News / ‘Toxic mix’ of NHS pressures leads to pessimistic outlook

The NHS is entering dangerous financial territory and displays the symptoms of a service that is struggling to meet patient demands with inadequate funding, the King’s Fund has said.

Publishing its latest quarterly monitoring report, the fund said the health service faced a ‘toxic mix’ of widespread deficits, failing operational targets and low staff morale. The report followed gloomy quarter one figures from Monitor and the NHS Trust Development Authority (TDA), in which providers recorded an aggregate deficit of £930m – a total of £164m above plan for the first three months of the year.

This position was underlined by the fund’s second quarterly monitoring report in this financial year. The survey of 90 trust finance directors and 50 clinical commissioning group finance leaders showed 64% of all providers – 88% of acute trusts – expected to overspend their budget by the end of the financial year.

The position appeared to be getting worse in CCGs, where 18% of finance leaders predicted a year-end deficit – the greatest proportion since the fund began surveying them in April 2013.

Almost three-quarters (72%) of trusts reported their year-end outturn would depend on extra financial support from their reserves, the Department of Health (loans or additional public dividend capital) or both. In the previous quarter 59% of trust finance directors said they would require support.

While 54% of trust finance directors were concerned about achieving this year’s cost improvement programme (CIP), about 44% of CCG finance leads were worried about meeting their QIPP quality and productivity targets.

Finance professionals also voiced fears about the recently announced curbs on agency staff spending. More than a quarter (27%) of trust finance directors said the controls would affect their ability to ensure safe staffing levels.

Staff morale and delayed discharge topped trust finance directors’ list of concerns, while CCG finance leads were most anxious about delivery of waiting times targets.

King’s Fund chief economist John Appleby said: ‘The quarterly monitoring report reveals the financial crisis engulfing the NHS and social care. With winter approaching, the NHS faces a toxic mix of widespread deficits, rising waiting times and low morale.’

He added that finance directors were increasingly concerned about the impact of social services cuts on the NHS, with almost 90% believing that they were having an adverse effect. Delayed transfers of care attributable to social care increased by more than 21% over the 12 months to August 2015.

‘There is now clear evidence that cuts to social care budgets are affecting the NHS, as well as reducing services for people that need them,’ Mr Appleby added.

Although the NHS had received additional funding this year, the King’s Fund argued that this would be wholly absorbed by the better care fund. Finance directors were sceptical about the impact of the fund, with 80% of trust directors concerned it would achieve planned reductions in emergency activity.

NHS Providers director of policy and strategy Saffron Cordery said the message from the report was ‘stark and sobering’.

‘The harsh reality is that 2015/16 is the most difficult year for the NHS this century. If we are to get out of the vicious circle of spiralling deficit, rising waiting times and low staff morale, we need the centre to work with the sector in an unprecedented way, one that fully funds the new approaches set out in the Five-year forward view and delivers the strongest policy, funding and regulatory framework possible,’ she said.