Andy Cowper discusses the National Audit Office’s seventh report on the financial sustainability of the NHS

“All of old. Nothing else ever. Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”

Worstward Ho, Samuel Beckett

Before we start this week’s column, may I commend to you the latest reverberations of The Bedpan – HSJ editor Alastair McLellan’s fine new interview series with key political figures. This week’s is about the formidable civil servant Jeremy Heywood, and it is an essential read.

I also warmly recommend the debut instalment of The Ward Round, my colleague Annabelle Collins’ new column on the essential subject of workforce. On which subject, it was heartening to see the estimable Julian Hartley hired to work on this issue for the reborn NHS Executive (the branding of the joint working function of Monitor/TDA and the NHS Commissioning Board).

Last Friday, the National Audit Office launched its seventh report on the financial sustainability of the NHS.

Members of the Paying Attention Community, such as the readership of this column, will find little or nothing in the NAO report to surprise them. Its conclusion on the 2017-18 financial year is that “the growth in waiting lists and slippage in waiting times, and the existence of substantial deficits in some parts of the system, offset by surpluses elsewhere do not add up to a picture that we can describe as sustainable”.

The NAO wisely suspends its judgement of the NHS Long Term Plan’s likely achievability until the workforce plan and the autumn spending review, describing the LTP and commitment in increasing NHS funding as “positive, and the planning approach we have seen so far looks prudent. We will really be able to judge whether the funding package will be enough to achieve the NHS’ ambitions when we know the level of settlement for other key areas of health spending that emerges from the Spending Review later in the year”.

But the NAO’s following pay off line is a stunner for a government auditor, albeit technically independent to write: “This will tell us whether there is enough to deal with the embedded problems from the last few years and move the health system forward. Let’s hope there are not too many strings attached.”

Wonga economics

The report’s stand out figure on its introductory page of “key figures” is the £3.2bn extra funding given to trusts as interest bearing loans in 2017-18. This “Wonga economics” approach is plain fiscal lunacy, as I observed last June.

If you incentivise NHS lying about the money, then NHS lying about the money is what you get. As I am certain we will continue to discover. 

This issue has been covered in greater depth and detail by Nuffield Trust data diva/diver Sally Gainsbury and my HSJ news colleague Lawrence Dunhill.

The NAO report sets out some other Stevensesque caveats: notably that the long term funding settlement does not cover key areas of health spending. It also records “a risk that the NHS will be unable to use the extra funding optimally because of staff shortages”.

Provider debts aren’t a big problem (except where they are)

Another notable NAO number is that 69 per cent of the combined deficit of trusts in 2017-18 was accounted for by the 10 trusts with the largest deficits.

It is a statement of the hugely obvious that the new Fluffer Fund (Financial Recovery Fund) is going to have a hard task.

What the Dickens?

We are going to hear a lot of Dickens quoted: not only with the Oliver Twist “please sir, I want some more”, but also The Micawber Principle: “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

The provider community will do well not to be bullshitted by regulators over this situation, and to bear in mind the timeless maxim that when you owe the bank £250,000, it’s your problem; when you owe the bank £250m, it’s the bank’s problem.

NHS provider deficits are a result of three things: increased workforce costs post-Mid-Staffs (partly funnelled off into the agency market); a cutting of the national tariff to below the actual costs of production of care; and the unstated but clear intention to renationalise foundation trusts’ surpluses.

This piece, which I wrote in 2008, seems wearyingly relevant. The NHS has never been particularly timely nor tasteful in dealing with failure.