The NHS is in a worsening financial state because of falling productivity and a failure to prevent ill health, a report from the National Audit Office (NAO) has concluded.
A damning verdict on the state of the NHS purse found that a series of long-standing issues, coupled with more recent problems such as the pandemic, has caused the health service to face an ‘unprecedented challenge’.
Despite delivering record levels of activity, including 352.6 million GP appointments, NHS performance overall has been well below what patients had been told to expect including on elective and cancer care, the NAO said.
The review said that the NHS had a deficit of 1.4bn in 2023-24 with three ICBs and 21 trusts having to be put in special measures, and that productivity declined during the pandemic and has not recovered, in part due to a failure to invest in infrastructure that could help staff work more efficiently.
The growing mismatch between demand for services and the funding the NHS receives will need to be addressed, the review added.
It said that both NHS England and the Department of Health and Social Care currently lack a precise definition of ‘what counts as prevention spending’, making it difficult to focus attention and track spending trends.
There was also strong criticism of delays in HM Treasury and DHSC’s approval of NHSE’s overall budget and planning guidance until months into the new financial year, making it very difficult for systems to plan effectively.
‘We are concerned that the NHS may be working at the limits of a system which might break before it is again able to provide patients with care that meets standards for timeliness and accessibility,’ said the NAO report.
ICBs were supposed to have been given autonomy to determine how to allocate resources locally but in reality this has not happened, due to NHS England’s control over budgets which they felt was necessary to deliver financial balance.
The review concluded: ‘The scale of challenge facing the NHS today and foreseeable in the years ahead is unprecedented.
‘Following the statutory introduction of ICSs in 2022, we concluded that they needed time and capacity to build relationships and design services that could better meet local needs.
‘While some transformation is occurring, the pace of change has been slow as ICSs struggle to manage the day-to-day pressures of elective recovery following the pandemic, continual rising demand for NHS services, and significant workforce and productivity issues.’
Health Foundation’s head of economics research Elaine Kelly said the review painted a picture of ‘systemic failures and inefficient decision making’.
‘The pressures on our fractured health service will only increase,’ she said. ‘Health Foundation research projects that the number of people with major illness is expected to increase by a third by 2040. Over the next parliament alone, our analysis shows a potential £38bn shortfall in funding to keep pace with demand and improve services.
‘There needs to be an honest conversation with the public about what can be delivered within existing budgets and where additional funding is needed – the review of NHS performance led by Lord Darzi can provide that opportunity.’
She added: ‘The NHS needs both investment and reform. A shift to the prevention of poor health and stable, long-term investment to meet underlying demand and cost pressures will strengthen the resilience of the NHS and help rebuild the health of the nation.’
The King’s Fund chief analyst Siva Anandaciva said the report showed the ‘desperate state’ of NHS finances.
‘For too long, financial planning in the NHS has been plagued by a lack of candour and transparency. Many local NHS organisations feel pressure to submit financial plans based on hope rather than reality,’ he said.
‘In his new role, the Secretary of State for Health and Social Care has talked about the need for honesty. The government can now decide if it wants NHS organisations to keep submitting overly optimistic financial plans, or the financial plans NHS leaders really believe they can achieve.’
A version of this story first appeared on our sister publication Pulse.
