The NHS trust sector could be “heading for deficit” in 2011-12. Health economists made the warning after HSJ research revealed deepening problems among the financially weakest providers.

There are now at least eight non-foundation trust providers expecting to finish the year in the red, up from six at the end of June, analysis of the latest published finance reports shows.

The most troubled trusts were forecasting a combined deficit of £201m, up from the £170m gross deficits forecast in the NHS’s first quarterly report for 2011-12.

The rise in forecast deficits wipes out half of the £61m net surplus forecast for the trust sector in that report. Earlier this month NHS deputy chief executive David Flory said the next quarterly report would show the surpluses forecast by the rest of the trust sector had also fallen between June and September.

“The combination of those two things [increase in gross deficit and decrease in gross surplus] is a real alarm bell that we must listen to and must act on,” he told a conference.

The surpluses forecast by trusts not expecting a deficit now needs to drop by only £31m – or 13 per cent of the surplus predicted in the quarter 1 report – for the sector overall to fall into net deficit, HSJ’s research suggests.

Nuffield Trust chief economist Anita Charlesworth said: “Unless some other trusts are forecasting big increases in their surpluses, the implication is that the NHS trust sector is heading for deficit.”

However, she added: “The primary care trust sector is still forecasting a surplus greater than the deficits forecast in the trust sector. The NHS as a whole has the wherewithal to balance the books in-year.

“That would require PCTs to agree additional payments [to trusts] which were not necessarily for additional activity.”

She said there were two possible interpretations for the deficits: “One is that light has been cast on a group of organisations with underlying long-standing financial problems and sustainability issues that were masked by the large amounts of cash in the NHS [in the last decade],” she explained.


Mid Yorkshire Hospitals Trust is predicting it will break even at the end of the financial year only if it makes £31.3m of savings and gets a £14m bailout. The £442m-turnover trust has a year-to-date deficit of £4.6m.

NHS North of England confirmed a “review to support the development of FT status”. HSJ understands a merger is being considered.

The alternative was that “these providers are indicative of problems that will beset the provider side across the board, and people will struggle to achieve the level of savings [required to maintain services within the context of reduced funding]”. It was too early to say which of these interpretations would prove accurate, she added.

King’s Fund chief economist John Appleby said it was “quite possible” the sector may slip into overall deficit. He said of the large London trusts that made up the bulk of the deficit, that it was “hard to see them turning it around this year”.

Of the two trusts newly predicting a deficit, Wye Valley had predicted a small surplus in quarter 1 (see story, right) and Whipps Cross had expected to break even.

HSJ analysed the latest finance reports of 58 acute providers chosen after showing signs they may struggle as NHS finances tightened this year. We examined those predicting deficits, with savings targets of more than 7 per cent turnover for the year, or with high financial risk ratings from foundation trust regulator Monitor. Only four provided no information at all; 13 did not provide a revised forecast for the year.

The data revealed several trusts outside the capital which predict surpluses for 2011-12 are dependent on additional payments from their commissioners to do so.

East Sussex Hospitals anticipated receiving £15m, Mid Yorkshire Hospitals needed £14m, Mid Essex Hospital £8.5m and Princess Alexandra Hospital in Essex £3m.

Another four trusts revised their planned surpluses for the year down to break-even positions.


Surrey and Sussex Healthcare Trust predicts a £6.1m year-end deficit but says that figure could rise to between £10m and £15m because its forecast includes £7.2m of non-recurrent income.

The £196m-turnover trust was awarded £13.7m public dividend capital by the DH, partly to cover the deficit and the rest for capital projects.

The trust recorded a year to date deficit of £4.2m and has a £7.7m savings plan.

The DH information for quarter 2 will not include foundation trusts but HSJ’s research also revealed large deficits predicted for some.

Milton Keynes and Heatherwood and Wexham Park FTs have seen their year-end positions fall from break-even to deficits of £4.4m and £18.3m respectively. Peterborough and Stamford Hospitals FT’s deficit increased from £20.9m to £34.3m.

The Department of Health is due to publish results for the second quarter later this month. A spokesman said it would not comment before the results were released.

Trusts forecasting a deficit for 2011-12

TrustForecast at
30 June (£m)
Most recent
forecast (£m)*
South London Healthcare-65.2-69.8
Barking, Havering and Redbridge University Hospitals-40-50
Imperial College Healthcare-30-35.2
Epsom and St Helier University Hospitals-19.3-14.3
Whipps Cross University Hospital0-12.9
North West London Hospitals-9.7-9.7
Surrey and Sussex Healthcare-6.1-6.1
Wye Valley0.1-3.3

*All figures taken from most recent published finance reports, ranging from September to November