Public Accounts Committee

The Financial Sustainability of the NHS inquiry

Inquiry status: Concluded

Report published 27 February 2017. Government response published 12 October 2017.

Report and response published

Scope of the inquiry

The financial performance of NHS bodies worsened considerably in 2015–16 and this trend is not sustainable, according to the National Audit Office.

In 2015–16, NHS commissioners, NHS trusts and NHS foundation trusts reported a combined deficit of £1.85 billion, a greater than three-fold increase in the deficit position of £574 million reported in 2014–15. Provider trusts' overall deficit grew by 185% to £2.45 billion, up from £859 million in 2014–15, against total income of £75.97 billion.  In addition, two-thirds of NHS trusts (65%) and NHS foundation trusts (66%) reported deficits in 2015-16, up from 44% of NHS trusts and 51% of NHS foundation trusts in the previous financial year. The number of clinical commissioning groups reporting cumulative deficits was 32 in 2015–16, up from 19 in both 2014–15 and 2013–14.

National Audit Office report

According to the NAO report, the NHS entered the current financial year from a worse than expected starting point. This year's plans were based on trusts ending 2015–16 with a combined deficit of £1.8 billion. The fact that trusts ended the year with an even larger deficit means that they will, overall, need to make more savings than planned to reach the intended starting position. Many of the savings made by NHS England in 2015–16 were one-off in nature.

NHS trusts and NHS foundation trusts under financial stress continue to rely on financial support from the Department and NHS England. The total amount of financial support funding provided by the Department and NHS England in the last financial year was £2.4 billion. This was an increase of 32% from £1.8 billion in 2014–15. The Department has transferred £950 million of its £4.6 billion budget for capital projects, such as building works and IT, to funding for day-to-day spending. While this helped it to manage the NHS' financial position in 2015–16, it could risk trusts' ability to achieve sustainable service provision.

There are indications that financial stress is having an impact on access to services and quality of care. Trusts' performance against important NHS access targets has worsened, and the NAO found an association between trusts' financial performance and their overall Care Quality Commission rating, with those that achieved lower quality ratings also reporting poorer average financial performance. The 14 trusts rated 'inadequate' had a net deficit equal to 10.4% of their total income in 2015–16.

The Chair of the Committee of Public Accounts has raised some of these issues following the Autumn Statement and directly with the Prime Minister (PDF PDF 252 KB).

Publications

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