News / Finance directors downbeat over future as King’s Fund puts provider deficit at £800m

Its quarterly review, which includes a survey of provider and commissioner finance directors, also said that almost 60% of trust finance directors had needed additional financial support or, in foundation trusts, to draw down their reserves. 

The review, How is the NHS performing?, said 41% of trusts had used reserves, 13% had received additional financial support and 3% had done both. The financial support included public dividend capital and loans from the Department of Health Independent Trust Financing Facility.

Trust and clinical commissioning group confidence in achieving their planned cost improvements has been in decline since 2011. About half of trust finance directors were fairly or very concerned about achieving their cost improvement programme in 2014/15. This compares with 38% at the same point in 2013/14.

And about 30% of CCG chief finance officers were fairly or very concerned about meeting their QIPP savings targets – some 26% were concerned about achieving their 2013/14 targets.

Looking ahead, three-quarters of trust finance directors believe there is a high or very high risk of failing to achieve the productivity gains set out in the Five-year forward view. CCG finance leads are similarly pessimistic, with two-thirds believing the risk of failure is high or very high.

Finance chiefs continue to be downbeat about the prospects for 2015/16, with two-thirds of hospital finance directors worried about staying within budget. Commissioners were more optimistic, with 40% of CFOs anxious about their ability to balance the books in 2015/16.

Richard Murray, King’s Fund director of policy, said the picture was gloomy. ‘The health service enters the new financial year facing some of the biggest financial and performance challenges in its recent history. If last year was the most difficult for some time, this year promises to be much worse, with little confidence that the alarming deterioration in NHS finances can be arrested.

‘Looking further ahead, while there is still significant scope to improve productivity in the NHS, efficiencies are becoming harder to generate. There is considerable scepticism the £22bn in productivity improvements outlined in the Five-year forward view can be achieved.’

HFMA policy director Paul Briddock agreed the efficiency savings would be a huge challenge, calling for radical new ways of providing care.

‘It’s no surprise there is this level of scepticism among finance directors around the achievability of the overall scale of the challenge despite those funding pledges. This mirrors the HFMA’s temperature checks over the last year, where finance professionals have taken a pragmatic and realistic view of what’s achievable.’

Financial support

The King’s Fund quarterly review said that in 2014/15 NHS providers received significant financial support from national bodies. This included £640m taken out of capital spending and switched into revenue and a further £250m provided by the Treasury. It added that whether the health budget overall will overspend depends on further increases in CCG underspends and performance against the other health budgets managed by the Department of Health and other national bodies. CCG underspends are forecast to be £135m.