NHS trusts forecast £519m deficit, as regulator admits underlying problem

In February, following an additional allocation of funds from the Department of Health and Social Care, NHS Improvement and NHS England said the provider sector would “plan and deliver a balanced income and expenditure position” in 2018-19.

But NHSI’s report for the first quarter of the year says trusts have planned for a deficit of £519m, which they are forecast to deliver.

The year to date position, and the pattern of deterioration in previous years, suggests that delivery will be challenging.

Trusts have already reported a deficit of £814m after the first three months. This is slightly better than planned, which reflects the fact that many trusts plan to deliver significant savings in the latter half of the year. In previous years, such plans have fallen significantly short.

In its commentary, NHSI said it is now looking to secure a balanced financial position “for the NHS”, which would also incorporate the commissioning position.

In previous years, the provider deficit has been offset by commissioning surpluses reported by NHS England. But it is unclear to what extent this is possible in 2018-19.

Senior figures at NHS England have warned of its diminishing ability to post large underspends, and after two months of the year it was forecasting a small overspend for the year.

NHSI said the plans can still be improved: “This is clearly unaffordable, and NHS Improvement and NHS England regional colleagues have been working with the most challenged health economies to identify actions to close the residual local planning gap. The work has also identified further opportunities for improvement in some organisations and systems already meeting their original control totals.”

Earlier this year, the government announced a real terms funding uplift of around 3.4 per cent for the NHS, which will start in 2019-20.

NHSI said delivery of plans in 2018-19 will be an “essential foundation” as the NHS prepares for the first year of the new settlement. It added: “It is therefore crucial that boards take the necessary actions to deliver the plans they have signed up to this year as any shortfall in delivery during 2018-19 would have significant implications for the following year.”

For the first time, NHSI has also noted that providers are carrying an underlying deficit of around £4.3bn, if the non-recurrent “provider sustainability fund” is discounted.

HSJ first highlighted the underlying deficit two years ago, following analysis by the Nuffield Trust think tank.

When asked about this previously, the DHSC has said “we do not recognise these claims”.

Meanwhile, NHSI states that the £519m deficit plan is based on Agenda for Change pay awards being fully funded. Providers have said this is not the case.

Sally Gainsbury, senior policy analyst at the Nuffield Trust, said: “The NHS has now been charged with developing a plan for the next 10 years, setting out how it will spend the modest increases in funding set to begin next April. But today’s figures are a reminder that we are starting underwater – and the first priority will have to be simply getting back to a firm footing.”

The year to date deficit of £819m is about £80m worse than at the same point in 2017-18, despite the PSF being increased from £1.8bn to £2.45bn this year. In 2017-18, providers ended the year with a deficit of almost £1bn.

Chris Hopson, chief executive of NHS Providers, said: “NHS trusts are doing all they can to respond to a triple challenge of rapidly increasing demand, growing workforce shortages and continuing pressure on NHS finances.

“But however hard they run, they don’t seem able to outpace the increase in demand.

“In short, trusts are doing absolutely everything they can to provide the best possible patient care but it’s an extremely challenging environment – and that applies to the rest of the NHS and social care frontline too”.