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A balanced NHS budget means workforce cuts ‘inevitable’

12 July 2016

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Cuts in staffing and quality of care are inevitable if the NHS deficit is to reduce, King’s Fund analysis has found.

The report, Deficits in the NHS 2016, found that NHS providers and commissioners recorded a total deficit of £1.85 billion in 2015/16.

This is three times higher than the year before and the biggest deficit in NHS history despite financial controls and short-term measures to reduce cost.

For clinical commissioning groups alone, the overspend totalled £16 million in 2015/16.

The report says: “If restoring financial balance is the government’s highest priority, it is inevitable that staffing levels will need to be reduced.

“This presents a clear and present danger that patient safety and quality of care will be compromised and staff morale damaged further.”

The report argues that extent of the overspend shows that the deficit is not due to mismanagement in individual organisations but is, instead, a systemic problem.

To fix this, the report recommends the NHS improve productivity by improving clinical practice and reducing waste.

However, the researchers concede that this cannot be achieved at the pace or scale needed to meet the target of delivering £22 billion in efficiency saving by 2020/21.

The report adds that new models of care programmes will also not deliver major savings in the short term, even if they do offer opportunities to improve services for patients.

Andrew Pepper, chair of NHS Clinical Commissioners Finance Forum said: “This report provides some important analysis of the increasing deterioration of NHS finances, and sets out how the pressures are hitting all part of the system including primary care and social care.

“As highlighted in the report, commissioners are not immune to these system pressures and it starts to explain why many CCGs will struggle to balance their budgets for the first time.

“We have been warning for some time that the financial position of commissioners has been deteriorating and that the allocative growth in the 2016/17 funding cycle has already been committed to announced projects or funding streams.

“The growing provider deficit means that CCGs will have to dedicate more of their resources to sustaining, rather than transforming the current system.  “Systems are already beginning to link together across health and social care in a way that will improve care and quality for patients and recognising that efficiencies are required, and as the King’s Fund makes clear implementing new models of care, raising the tariff or moving away from PbR are all examples of where we can move to, but they may not materially affect the overall position in the current year.

“Add to that the drawdown restrictions which means many CCGs are unable to access any additional money to support local services and implement new delivery approaches to enable transformation, and we begin to see the full picture across both providers and commissioners.

“The financial pressures in the NHS are the result of system-wide challenges, and cannot be attributed to any single organisational element of the health and care sector.

“Given the changed financial landscape and the economic impact of Brexit yet to be fully known, a governmental review of the overall financial position is critical and we fully support the King’s Fund call for an honest conversation with the public about what can realistically be delivered.”

Helen McKenna, senior policy advisor at The King’s Fund, added: “Politicians need to be honest with the public about what the NHS can offer with the funding allocated to it.

“It is no longer credible to argue that the NHS can continue to meet increasing demand for services, deliver current standards of care and stay within its budget. This is widely understood within the NHS and now needs to be debated with the public.”