NHS trusts worst deficits ever

NHS trusts under pressure to make ‘adjustments’ as they report worst ever deficits

NHS trusts have come under pressure to make financial “adjustments” to their books as they prepare to record the worst deficits in history. Figures published on Friday for 2015/16 show a deficit of more than £2 billion – lower than the worst case scenario of £2.8bn but still the worst on record.

Over the last five months, NHS trusts have come under increased pressure to change the way they present their deficits in their accounts in a bid to make figures appear better.

The Nuffield Trust said trusts have made “accountancy adjustments”, including reclassifying capital budgets as revenue, claiming for five quarters (15 months) worth of VAT rebates and reviewing accounting policies.

Speaking to the BBC, an NHS trust finance director also accused the Department of Health of financial “alchemy” as the Department aims to keep within spending limits set by the Treasury.

A Department of Health spokeswoman said the guidance it gave to trusts made “no difference” to the overall spending picture.

She said: “We are committed to the NHS and are investing £10bn in its own plan for the future – but it is vital that money is accounted for consistently.

“The transfer from capital to revenue makes no difference to the overall Departmental picture given Parliament has voted to approve it – to say otherwise is misleading.

“We recognise parts of the NHS are under pressure as demand rises due to our ageing population, but we are providing intensive support to improve performance, boost efficiency and reduce the use of expensive agency staff.”

In February, a report containing the first nine months’ worth of figures said the NHS was on track for a £2.8bn deficit across the year. It said if savings could be made in the final three months of the financial year, the figure may fall to around £2.4bn.

Data published just before Christmas showed NHS trusts had racked up a deficit of £1.6bn in just the first six months, and 156 out of 239 NHS trusts expected to end the year in deficit.

In the entire previous year, the NHS overspend stood at a comparatively small £820 million. High spending on expensive agency staff has been blamed for having a serious detrimental effect on the financial position of NHS trusts.

The Government has capped agency spending, with new hourly price caps limiting the amount of money various types of agency staff working in the NHS can earn.

Controls on spending on expensive management consultants also came into force over the summer and were expected to have had an impact by the end of the financial year.

But some trusts have argued they are struggling to fill rota gaps and are finding it difficult to keep within the agency cap.

Nuffield Trust senior policy analyst Sally Gainsbury said of the expected data: “These figures are expected to show NHS trust performance improving from the start of the year, when they ran up a deficit of nearly £1 billion in just three months.

“However, this is the result of accountancy adjustments which have not changed the underlying £3.5bn gap between the costs of providing hospital and community health services and the funds those services receive.”

She said the targets for efficiency savings demanded by the Government looked further away than ever.

She added: “NHS trusts have made cost efficiencies, but not as fast as their funds have been cut. In order to eliminate the underlying deficit by the end of next financial year, providers will need to make year-on-year cost cuts of 4%: twice the rate at which Lord Carter’s recent report on hospital efficiency found was possible, and higher than any year in the last decade.”

The influential King’s Fund think-tank has previously said many trusts would not be able to deliver the cuts needed to get the overall deficit down to £1.8bn by the end of March. It said any shortfall will come out of the 2016/17 budget, eating into the extra funding provided in the Government’s spending review.