The Department of Health used funds that were supposed to be ringfenced to help balance its revenue budget last year, its annual accounts show.
- DH transferred £108m of ringfenced depreciation funds to revenue budget
- Treasury permission had to be sought for the move
- Department is struggling to absorb “ballooning” provider deficits, says expert
The 2014-15 accounts show that £108m of depreciation funding, which is ringfenced to cover the decreasing value of assets, was transferred to non-ringfenced revenue funding.
The DH had to seek specific approval from the Treasury to do this, LGC’s sister title Health Service Journal.
The department finished the financial year with a revenue budget underspend of £1.2m, which was just 0.001 per cent of the £110bn budget.
Richard Murray, policy director for the King’s Fund, told HSJ that depreciation funds are “off limits under normal business”.
He added: “This provides further proof of just how hard it was for the department to absorb the ballooning provider deficits in 2014-15.
“With these emergency measures already needed to balance the 2014-15 position, it’s very hard to see where the department has left to turn in 2015-16.”
Previous accounts showed depreciation was planned to be £1.27bn in 2014-15, but the outturn figure ended up being £1.16bn.
The measures were taken in response to huge deficits building up in the provider sector. The total deficit among trusts and foundation trusts was £822m last year, but has been forecast to reach more than £2bn in 2015-16.
Ministers and national NHS leaders are under major pressure to balance the books this year. Lord Prior, minister for NHS productivity, told HSJ last month: “We’ve got to come in at a breakeven position at the end of this year… No ifs, no buts.”
A DH spokesman confirmed that Treasury approval had been given for the transfer of the ringfenced depreciation funds.
He added: “The government is investing the additional £8bn the NHS has said it needs to implement its own plan for the future.
“The NHS must deliver its side of the deal by delivering £22bn worth of efficiency savings and putting in place the sort of cost control measures that we’ve highlighted recently, like clamping down on rip off staffing agencies and expensive management consultants.”
HSJ asked whether the DH was confident of achieving another revenue budget underspend this year, and whether this would require further drawdowns from the Treasury, but did not receive a response in time for publication.