Hospitals overspend by up to £141 million a year

The National Audit Office (NAO) has warned that some hospitals are currently overspending by as much as £141 million each year as a result of underfunding, staff shortages and demand for care.

In its annual report on the financial sustainability of the NHS, the NAO concludes that the existence of substantial deficits in some parts of the system, offset by surpluses elsewhere coupled with growing waiting lists and year-on-year increases in waiting times, does not paint a picture that is sustainable.

Following the recent announcement of the NHS Long Term Plan, the NAO warns that a number of risks remain to its delivery, with the 3.4 per cent average real-terms increase in funding from the long-term funding settlement not covering some key areas of health spending such as education, public health and capital investment that could affect the NHS’s ability to deliver the priorities of the plan. Additionally, without a long-term funding settlement for social care, local NHS bodies are concerned that it will be very difficult to make the NHS sustainable.

The report states that ongoing difficulties in recruiting NHS staff continues to present a real risk that some of the extra £20.5 billion will either not be used optimally or will go unspent as even if commissioners have the resources to commission additional activity, health care providers may not have the staff to deliver it.

The spending watchdog revealed that 10 trusts recorded a combined deficit of £758 million in 2017-18, equating to 69 per cent of the £991 million loss that trusts collectively posted. King’s College Healthcare Trust, which runs two hospitals in the capital, ended last year £141.4 million in deficit – the biggest deficit among England’s 232 trusts that provide services. Barts Health, also located in London, had the second largest deficit (£108.8 million) while the United Lincolnshire Hospitals Trust was £81.23 million in the red.

While NHS England had an underspend of £1,183 million, clinical commissioning groups (CCGs) together reported an overspend of £213 million, which, when calculated alongside the deficit of trusts, reaches a combined deficit of £21 million.

Amyas Morse, head of the NAO, said: “As we head into the Spending Review the NHS will undoubtedly be the envy of other departments. The promise of longer-term sustained funding growth for NHS England, together with a long-term plan, is a positive and welcome development. This should enable a more strategic approach to spending and we can expect to see a less turbulent financial context than in the last few years, if the funding is spent wisely. “The plan we have seen so far seems to be based on prudent assumptions, but we will really be able to assess whether the ambitions set forth are supported by funding when we can see the results of the Spending Review for the non-NHS England parts of the health service, and the funding for social care.”