committee suggested that some trusts had been allowed to struggle for too long and that Monitor's job would become harder as more trusts experienced financial difficulty.

The committee also requested that the Department of Health explain how it intended to meet the objective of all NHS trusts becoming NHS foundation trusts, given the slow progress towards that objective.

The Secretary of State for Health

On 4 August, Jeremy Hunt announced a 'managed breach' of key waiting time targets for several months, while additional funding of £250m would be given to acute trusts to reduce the backlog of people on waiting lists.

By focusing on reducing the numbers waiting for treatment, and on those who had waited longest for treatment, it was likely that the system would miss the target of 90% of patients waiting less than 18 weeks from referral to treatment.

Monitor

Analysis by health sector regulator Monitor in September 2014 suggested that NHS foundation trusts were under unprecedented financial and operational pressures.

Monitor reported that 86 NHS foundation trusts were in deficit as of June 2014 and that the combined deficit of the 86 foundation trusts was £227m. 80% of the 86 trusts were acute trusts.

The deficit was offset by 61 foundation trusts making a surplus of £60m. The total deficit for the foundation trust sector was £167m for quarter 1.

Foundation trusts spent £391m on contract and agency staff, which was more than double the planned amount to spend.

Monitor suggested that a combination of the increase in the number of patients being treated, the requirements to make cost savings and the use of contract and agency staff had led to NHS foundation trusts being put under exceptional financial pressure.

NHS Trust Development Authority

In November, the NHS Trust Development Authority (TDA) reported that the NHS trust sector was under significant financial pressure.

26 NHS trusts forecast that they would be in deficit at the end of 2015, to a combined value of £436.5m.

Non-recurrent provider deficit funding was made available to a number of NHS trusts that exhibited particular financial challenges which affected the overall sustainability of the trust, or that could use the funding to accelerate recovery to financial balance.

The TDA attributed the deficits to three key drivers. These were:

  • an unpredicted growth for care in a hospital setting
  • a failure to deliver the levels of cost improvement schemes planned at the start of the financial year
  • a significant increase in spend on contract and agency staff.

NHS trusts varied regionally in their financial performance in 2014/15. As of September 2014, London had 40% of NHS trusts forecasting a deficit, compared to 16% in the north. Acute NHS trusts faced significant levels of financial pressure compared to other sectors. 41% of acute NHS trusts predicted a deficit in 2014/15, compared to 0% for the ambulance sector.

Source(s)

Department of Health.
Government response to the House of Commons Health Select Committee report into Public expenditure on health and social care (seventh report of session 2013-14).
HMSO; 2014.

Baumann P.
Consolidated 2013/14 finance report.
NHS England; 2014.

Public Accounts Committee.
Monitor; regulating NHS foundation trusts.
Parliament; 2014.

West D.
Hunt; care targets to suffer 'managed breach'.
Health Service Journal; 2014.

Monitor.
NHS foundation trusts under pressure from rising demand.
gov.uk; 2014.

NHS Trust Development Authority.
Annual Report and Accounts for the period 1 April 2014 - 31 March 2015.
HMSO; 2015.