Our response to financial figures from NHS Improvement

Sally Gainsbury responds to the release of NHS trust financial figures from NHS Improvement for the 2015/16 year.

Press release

Published: 20/05/2016

Commenting ahead of today’s release of NHS trust financial figures from NHS Improvement for the 2015/16 year, Nuffield Trust Senior Policy Analyst Sally Gainsbury said:

These figures are expected to show NHS trust performance improving from the start of the year, when they ran up a deficit of nearly £1 billion in just three months. However, this is the result of accountancy adjustments which have not changed the underlying £3.5bn gap between the costs of providing hospital and community health services and the funds those services receive.

“These figures are expected to show NHS trust performance improving from the start of the year, when they ran up a deficit of nearly £1 billion in just three months. However, this is the result of accountancy adjustments which have not changed the underlying £3.5bn gap between the costs of providing hospital and community health services and the funds those services receive.

“That £3.5bn gap is the result of five successive years of cash cuts to the amount hospitals and providers get paid for the treatments they give patients. This meant that by 2015-16, providers were paid £925 in cash terms for a procedure they would have received £1,000 for in 2011-12: a real terms cut of 20 per cent.

“NHS Trusts have made cost efficiencies, but not as fast as their funds have been cut. In order to eliminate the underlying deficit by the end of next financial year, providers will need to make year on year cost cuts of 4%: twice the rate of at which Lord Carter’s recent report on hospital efficiency found was possible, and higher than any year in the last decade.

“The NHS has now already started the five years in which it must deliver £22 billion of savings, yet that ambitious target looks further away than ever.”

Notes to editors

  • Over the last five months NHS providers have come under increased pressure to change the way they present their deficits in their accounts. This pressure has been influenced by the desire to reduce the total national deficit to a figure close to £1.8bn, needed to allow the Department of Health to keep within the spending limit set by the Treasury. Accountancy measures include reclassifying capital budgets as revenue; claiming for five quarters (15 months) worth of VAT rebates and reviewing accounting policies so as to recognise as much income and as little expenditure as possible. As well as being purely presentational, many of these measures can only be taken once and so simply delay for another year the point at which true scale of the underlying problem will be laid bare.

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