The Department of Health is still some way from implementing a plan to put the NHS’ finances in England on a sustainable footing, according to three reports issued by the Comptroller and Auditor General, Sir Amyas Morse, who leads the National Audit Office (NAO).
These concern the accounts of the Department of Health, NHS England and the Consolidated Accounts of the NHS Foundation Trusts.
The NAO reported that the Department has kept within the voted budgets set by Parliament for revenue (RDEL) by £210 million and capital (CDEL) by £58 million. The Department’s budgets for 2015-16 were: £114.7 billion (RDEL), and £3.6 billion (CDEL). The Department received an extra £417 million of receipts from the National Insurance Fund, more than originally anticipated. The Department did not notify HM Treasury of these extra receipts that it received from HMRC. Therefore neither HM Treasury nor Parliament had the opportunity to consider whether to reduce any voted funding for the Department by an equal and opposite amount. Without these extra receipts, the Department would have exceeded its voted RDEL. This meant that the Department exceeded its total budget by £207 million, but remained within its voted RDEL budget by £210 million.
The failure to follow well-established practice in relation to these National Insurance receipts has been ascribed by the Department to an administrative error. HM Treasury has chosen not to impose fines on the Department due to this overspend against its budgetary controls.
The NAO also reported that local NHS Trusts also ended the year with a combined deficit of £2.45 billion (Foundation Trusts with £1.1 billion and NHS Trusts with £1.35 billion). However, the problems are not confined to non-Foundation Trusts and all providers are experiencing growing demand coupled with rising costs.
In November 2015, the Government committed to increasing funding for the NHS by £8.4 billion by 2020, with £3.8 billion of this given to the NHS in 2016-17. The Spending Review also allocated an additional £5.4 billion to the NHS in 2016-17, which included £1.8 billion of funding for sustainability and transformation. The Comptroller and Auditor General noted that, even with additional resources in 2016-17, early forecasts are showing a year end deficit of £500 million in the provider sector.
Sir Amyas Morse commented: “The NHS in England remains under significant financial pressure which is demonstrated in its accounts. It has again used a range of short term measures to manage its budgetary position but this is not a sustainable answer to the financial problems which it faces. The Department and its partners need to create and implement a robust, credible and comprehensive plan to move the NHS to a more sustainable financial footing.”
Richard Murray, director of policy at The King’s Fund, said: “The news that the Department of Health overspent its budget last year is further evidence of the serious financial crisis engulfing the NHS. Although the Department avoided breaching controls set by parliament on a technicality, a strong rebuke by the National Audit Office underlines the significance of this.
“The overspend has happened despite additional funding from the Treasury, extensive raiding of capital budgets and the widespread use of one-off accounting measures. Many of the short-term fixes used this year cannot be repeated, and taking money out of capital budgets is reducing much-needed investment in buildings and equipment, storing up problems for the future.
“The prospects for the current financial year are grim, with national leaders already admitting that the NHS will be in deficit again despite even more stringent controls on spending…It is no longer credible to argue that the NHS can continue to meet demand for services, deliver current standards of care and stay within its budget. If the Government is serious about restoring financial balance, it must review its priorities for the NHS and be honest with the public about what it can deliver with the money it has been allocated.”
RCP president, Professor Jane Dacre, said: “The release of the Department of Health’s annual accounts is further evidence that as a service the NHS is underfunded, under doctored and overstretched. To adequately support the transformation of services and to sustain and improve patient care we need the additional finances from Government to do this. For the last few years the NHS has been asked to find a large amount of savings – now is the time to reassess and to revisit our national contribution to healthcare.”
