The public accounts committee’s verdict on hospital finances could hardly be more damning. Its report on the financial performance of acute hospital trusts concluded that they are deteriorating “at a severe and rapid pace”. In case anyone was in any doubt, it says this trend is not sustainable.
The deficit could pass £2.5bn by the end of the financial year. Accountancy games may get the final figure down to £1.8bn, but that will do nothing to address the underlying problem.
Its criticism of NHS England and Monitor was severe, accusing them of setting unrealistic efficiency targets that have caused long-term damage to trusts’ finances. NHS England has conceded the point, and the efficiency targets have been cut from 4% to 2% for the coming year. But even this target is shaky, with many trusts flying blind because their data is so poor.
The MPs were dismissive of attempts to get the money under control, pointing out that until the NHS sorts out its workforce planning it will not solve the problem of spending on agency staff, and said there is not yet a convincing plan for closing the £22bn efficiency gap and avoiding a black hole in NHS finances.
With all but about £340m of NHS England’s £2.14bn Sustainability and Transformation Fund being soaked up in stabilising the system, it is highly questionable how many of the vanguards leading the development of new models of care will have enough funding to get them established successfully. Even then, the problem remains of replicating these new ways of working across the country.
Huge faith is now being invested in the sustainability and transformation plans being set up across the country, divided up into 44 footprints with a local leader. The plans will identify how each area intends to become financially and clinically sustainable and implement the key elements of the Five Year Forward View. They should be ready by June, with the first drafts due in the next few weeks.
Notably, two of the first eight leaders to be announced were local authority chief executives – Manchester City Council’s Sir Howard Bernstein leading Greater Manchester, and Birmingham City Council’s Mark Rogers leading Birmingham and Solihull.
The NHS improvement chief executive, Jim Mackey, has quashed any illusions that promising to achieve heroic savings through fancy organisational restructuring will be acceptable. He is insisting on proposals that are practical and deliverable, minimising the wriggle room for avoiding the tough issues. This means that, by the summer, we may well have some specific details on service cuts and closures; questions that have been put off for years will now have to be answered in weeks. If they are not, this latest planning process will have failed.
The financial position is now so critical that each week of further delay in making choices significantly heightens the risk that the Department of Health will end the next financial year in breach of its revenue expenditure budget authorised by parliament. The public accounts committee points out that in 2014-15 it squeaked in by just 0.001% – £1.2m out of £111bn.
The central bodies are therefore likely to have little compunction in directing changes to be made in a particular area if the sustainability and transformation plan is deemed inadequate. For this reason, the plans represent a massive reassertion of central control; foundation trust autonomy has gone.
Almost 18 months after the Forward View was published, progress towards its vision of new models of care, improve clinical quality, a better experience for patients and financial sustainability seems frighteningly slow. The financial crisis is now so severe that it is all but impossible to see a good outcome. It would take astonishing optimism to believe that, from this position, change can be delivered at the scale and speed to avoid a financial crash.
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