NHS finances ‘absolutely on the knife edge’

Speaking at the organisation’s board meeting yesterday, chief finance officer Paul Baumann said there was “no reserve left which will cater for things which we haven’t anticipated in the risk and mitigation analysis we’ve done”.

He described 2014-15 as “the year in which we are absolutely on the knife edge of balancing or not balancing against the position we’ve got”.  

At month six he said the NHS was £184m off-plan, which accounted for 0.2 per cent of its total budget.

The figures are “to be taken seriously, but not a vast deviation” from where the health service is expected to be”, he explained.  

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Mr Baumann said the health service has “overall a good chance of squaring its [financial] position in most foreseeable scenarios through to the end of the year”.

He said it was “really, really important that we contain our expenditure”, but “at the moment I can see ways in which it should be possible to do that”.

“What I can’t guarantee is that there will be nothing that transpires between now and the end of the year that I wasn’t expecting, either in terms of activity trends going faster than we’ve got in the forecast, or any other calamities or disasters,” he warned.

“In other years it might have been possible to say don’t worry about that too much, because I’ve got a reserve over here of a couple of hundred million that will deal with the inevitable bumps and turns that the NHS throws up in the course of given year.

“I have to [say] now I have not got such a £200m, £100m or indeed £50m pot sitting somewhere waiting to soak up those bumps.”  

NHS England deputy chair Ed Smith said the financial position was “extraordinarily tight this year, before you even start on next year”.

“In this system we are very dependent on a lot of moving parts coming in exactly where they say they are going to come in,” he pointed out.

“if they don’t and external circumstances in CCGs, in specialised [commissioning] and activity impacts, then… we do not have the type of reserves, contingencies and buffers that will allow us to come back”.

Mr Smith, who also chairs NHS England’s audit committee, said: “I’m not sure it’s a place I feel terribly comfortable being in on a recurring basis.”