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£2.45bn NHS trusts deficit sparks fears over future patient care

Published 20/05/2016

Figures are expected to reveal a massive NHS deficit
Figures are expected to reveal a massive NHS deficit

NHS trusts have recorded the biggest ever deficit in the history of the health service, prompting fears about the future of patient care.

Data shows NHS trusts ended the last financial year a record £2.45 billion in deficit, lower than the £2.8 billion which had been predicted, but almost three times bigger than the previous year.

Overall, 65% of the 240 trusts are in deficit with nearly all hospitals ending the year in the red and the chief executive of NHS Providers has said that cost-cutting alone is not enough to solve the problem.

The data comes as the NHS struggles to hit key targets, with performance against the four hour A&E waiting times target at its lowest ever level and the highest ever number of patients being delayed leaving hospital due to inadequate community and social care.

Some have argued the massive black hole actually represents huge government under-investment in the NHS as the health service deals with more patients than ever and increasingly complex cases as people live longer.

The UK spends a smaller proportion of its GDP on health care than countries such as Portugal, France and the Netherlands.

Earlier on Friday, there were claims that the deficit was only kept below the £2.8 billion prediction through financial "alchemy".

The Nuffield Trust said trusts had been pressurised to make "accountancy adjustments", including reclassifying capital budgets as revenue, claiming for five quarters' (15 months') worth of VAT rebates and reviewing accounting policies.

Speaking to the BBC, an unnamed NHS trust finance director accused the Department of Health of financial "alchemy" as it sought to keep within spending limits set by the Treasury.

But a Department of Health spokesman said: "We are committed to the NHS and are investing £10 billion in its own plan for the future, and it is vital that money is accounted for consistently.

"The transfer from capital to revenue makes no difference to the overall departmental picture given Parliament has voted to approve it - to say otherwise is misleading.

"Our financial statements will be audited by the independent National Audit Office."

Nuffield Trust senior policy analyst, Sally Gainsbury, said: " This shortfall is much more than can be accounted for by often discussed issues with agency staffing - extra spending linked to this accounts for only £760 million.

"These gaps result from several years during which the amount paid for treatments has been cut faster than trusts can cut their costs."

The deficit was revealed in NHS Improvement's quarter four financial and performance figures.

NHS Providers chief executive Chris Hopson said the record deficit is "simply not sustainable. We have to rapidly regain control of NHS finances otherwise we risk lengthening waiting times for patients, limiting their access to services, and other reductions in the quality of patient care."

He said NHS trusts had a big part to play in turning the deficit round.

"But the financial challenge before them today is much tougher than before, so they need more help than ever from national NHS leaders," he said.

"We already devote a lower percentage of our nation's wealth to the NHS than France, Germany, Sweden or Greece, but by 2020 public spending on the NHS is set to drop further to below 7%.

"This is simply not enough and we need to stop pretending it will be. In the end, you get what you pay for.

"There is now a clear gap between the quality of health service we all want the NHS to provide and the funding available.

"What we can't keep doing is passing that gap to NHS trusts - asking them to deliver the impossible and chastising them when they fall short. Not least because it is placing an increasingly intolerable burden on NHS staff whose commitment and discretionary effort are the lifeblood of our NHS."

Writing in The Times, he questioned whether more A&E closures would be necessary as well as attempts to save money through improving efficiency.

He said: "No one in the NHS believes that these savings will be enough to cover the large financial gap that is rapidly opening up.

"We are therefore going to have to ask difficult questions about the pattern of health services. Does it make sense to keep open two A&E departments only 14 miles apart?"

Shadow health secretary Heidi Alexander, said: "The NHS is now in the deepest cash crisis in its history.

"The Tories have lost complete control of hospital finances and it's patients who are paying the price."

Richard Murray, director of policy at health charity The King's Fund, said: " These figures are unprecedented.

"Overspending on this scale is not down to mismanagement or inefficiency in individual trusts - it shows a health system buckling under huge financial and operational pressures."

John Mills, chairman of the Labour Leave campaign in the EU referendum, said: "The latest NHS figures show that Britain's public services are struggling to cope with open-door migration.

"The net cost of the EU is about £210 million every week. This money could be much better used shoring up our public services, which are nearly at breaking point."

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