News / King’s Fund spells out challenge facing incoming government

The NHS Trust Development Authority (TDA) said at quarter three, the non-foundation sector predicted a net deficit of just over £448m. This compared with a planned deficit of almost £406m.

TDA board papers said the net deficit was forecast despite trusts expecting to deliver £1.3bn of efficiency savings in 2014/15. Under-delivery of cost savings, coupled with unplanned growth in demand for care in hospitals – particularly
in urgent and emergency care – and a
significant increase in the use of agency and contract staff, had led to the adverse net forecast variance of £42m.

While 64 NHS trusts (65%) predicted they would break even, 35 forecast a combined deficit of £571m. More than half of acute trusts forecast a deficit. The papers said rising demand for hospital care had adversely hit NHS trusts – leading to increased costs of more than £258m, the bulk of which (£218m) affected acutes.

Where this activity is in urgent and emergency care, it is often paid for under the marginal rate emergency tariff and the effect of this deduction was worth £174m. This was further compounded by penalties on providers for not managing activity, totalling £145m.

At quarter three, foundation trusts reported an aggregate £321m deficit and forecast this would rise at year-end to £375m. If the NHS trust and foundation forecasts prove correct, the provider sector could end the financial year with a deficit of more than £800m.

NHS England published month 10 figures, showing a forecast underspend across all commissioners of £197m (0.2%), driven primarily by one-off factors. Clinical commissioning groups predicted a £135m underspend at year end, which includes a £66m underachievement on the quality premium.

In addition, CCGs have reassessed their rate of spending against legacy continuing healthcare provisions. This has indicated that £94m of the £250m risk pool will be required in 2014/15, with a proportion of the liability moving to 2015/16. The resulting rebate has allowed 148 CCGs to revise their forecasts upwards.

Following the action taken by NHS England to secure stronger control over specialised commissioning, the position has remained stable since month eight, with a forecast net overspend of almost £168m.

In its second analysis of the NHS under the coalition government, the King’s Fund said performance had held up well for the first three years. The government had met its pledge to increase the NHS budget in real terms, averaging 0.8% a year over the five years. The number of doctors and nurses had increased, patient experience remained positive and healthcare-acquired infection had fallen. But performance had now deteriorated, with waiting times at their highest levels for a number of years and several key targets missed.

‘The next government will inherit a health service that has run out of money and is operating at the very edge of its limits,’ said King’s Fund chief economist John Appleby. ‘While the NHS has performed well in the face of huge challenges, there is now a real risk that patient care will deteriorate as service and financial pressures become overwhelming.’

However, he added that, with the economy improving, spending on health could increase.