Scope of the inquiry
The NHS’ financial position deteriorated in 2017-18; it reported a deficit of £21m compared to a £111m surplus in 2016-17. Deficits in the system were offset by surpluses elsewhere: while NHS England achieved an underspend of £1,183m (4.1% of the money available for its national functions and services), Clinical Commissioning Groups and NHS trusts both reported respective deficits of £213m (0.3% of their income) and £991m (1.2%).
A recent National Audit Office (NAO) report has found that these substantial deficits offset by surpluses in other areas are hiding the stark difference in financial health and patient experience that it found at a local trust level. It concluded that this, combined with growing waiting lists and increasing waiting times, reveals a national healthcare system which is unsustainable. The report highlighted that the underlying financial health of some trusts is potentially getting worse: in 2017-18, the Department of Health and Social Care gave £3.2bn in loans to support trusts and used £1bn of its £5.6bn capital budget to fund day-to-day spending.
In June 2018, the Prime Minister announced that NHS England would receive a £20.5bn budget increase by 2023-24 to “tackle waste and improve services”. The NHS then published its long-term plan in January 2019, which set out how it aims to achieve the priorities and financial tests set by the government in return for the increased funding. The recently-published NAO report assessed the plan as a “prudent approach”, but highlighted that a number of risks still remain to successful delivery. There are also some crucial areas of health spending which are not covered by the funding such as education, public health and capital investment.
Last year, the Public Accounts Committee concluded that the financial position of the NHS was in a “perilous state”. On 25 February, it will revisit what has been an ongoing and critical concern for the Committee, questioning the heads of NHS England and the Department of Health and Social Care on how they plan to improve the financial sustainability of NHS services. It will look at the deficits reported by commissioners and providers as well as the local disparities between financial health and patient experience and, against this backdrop, it will examine how they plan to meet the targets of the NHS long-term plan in order to receive the government’s long-term funding settlement.