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NHS trusts accrue £1.6bn deficit in six months

Published 20/11/2015

A report warns NHS trusts will end the financial year £2.2 billion in debt
A report warns NHS trusts will end the financial year £2.2 billion in debt

NHS trusts in England have racked up a deficit of £1.6 billion in the first six months of the financial year - the worst on record.

Based on current performance, trusts are predicting they will end the financial year £2.2 billion in debt, with 156 out of 239 of them recording deficits, the regulator Monitor said.

The figure has soared above the £820 million overspend for the entire previous year.

The £1.6 billion overspend is also £358 million more than planned for at the start of the year.

A report from Monitor and the Trust Development Authority (TDA) said NHS trusts also struggled to achieve several key NHS targets for good patient care.

Delayed transfers of care - where medically fit patients cannot leave hospital because the care they need is not yet in place in the community - are having a negative impact on the NHS, the report said.

High spending on expensive agency staff is also "continuing to have an extremely detrimental effect" on the financial position of NHS trusts, it added.

Some trusts argue they are struggling to fill rota gaps due to too few staff and are forced to turn to agency workers.

The Government has capped agency spending, with new hourly price caps limiting the amount of money various types of agency staff working in the NHS can earn.

Controls on spending on expensive management consultants also came into force over the summer and are expected to have an impact by the end of the year, Monitor said.

Overall, in the second quarter of the financial year, 190 out of the 241 NHS providers reported a deficit.

Richard Murray, director of policy at the King's Fund, said: " Today's figures show the NHS is in the grip of an unprecedented financial meltdown.

"Deficits on this scale cannot be attributed to mismanagement or inefficiency. Quite simply, it is no longer possible for the vast majority of NHS providers to maintain standards of care and balance their budgets."

Today's report said NHS trusts spent £1.86 billion on agency staff in the first six months of the financial year, "especially agency nurses and locum doctors, employed to meet unplanned activity, inefficient use of permanent staff and a shortfall in the permanent workforce due to recruitment difficulties".

"In addition, we estimate that delayed discharges cost providers £270 million in the year to date."

All three ambulance response time targets were missed, although a hospital target to treat patients within 18 weeks of referral by their GP was hit.

Hospitals also treated 82.1% or 35,530 cancer patients referred by GPs within 62 days of referral, missing the 85% national target.

A key reason for this was delays in providing key diagnostic tests, the report said.

Mr Murray said: " We are now halfway through a decade which will see the largest sustained fall in NHS spending as a share of GDP since 1951.

"Services are under huge pressure, with the latest data showing that the A&E target has not been met for a year and delayed discharges at record levels. While there is still scope to improve productivity, this requires upfront investment to release savings and will take time to deliver results.

'If the Chancellor needed a wake-up call ahead of next week's Spending Review, this is it."

Jim Mackey, chief executive designate of NHS Improvement, said: "Today's figures make for really challenging reading - not least for those NHS organisations that are missing national standards and going into deficit for the very first time."

Anita Charlesworth, chief economist at the Health Foundation, said the figures showed a "deepening financial crisis".

She added: "Today's figures confirm the truly dire state of NHS finances. They underline the need for realistic hospital budgets, enough trained staff, investment in prevention to tackle rising demand, and sustained practical support for hospitals to unlock efficiency savings while maintaining quality of care for patients."

Shadow health secretary Heidi Alexander said: " These figures paint a worryingly bleak picture of an NHS in financial crisis and under severe pressure.

"The key cause of the black hole in hospital finances, as Monitor states in its report, is the rising bill for agency staff.

"Ministers must accept that their cuts to nurse training commissions, which created a shortage of qualified nursing staff, was a monumental mistake which is now costing the NHS dear."

A Department of Health spokesman said: "We know finances are challenging, but this Government is committed to the NHS and its values - which is why we're investing £10 billion to fund its own plan for the future.

"The NHS must play its part in delivering efficiencies and we're supporting it with new measures to help hospitals clamp down on expensive staffing agencies and cut spending on management consultants.

"We expect the impact of these to be reflected later in the year and, along with other savings across the system, we are confident we will end the year in financial balance."

Janet Davies, chief executive of the Royal College of Nursing, said: "The NHS is staring into the financial abyss and while these reports reappear with startling frequency, precious little is being done about it.

"The NHS needs an urgent cash injection. The Government has promised billions, but it has yet to appear and the NHS can't wait any longer for this money.

"If the Government hopes to solve this financial crisis by capping agency spend, it will be disappointed. This crisis was not caused by agency staff.

"While it is right to reduce the money spent on short-term staffing, this should be done by increasing the supply of long-term staff, by training more nurses and paying them fairly."

Paul Healy, senior policy adviser on economics and regulation at the NHS Confederation, said: "Today's figures released by Monitor are alarming but unsurprising.

"Finances in the NHS are in free fall and each quarterly report merely confirms this.

"Cuts to social care and increased demand have left our acute provider members in particular under extreme pressure."

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