Watchdog warns over NHS financial sustainability

The government spending watchdog has cast doubt on the financial sustainability of England’s National Health Service and its capacity to deliver a much-vaunted plan to secure its future.

The National Audit Office blamed longer queues and waits for treatment and “the existence of substantial deficits in some parts of the system” for its continuing fragility.

The recent funding settlement for the taxpayer-financed service, which injected an additional 3.4 per cent a year, on average, over the next five years, excluded a number of key areas of expenditure such as capital investment for buildings and equipment, disease prevention initiatives and paying for doctors’ and nurses’ training.

Uncertainty over how well funded these areas will be will continue until the government publishes a cross-Whitehall spending review later this year. In addition, the NAO noted: “Without a long-term funding settlement for social care, local NHS bodies are concerned that it will be very difficult to make the NHS sustainable”.

Amyas Morse, the head of the NAO, said the promise of sustained funding growth for NHS England in the longer term, together with the newly-published long-term plan, “should enable a more strategic approach to spending and we can expect to see a less turbulent financial context than in the last few years, if the funding is spent wisely”.

However, the NAO would be able to assess whether the plan’s ambitions would be realised only “when we can see the results of the spending review for the non-NHS England parts of the health service, and the funding for social care,” he stressed.

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The report said performance against key standards for the maximum time patients should wait for treatment had steadily declined since 2012-13 and fell further in 2017-18. While more than 200,000 additional patients were treated in A&E within four hours, performance against the target that 95 per cent of patients should be seen within four hours fell to 88 per cent last year.

There are now 4.1m patients on waiting lists for non-urgent treatment, up from 2.5m in 2012-13.

The agency highlighted staff shortages as a key potential barrier to using the extra money given to the service in the most effective way, raising the prospect that more expensive agency staff would be deployed or that money would go unspent.

In the past, it noted, funding boosts have been spent on dealing with immediate, short-term pressures “with less devoted to the changes required for long-term sustainability”.

The report also underlines the continued problem caused by deep deficits within the NHS. Although the service came close to achieving overall financial balance in 2017-18, “it continues to offset surpluses and deficits, which hides local disparities in financial health and patient experience”.

For example, while NHS England had an underspend of £1,183m, clinical commissioning groups together reported an overspend of £213m and trusts reported a combined deficit of £991m, leaving a combined deficit of £21m.

The NAO also argued that the way money flows between different parts of the NHS was complicated and did not support the more integrated approach, with all levels of the NHS working more closely together, that is one of NHS England’s principal stated aims.

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Trusts told the NAO that payments from a sustainability and transformation fund, designed to bolster trusts that are in the red, “have encouraged trusts to prioritise short-term gains over long-term sustainability which also resulted in reduced collaboration with other local bodies”.

The watchdog also warned that many parts of the NHS did not have a sufficient understanding of why demand for their services was increasing, hampering their ability to manage it.

The NAO recommended that local plans to manage demand needed to be tested to ensure they were realistic, that key risks to delivery of the long-term plan needed to be identified and the development of a sustainable long-term plan to support trusts in severe financial difficulty.


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