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NHS overspend in England hit £2.45bn last year

The 2015/16 deficit is the highest ever and almost three times larger than the deficit in 2014/15

Ingrid Torjesen

Friday, 20 May 2016

The NHS in England ended a record £2.45bn in deficit last year, almost triple the £822m recorded in 2014/15, largely because hospitals overspent on their budgets.

The 2015/16 deficit is more than 20 times the size of the £115m deficit seen in 2013-14.

The size of the figure threatens to wreck this year’s financial planning for the NHS and is an embarrassment for the Treasury which set a cap of £1.8bn on the amount the NHS was allowed to overspend. However, end of year deficit is lower than the third quarter trajectory suggested, but finance experts suspect the size of true deficit may have been masked by accounting devices.

Overall 157 (65%) out of 240 providers reported a deficit at the end of 2015/16 and the majority of these were acute trusts.

The provider sector spent £3.64 billion on agency and contract staff: £1.4 billion more than planned.

Providers estimated that delayed transfers of care have caused the sector £145 million in direct costs this financial year and 1.7 million bed days to be lost. Providers paid £751 million in fines and readmission penalties to commissioners of which £253 million was re-invested in improving patient services. Providers made £2.9 billion of savings: £316 million less than planned.

Chris Hopson, chief executive of NHS Providers, said: “Today’s report reveals how the combination of increasing demand and the longest and deepest financial squeeze in NHS history is maxing out the health service.”

He added: “This record number of trusts in deficit, with a record overall deficit, is simply not sustainable. We have to rapidly regain control of NHS finances otherwise we risk lengthening waiting times for patients, limiting their access to services, and other reductions in the quality of patient care.

“By 2020 public spending on the NHS is set to drop further to below 7%. This is simply not enough and we need to stop pretending it will be. In the end you get what you pay for. There is now a clear gap between the quality of health service we all want the NHS to provide and the funding available. What we can’t keep doing is passing that gap to NHS trusts – asking them to deliver the impossible and chastising them when they fall short.”

Reference: Bob Alexander B and O’Mahony E. Performance of the NHS provider sector: year ended 31 March 2016. NHS Improvement, May 2016.

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