The National Audit Office (NAO) warned that ‘aggressive efficiency targets’ had increased the proportion of NHS trusts in deficit to more than two thirds in 2015/16.
The independent audit body called on the NHS and DH to assess whether national and local sustainability plans, which aim to save £22bn by 2020/21, are achievable. The NHS should set realistic and informed efficiency and savings targets for local NHS bodies, it added, warning against ‘overly optimistic targets’ that could be ineffective.
The combined deficit of NHS trusts and commissioners increased more than three-fold to £1.85bn last year, while provider trusts’ deficits went up by 185% to £2.4bn, the NAO warned.
The number of CCGs reporting cumulative deficits was increased to 32 in 2015/16 from 19 in the previous two years.
In its report on NHS finances the NAO raised concerns over the DH's use of capital funding to plug day-to-day funding gaps, which it said could threaten trusts’ ability to reach financial sustainability.
‘Efforts to get NHS finances on track,' the report added, ‘such as large savings and efficiency targets, have damaged trusts’ financial positions and contributed to the current situation.’
The auditors said there was evidence that the financial strain of the service was affecting quality of care. Trusts’ performance against access targets had declined, it said, and the report found an association between poor finances and lower quality ratings.
Head of the NAO Amyas Morse said: ‘With more than two-thirds of trusts in deficit in 2015/16 and an increasing number of CCGs unable to keep their spending within budget, we repeat our view that financial problems are endemic and this is not sustainable.
‘It is fair to say aggressive efficiency targets have helped to swell the ranks of trusts in deficit over the last few years. The DH, NHS England and NHS Improvement have put considerable effort and funding toward stabilising the system, but have a way to go to demonstrate that they have balanced resources and achieved stability as a result of this effort. Therefore, value for money from these collective actions has not yet been demonstrated.’
King’s Fund director of policy Richard Murray said: ‘The National Audit Office is right to be concerned about NHS finances. There is already strong evidence that patient care is being affected by financial pressures and we share the NAO’s concerns about capital funding being used to plug short-term financial gaps.
‘The government will need to look again at NHS funding in future financial statements. In particular, the pressures will peak in 2018/19 and 2019/20, when there is almost no planned growth in real-terms NHS funding.
‘For this week’s Autumn Statement, the most pressing priority must be to find more funding for social care. Not only is the social care system increasingly struggling to meet the needs of older people, their families and carers, but extra funding for social care will also help relieve pressure on the NHS.’