• Meg Hillier says controversial accounting measures have disguised underlying NHS funding problem
  • Comments follow news DHSC has received an additional £600m from the Treasury
  • Department’s finance chief due to appear before committee next week

The in-year bailout for the Department of Health and Social Care is partly a result of the “creative accounting” which has masked the real financial position, says the chair of the Commons public accounts committee.

Meg Hillier, also Labour MP for Hackney South and Shoreditch, told HSJ the “chickens are now coming home to roost” after various controversial accounting measures had enabled the department to “cover up the fact” that the money flowing into NHS trusts was insufficient.

Last week, HSJ revealed the DHSC had received an additional £600m from the Treasury to cover “unforeseen” cost pressures in 2018-19.

Experts said the budget increase is likely to have been sanctioned to help the department avoid a breach of its spending limit. The financial position of every NHS organisation feeds into the DHSC accounts.

Ms Hillier added: “They’ve done some very creative accounting and been very lucky with some technical issues like the national insurance [in recent years].

“But they always knew in reality, we all knew, that the baseline wasn’t right, and that also allowed them to cover up the fact that the base foundation money going into trusts just hasn’t been enough to deliver what they’re supposed to deliver.  The chickens are now coming home to roost.

“We’ve been really critical about the shenanigans that have gone on, including the constant raids on capital budgets to prop up revenue, which is going to cause long-term problems.

“The department has pushed things to the wire in order to balance the books and done quite a lot of damage to the system but [is] not acknowledging it. They’ve been sat atop a system that’s creaking and cash injections on their own aren’t enough. The problem is if you squeeze it and then flood cash in you get perverse outcomes. You need steady flows.

“The benefit of the £20bn [government NHS funding increase] is there will be a steady flow, but it’s going on top of very shaky ground. The money is supposed to be for service improvements but there’s a lot of filling in to do.”

She also warned of future pressure from pay, which has been held down for several years.

As yet, the department has not explained the “unforeseen” cost pressures. Its director general of finance and group operations, David Williams, is due to appear before the PAC next week.

A spokesman said: “HM Treasury have provided the department with an extra £600 million in revenue funding to cover unforeseen costs outside the department’s control.”

Story updated to include DHSC comment.