NHS leaders accused of ‘pie in the sky’ finance plans

The chair of the Commons’ public accounts committee has accused NHS leaders of “making pie in the sky assumptions” to maintain the argument that the health service will be able to close its funding gap.

MP Meg Hiller made the comments as the National Audit Office released its latest ‘Financial Sustainability of the NHS’ report; which concludes for the third year running that the NHS’s finances are not sustainable.

The nation’s financial watchdog notes that the financial position has since worsened, even as the NHS embarks on the first year of what is meant to be a five year plan to make £22 billion of efficiency savings.

This are required to deliver on the ‘Five Year Forward View’ plan to close a funding gap that is otherwise projected to reach £30 billion by 2020-21.

However, the NAO raises questions about whether the efficiency targets that trusts have been set are achievable, about the credibility of the plan’s modelling, and about whether it can be translated into action on the ground.

Hillier, the Labour Co-operative MP for Hackney South and Shoreditch, said: “Again, I call on the Prime Minister to address the realities of increasing deficits in NHS trusts, long-term workforce problems, unrealistic efficiency targets, and the impact that financial stresses are having on the quality of services.

“Like many others, I will be reading the Autumn Statement with interest tomorrow.”

As Hillier’s remarks indicate, the NAO’s report has been issued at a particularly political moment, with Chancellor Philip Hammond due to deliver his Autumn Statement on Wednesday lunchtime.

To date, the government has held to the line that it is “fully funding the NHS own plan” by finding £8 billion for the NHS over the next five years.

However, Chris Hopson, the chief executive of NHS Providers, has led the argument that it will need to find more money for the NHS, while think-tanks have joined forces to argue that any spare cash that can be found should go into social care.

The NAO’s report restates that trusts finished the last financial year £2.4 billion in deficit, and that the position would have been worse if significant sums of capital had not been diverted to revenue.

It notes that this means money for “building works and IT” will have been used to “cover day to day spending”, and criticises the Department of Health for not assessing the long-term impact of this.

A financial “reset” last autumn gave trusts strict “control targets” to try to keep the deficit to about £580 million this year. But this will only be achieved by diverting most of the Sustainability and Transformation Fund that was supposed to kick-start change projects.

The DH is also continuing to approve transfers from capital to revenue which, by implication, will reduce the amount of money available for technology; even though local sustainability and transformation plans identify a need for investment in data, shared care records, and digital patient services.

Last year, the Treasury found £4.2 billion for NHS IT over the course of this Parliament, but much of this is scheduled for national services and completing the 'paperless agenda'; and it is unclear how or when it will be released.

Meanwhile, the new acute sector deficit target will only be achieved if trusts manage to make 2% efficiency savings. Those that don’t could find themselves looking at a target of 4% next year. Both the NAO and PAC have argued that such large targets are “unrealistic” and counter-productive.

Overall, the NAO says the NHS is going into the first year of the Forward View in a worse position than it might be. But it raises some questions about the Forward View itself.

It notes there has been only limited testing of its modelling assumptions, so the funding gap might be “bigger or smaller” than it assumes.

It says that while the 44 STP areas are being charged with implementing the plan on the ground, nobody really knows what kind of investment they will require, or “whether they will be able to make the changes at the scale and pace needed.”

It also worries that there are still significant disincentives in the system for organisations to work together. The NAO report concludes: “We repeat our view that the financial problems are endemic and that this is not sustainable.

“The Department, NHS England and NHS Improvement must make sure their plans for restoring NHS finances to a stable position are achievable. Value for money from [their] collective actions has not yet been demonstrated.”