'Fundamental change to how the NHS is run': reaction to the letter

Providers have been told to revisit their financial plans for 2015-16 in a bid to reduce the total deficit for the year, which has been forecasted as more than £2bn.

They have been told to use a raft of emergency measures to try and reduce the huge deficit, after it was labelled “unaffordable”.

Richard Murray, policy director at the King’s Fund, told HSJ: “This is a pretty fundamental change to the way the NHS has been run since 2005-06, as they are even asking trusts that have predicted a surplus to revisit their plans.

“It’s difficult to see that these measures will shake a lot of money out the system, but the language used is significant and shows they are tightening the controls around all the providers.

“And by saying that ministers have been sighted on the options they are signalling there’s no way out of this.

“The crucial question will be just how tight will they draw the noose around organisations to reduce their deficits, or increase their surpluses.”

Trusts’ outturn figures contribute to the Department of Health’s overall financial performance. As reported last month, the DH ended 2014-15 with a revenue underspend of just £1.2m, with this position propped up by £250m from the Treasury and raids on capital budgets worth £640m.

Nigel Edwards, chief executive of the Nuffield Trust, told HSJ the measures outlined in the letter did not contain a solution to the problems facing the NHS.

He added: “It shows people are becoming extremely worried about the financial situation but they aren’t entirely clear what to do about it.

“One does wonder if there is anyone sitting in a trust who will say, ‘I haven’t thought of that’.

“It is a worrying signal that there is a big problem coming and we are talking about transactional changes rather than some of the very major changes that may be required to confront the situation that is rapidly emerging and which looks like a very significant problem really quite soon.”