Trusts told to make savings ‘never delivered before by NHS’

Sources told HSJ there was widespread scepticism about how deliverable the asks for 2022-23 will be.

Some trusts with large underlying deficits, such as University Hospitals Plymouth Trust, are looking at efficiency targets as high as 5 per cent, which the trust’s audit committee has said “have never been delivered by the NHS in a single year”.

The finance director at another trust facing a similar target, who asked not to be named, said they had “never known anything like it”, adding that managing to save 3 per cent was seen as a good result in a normal year.

Chris Hopson, CEO of NHS Providers, said it was “striking how many trusts are telling us that they are concerned by the scale of the efficiency savings they will need to realise.”

The new financial year will see an end to more generous covid-19 funding arrangements and a return to the kind of financial oversight that has not been seen for two years.

Previous research has suggested trusts averaged long-run savings of about 1 per cent per year in the years running up to the pandemic, and the baseline assumption set in the 2019 NHS long-term plan was for annual efficiencies of 1.1 per cent.

Trusts with a healthier underlying position are facing easier, although still stretching targets, such as Maidstone and Tunbridge Wells Trust, which must make savings of 3.6 per cent.

Bradford Teaching Hospitals FT faces an efficiency demand of 2.6 per cent, and said this was “stretching but credible”.

Mr Hopson said trust leaders were voicing three main concerns: “First, some trusts are telling us that they will need to make a higher percentage rate of savings than they were doing pre-covid, which will be very challenging given the need to tackle care backlogs, meet rising demand for services and deal with the ongoing impact of covid-19 at a time of widespread workforce shortages.

“Second, trusts are worried about the extent to which rapidly rising inflationary pressures including energy and fuel costs could make their savings requirement more stretching.

“Third, while non-recurrent covid funding will be reduced in 2022-23, there are still recurrent covid cost pressures driven by the pandemic, which providers are worried have not been fully reflected in their allocations.”

In the spending review last October, the NHS was given real-terms annual growth of 3.8 per cent, yet the Institute for Fiscal Studies warned this week that rising inflation had already eroded a quarter of the value of the planned NHS spending boost over the coming years.

It said inflation forecasts produced before Russia’s invasion of Ukraine, which is expected to send inflation even higher, would see average NHS real-terms growth drop to 2.9 per cent per year.

Ben Zaranko, senior research economist at the IFS, said there was little prospect of Rishi Sunak looking again at the health service budget at the spring statement next week.

He said: “The chancellor is facing a cacophony of calls for extra cash, not least to provide additional support to households over what will be an extremely difficult period. On top of that, there are growing calls for higher defence spending in response to the conflict in Ukraine, and rising inflation is pushing up the government’s debt interest bill.

“Given all of that, and the fact that the chancellor may be reluctant to re-open a settlement agreed just six months ago, the chances of a substantial NHS support package in the near future seem remote.”

An NHS England spokesperson said: “While England has one of the most efficient health services in the world, the pandemic inevitably has had an impact on productivity, and so it is right that trusts look for ways to make efficiency improvements to deliver the high standards of care the public rightly expects.”