National Audit Office finds parts of NHS ‘seriously financially unstable’

The National Audit Office has published two reports. The first, NHS financial management and sustainabilitylooks at the financial and operational performance of the NHS as a whole, as well as the financial performance of local NHS organisations. The second, Review of capital expenditure in the NHS, examines the use of the NHS capital budget, which is for replacing and maintaining equipment and buildings.

The NAO has concluded that parts of the NHS are “seriously financially unstable” and trusts are building up levels of debt they are unlikely to ever repay.

NHS provider trusts reported a combined deficit of £827m and clinical commissioning groups (CCGs) a £150m deficit in the financial year ending 31 March 2019, according to the NAO and extra money provided by the government to stabilise the finances of individual NHS bodies had not been fully effective.

The NAO note that the trusts in financial difficulty are relying on short-term loans from the Department of Health and Social Care (DHSC), but these are being treated as income by trusts.

Meg Hillier, the chair of the public accounts committee, said the NAO reports showed that the NHS was “addicted to unacceptable short-term fixes” to cover longstanding problems.

“Hospitals have built up loans they’ll never repay, workforce shortages continue and waiting times are getting longer. There is no long-term plan for social care in sight, but what is clear is the lack of investment in public health, equipment and buildings. It is the start of a new parliament and the Department of Health and Social Care needs to urgently get a grip and wisely use the new money it’s been given,” she said.

The capital budget for buildings and maintenance has been repeatedly raided by the government in order to fund day to day work of the NHS; in the past five years, the government has transferred £4.3 billion from capital to revenue budgets.  The NAO notes that the government has been unable to clearly say how this has affected patient services, the rising demand for capital spending and the growing maintenance backlog means there is an increasing risk of harm to patients.

Over the last three years, NHS providers have requested on average £1.1 billion more for buildings and equipment than their spending limits allow. Fourteen per cent of NHS buildings are older than when the NHS was formed (in 1948). The backlog of maintenance work to get all buildings up to standard currently stands at about £6.5 billion.

Full details can be found at the National Audit Office