NHS Providers reacts to Q1 figures and publishes survey of finance directors
25 August 2016
The overall provider sector deficit at quarter one 2015/16 was -£930 million. The NHS is investing an extra £1.8 billion this year to reduce this deficit. This quarter, supported by the relevant share of this money, the deficit has fallen to -£461 million.
Given that, historically, first quarter results have been poor in recent years, this is a strong performance that has resulted from hard work locally and a clear national plan. However, a survey of finance directors published today by NHS Providers gives strong reason to be cautious about the rest of the year. The survey of finance directors from 84 NHS acute, mental health, community and ambulance trusts found that:
- While almost half (47%) of trusts were ahead of their target at the end of the first quarter and a third were on target, the final fifth (21%) were worse-off than anticipated.
- Finance directors from almost 4 in 10 (38%) trusts are not confident of meeting the financial targets (so called ‘control totals’) they have been set by regulators for the end of 2016/17. A third were ‘unsure’ and the final third were ‘fairly confident’. Some of the main reasons for concern included: not being able to reduce agency staff costs, lack of bed capacity, not being able to manage the rise in A&E attendance and emergency admissions to hospital, and the ongoing impact on the NHS of cuts to social care.
- Further doubts about the sustainability of the first quarter results were raised by the way trusts can access the £1.8 billion ‘sustainability and transformation funding’. As a number of finance directors pointed out in the survey, there are significant incentives on trusts to declare they are on track at quarter one to ensure access to the sustainability and transformation funding, which they might otherwise lose.
- Finance directors were also asked how effective they believe the recent wave of financial measures introduced by NHS Improvement and NHS England were likely to be. These include tough control totals and placing some trusts into financial special measures. However, most finance directors have little or no confidence that these measures will help the NHS to achieve financial sustainability this year. Specifically, more than half (54%) were not confident that financial special measures for trusts would work, while 58% were not confident in measures to curtail increases in staff costs.
“It is positive news that NHS trusts have managed to slow the runaway train on NHS provider sector deficits. Many trusts are either on target or ahead of where they planned to be at this stage of the year. This is encouraging given that trusts are often off track in this quarter, recovering their position towards the end of the year. The £1.8 billion support for provider deficits and the first sensible tariff efficiency targets in years are having the desired effect.
There is now a clear and widening gap between what the NHS is required to deliver and the funding available
“However, any sense of optimism must be tempered by what finance directors are telling us. Nearly four in 10 finance directors are saying they will be unable to sustain this level of performance and expect their trust’s position to worsen over the rest of the year. They are not confident because of the sheer scale of the challenge they face but also because they do not want to miss their first quarter numbers and then lose access to the extra money.
“These findings show the strain NHS trusts are operating under. There is now a clear and widening gap between what the NHS is required to deliver and the funding available. This will only get worse as overall funding increases drop from next year. In reality, we have only just kept our heads above water because we have transferred the investment intended to fund long term transformation into reducing the deficit that the majority of NHS trusts face."
Commenting on the performance figures, which show record increases in A&E attendance, Chris Hopson said:
“The fact that the number of people attending A&E is at a record high is further evidence that demand on our local health services is far outstripping the money they are receiving. A&E departments up and down the country are being placed under increasing pressure, and even the best A&E departments are struggling to maintain their performance. There is now a fundamental mismatch between what is being asked of emergency services and the resources they have at their disposal. It’s hard to see how we can maintain high levels of A&E performance for patients within the funding we have available.”
The survey of finance directors is published in the report, The state of NHS finances at Q1 2016/17: a survey of finance directors. The survey is accompanied by a blog from survey author Edward Cornick which provides more analysis and details of the views of finance directors.