• NHS could lose significant amounts of its funding growth due to workforce shortages
  • New King’s Fund chief executive says continuing lack of a workforce strategy will hamper long-term plan
  • Calls for more “honesty” from regulators when it comes to finances

The NHS is at risk of losing significant amounts of its additional funding growth because of the time it will take to address its workforce shortages, according to a former Department of Health senior official.

Richard Murray, a former finance director at the DH, believes there is a real prospect of the health service failing to spend its funding allocations over the next five years. Departmental budgets that remain unspent at the end of a financial year are returned to the Treasury, he told HSJ in an interview.

Mr Murray, who took over as chief executive of health think tank the King’s Fund at the beginning of the year, said the continuing lack of a comprehensive workforce strategy will limit the NHS’ ability to spend its allocations and hamper the success of the long-term plan.

He said: “I just wish they sorted out [the] workforce element. That’s where a lot of services are going to find themselves tripping over, because there just aren’t the staff to do the things that they want to do.

“It seems almost inconceivable from where we are at the moment. But, this time next year, you wonder whether we’ll be looking at an NHS underspend because there just [aren’t] the staff to spend the money on.

“I do think there’s a risk of that… it may not be next year, but 3.4 per cent real terms [funding] growth is way above what the workforce can grow at.

“I don’t think the reason why the number of nurses, GPs, occupational therapists, radiographers isn’t going up at the moment is because there isn’t any money. It’s because they don’t exist to hire them.

“Remember that, up until about 2013, the NHS routinely underspent by a billion or two every year. The slide into deficit was quite quick after the best part of a decade of big underspends. And that money goes back to the Treasury – you don’t get it back.”

He continued: “People will think that’s absolutely impossible. But the NHS wasn’t really in deficit last year [due to commissioning underspends]. So it’s not that implausible that you can flip from famine to feast on the money side pretty quickly.

“That would obviously be a more comfortable place if you’re the person handling the budgets, but an unbelievably uncomfortable place to be if you’re local and national leaders.”

Mr Murray has been surprised by the lack of progress in creating a workforce strategy and the organisational structures that will be responsible for it, given that it’s “probably the biggest single risk that they’re facing”.

But he added: “If I was glass half full, I would say at least they know it and they’ve promised something material on it.” 

In recent weeks, NHS Improvement and England have established a workforce panel, under NHSI chair Baroness Dido Harding, and workstreams which will produce an interim report in the spring and further work later in the year, ahead of a government spending review.

Missing budgets

He said the delays to the social care green paper were also a missed opportunity, while the exclusion of capital, training, and public health budgets from the funding settlement made it difficult to judge the overall situation until the spending review.

Asked about the prospects for these budgets, he said: “From what I’m told about the modelling coming from [the] Institute of Fiscal Studies and others, and having negotiated multiple spending reviews, I suspect Treasury would be thinking something around a flat real terms increase. They’re not going to be in the mood to be generous.

“On social care, I’m not optimistic, because it’s going to need a lot of political bravery to get a long-term solution. So we’re more likely to get what we’ve seen in the past, which is just enough money to keep social care from collapsing and push it a little bit further down the line.”

Honesty

Mr Murray welcomed changes to the financial regime, which he said offered more realism and greater support. Such changes include giving additional funds to the trusts with the largest deficits, as opposed to severe performance management from regulators – an approach which has sometimes caused serious concerns in recent years.

He said there needed to be more “honesty” from national bodies, and added: “If the plan doesn’t look like it adds up at national level, no amount of shouting and performance management at local level is going to make up for it.”

He cited the example of one provider which was told by regulators its bailout cash would be withdrawn.

“The finance director, who had been around for some time, said, ‘No it won’t, because that means we’re not going to pay the doctors or nurses and you’ve not got the nerve.’ He went on to say, ‘Your threat to me is the same as your threat has ever been, you’ll end my career… Go for it, I’m pretty close to retirement.’

“When you’ve got dialogues like that with people that are responsible for the money, you’ve kind of lost it [as a regulator]. It can’t be that you are only credible with younger people whose careers you can end. You’ve got to get that out of the system. It’s got to be a bit more transparent, predictable and achievable.”

Mr Murray added he believes the integration of national bodies, the fact there is now more money, and lower expectations on waiting times means there could be less unreasonable pressures being placed on leaders.