Our response to NHS Improvement and NHS England "reset" and Department of Health accounts

Comment from Nuffield trust on NHS Improvement/NHS England announcement on NHS finances.

Press release

Published: 21/07/2016

Commenting on the announcement this morning by NHS Improvement and NHS England of a new ‘special measures’ regime for NHS organisations in financial difficulties (see note 1), Nigel Edwards, Chief Executive of the Nuffield Trust think-tank said:

“NHS Improvement has singled out five Trusts to be put into ‘financial special measures’ today – but with almost nine out of 10 acute hospital Trusts in deficit at the last count, the idea that this is a problem caused by ‘a few bad apples’, where the management simply doesn’t try hard enough to balance the books, is long gone.   The fact is that it’s almost impossible for Trusts NOT to run up deficits when they’re being paid less in real terms than they were five years ago to perform the same treatments - our research shows that procedures for which hospitals were paid £1,000 in 2010 were only earning them £925 in cash in 2015, the equivalent of only £800 after inflation.  So in effect their income per patient is dropping all the time, even though they are providing the same or higher levels of care.

“It’s also very worrying that so many Clinical Commissioning Groups are now getting into financial difficulties.  CCGs may seem like an obscure part of the NHS system to patients, but these are organisations that hold the purse-strings for hospital care – if they are getting into financial trouble now, then the hospitals they pay the money to are going to be in even bigger trouble later.

“My big worry is what happens next.  I fear that in order for hospitals to virtually eradicate their deficits as NHS Improvement and NHS England want, the next steps could be a series of brutal service reductions and bed closures – which will shock an unprepared public”.

On the publication of the Department of Health’s annual report and accounts, Nigel Edwards said:

“The DH has managed to avoid breaching the parliamentary limit on its spending only through a highly irregular “administrative error” which meant it had an extra £400m to play with. Even with that, the DH had rely on a series of unusual and one-off accountancy measures to create a veneer of financial balance which is not reflected in anyone’s reality.  As the National Audit Office has pointed out, these efforts have focussed on short-term Whitehall aim of balancing the budget while neglecting the more important issue of the long-term sustainability of the NHS.”

Notes to editors