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NHS deficit warnings spark calls for urgent action

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Ministers must give the NHS an “urgent cash injection” to stave off a crisis this winter, Unions have warned, as latest figures reveal the growing financial pressures facing the health service.

The NHS provider sector has reported a combined deficit of £930m for the first three months of 2015-16, which is more than the entire deficit reported last year.

Performance in the first quarter of the year was £163m worse than planned, and suggests the sector is heading for a year-end shortfall worse than the £2.1bn originally forecast.

“A financial crisis and a staffing crisis combined could cause ongoing chaos for years unless there is an urgent injection of cash”

Janet Davies

The figures were published this morning by Monitor and the NHS Trust Development Authority, following a delay of several weeks.

The regulators said spending on agency staff was a key factor in the overspend, which was a response to rising demand from patients and a “heightened focus on service quality”.

Trusts have also seen a reduction in their income compared with last year, they said.

Foundation trusts ended the quarter with a deficit of £445m, which was £90m worse than planned. Non-foundation trusts were £485m in the red, which was £63m behind plan.

Monitor said its latest forecast suggests foundation trusts will end the year with a deficit of about £1bn, which is broadly in line with original plans.

“Frontline NHS organisations have all-but exhausted their options for becoming more efficient”

Paul Healy

However, the TDA has not published a forecast for non-foundation trusts year-end position, saying the quarter one figures pre-date several cost savings measures announced in August.

Last year, the Department of Health only avoided breaching its overall revenue budget after securing a £250m bailout from the Treasury, as well as the transfer of £640m from capital budgets.

Unison general secretary Dave Prentis said the new figures confirmed the “full extent of the financial misery and chaos in the NHS”.

Dave Prentis Unison

Dave Prentis

“Without extra cash, waiting lists will continue to rocket, waiting times will grow, treatment will be rationed, and there simply won’t be enough staff to provide safe and dignified care for everyone who needs it,” he said.

“There is a criminal shortage of medical and nursing staff that has led to a huge increase in the use of agency staff, costing the NHS billions it can ill afford,” said Mr Prentis.

He added: “The government must invest substantial resources in more staff, extra training and start properly paying health workers or the NHS is at serious risk of collapse.”

“The only significant extra new opportunity on the horizon is the introduction of an agency staff spending cap”

Chris Hopson

Janet Davies, chief executive and general secretary of the Royal College of Nursing, said the size of the trust deficits was “alarming for us as nurses, as employees and as patients”.

“Trusts under severe financial pressure often struggle to deliver effective care and often end up in a cycle of reducing staff and then plugging the gaps at a high cost with temporary workers,” she said. “Worryingly, it seems that those pressures are now the norm.

“With winter pressures coming and cuts to public health budgets, the NHS will not only struggle to be on a good financial footing in the short term, but risks storing up even more problems for the next few years,” she said.

“A financial crisis and a staffing crisis combined could cause ongoing chaos for years unless there is an urgent injection of cash,” said Ms Davies.

“Health secretary Jeremy Hunt needs to start banging the cabinet table to get more funds in real terms from the chancellor George Osborne”

Barrie Brown

Unite national officer for health, Barrie Brown said: “Health secretary Jeremy Hunt needs to start banging the cabinet table to get more funds in real terms from the chancellor George Osborne, otherwise the NHS will go into a financial melt-down.

“The steps already taken to curb the ballooning bill for agency staff need to be accelerated,” he said. “There needs to be much better workforce planning.

“The use of agency staff is caused by a recruitment crisis, especially for nurses. This has not been helped by low or non-existent pay awards in recent years which have contributed to a massive exit of staff,” he said.  

Paul Healy, senior economics advisor at the NHS Confederation called for a long-term financial commitment from the government.

“Hospitals and other frontline NHS organisations have all-but exhausted their options for becoming more efficient,” he said.

“We need an end to the short-term approach to finances which is causing financial instability in the NHS and acting as a hindrance to transforming patient care,” he added.

NHS Providers chief executive Chris Hopson said the financial results were “not a surprise”, with trusts having flagged their rapidly deteriorating financial position for more than two years.

Foundation Trust Network

Chris Hopson

“The fact that more than 80% of all hospitals are now in deficit and more than 50% of all types of trust are projecting a year end deficit, shows that this is a system level problem, not one of poor trust performance,” he said.

“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,” he noted.

A spokesman for the DH said it was investing the funds needed to meet the “NHS’s own plan for the future”.

He added: “The NHS must play its part in delivering efficiencies – so we’re taking action to help hospitals clamp down on rip-off staffing agencies and cut spending on management consultants. We expect the impact of these measures to be reflected in figures released later in the year.”

Sean O’Sullivan, head of policy at the Royal College of Midwives, said: “Excessive reliance on agency staff and a failure to employ the right numbers of staff needed, are one of the issues at the heart of this problem.

“A failure to have the right numbers of staff to deliver the safest and best care ultimately leads to greater costs in the long-term,” he warned.

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Readers' comments (1)

  • As a qualified nurse on the frontline of a busy ward with ever increasing, complex needs of patients and diminishing social care funds. I worry from shift to shift about being able to deliver the best, dignified care for my patients with an ever fluctuating staffing level trying to maintain these standards in todays understaffed workforce.

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