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Hospitals continue to forecast £2bn deficit as NHS overspending worsens

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The latest available figures show the NHS acute sector continuing to forecast a deficit in excess of £2bn for this financial year. Trusts’ year to date financial performance is even worse than planned, analysis by LGC’s sister title Health Service Journal has found.

  • Acute provider sector still forecasts deficit of more than £2bn
  • Trusts’ year to date performance even worse than planned
  • NHS Providers: “Trusts are doing everything they possibly can”
  • HSJ analysis uses more recent data than unpublished Q1 figures from regulators

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The news comes amid controversy about Monitor and the NHS Trust Development Authority’s failure, to date, to publish their reports on the provider sector’s financial performance for the first three months of 2015-16.

The Observer this weekend reported claims that the regulators had delayed their reports to prevent forecasts of a £2bn deficit from overshadowing this week’s Conservative Party conference.

HSJ collated figures from the latest finance reports of 132 acute and specialist trusts, representing 85 per cent of the acute and specialist hospital sector. The bulk of the reports cover financial performance for the first four or five months of 2015-16, and are therefore more recent than the figures expected from Monitor and the TDA.

At the time of their last reports, those trusts forecast deficits totalling £2.1bn for the full financial year.

However, the available figures for in-year performance suggest trusts’ overspending was even higher than planned.

There were 112 providers – 72 per cent of the acute and specialist sector – that reported their year to date financial performance against plan up to the end of July or August.

That group reported an overall year to date deficit of £955m against a planned deficit of £706m – 35 per cent worse than planned.

Many foundation trusts and all non-FTs were given “stretch targets” in August in a bid to reduce the deficits. The response to this measure will not be reflected in the year to date performance.

However, separate analysis by HSJ last week suggested that even if the stretch targets are met, there will be little impact on the overall £2.1bn deficit projected at the start of the year.

Experts had previously warned that the sector’s huge deficit could mean “real trouble” for frontline services.

Richard Murray

The figures seem to show ‘that the trajectory on finance is still resolutely down’, Richard Murray said

Richard Murray, policy director of the King’s Fund, said on HSJ’s new research: “These figures seem to be saying that the trajectory on finance is still resolutely down… Add to that how little organisations think they’ll be able to shave off of their finances… this is extremely bleak reading.

“The gap between trust finances and any kind of reasonable financial position is now so big. If you go into winter, is that the time you do anything draconian to try and save the day? Or would it be the time you would really try and drive down on agency costs? It’s when performance is under pressure anyway, it doesn’t feel very likely.”

NHS Providers chief executive Chris Hopson said: “All trusts are doing everything they possibly can to improve their 2015-16 financial year position – they recognise how important it is for the NHS to stay within its allocated budget, particularly as a four year spending review is finalised.

“Trusts also tell us there is more downside risk than upside opportunity at this point. We are six months through the year and the vast majority of realisable savings were already in, or have now been added to, 2015-16 plans.

“We go into winter with a large number of members telling us they have less money than last year as the baseline allocation of winter money to [clinical commissioning groups] has not been fully passed to providers.

“The only significant extra new opportunity on the horizon is the introduction of an agency staff spending cap, but this will now come very late in the year and just at the point when demand for agency staff is likely to be at its greatest as extra winter capacity comes on stream.”

A spokesperson for Monitor and the TDA said: “It will come as no surprise to anyone that NHS providers are currently struggling to meet the financial challenge before them. We are currently focused on supporting our organisations to deliver realistic plans for the rest of this financial year.

“The figures for NHS providers’ financial performance in the first quarter of the year will be published shortly.”

HSJ revealed last month that CCGs have forecast a combined surplus of £358m for 2015-16 – less than half of that reported for 2014-15 – highlighting a severe risk that the Department of Health will breach its revenue budget this year.

Last year the DH reported an underspend of just £1m.

HSJ’s analysis focused only on the acute and specialist hospitals sector. It did not look at the financial performance of either mental health or community trusts, which contribute to the overall financial performance of the provider sector.

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