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NHS will be forced to use transformation fund to shrink deficit, report says

9 August 2016

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NHS England “will struggle” to save £22 billion by 2020, according to a Nuffield Trust report.

The report, Feeling the crunch: NHS finances to 2020, says that the NHS will have to take funds from the Sustainability and Transformation Fund to meet this requirement as laid out in the Five Year Forward View.

The Nuffield Trust said that making annual efficiencies of 2% through to 2020/21 would not be sufficient to fill the deficit even with the NHS’s “financial deficit” which assumes savings of 4% in 2016/17.

The think tank added that these savings would still leave providers with an underlying deficit of £2.35 billion in 2016/17, which would require further savings of 4% in 2017/18, followed by efficiencies of 3% in 2018/19.

The report highlights that this “level of recurrent, sustained efficiency saving has never been achieved to date and would still require funds to be taken from the Sustainability and Transformation Fund (S&TF) to balance provider deficits in the meantime.”

It adds: “The S&TF can only be spent once. If most of the funds are used to plug the deficit, there will be little money for the transformative service change that is required to modernise and reshape NHS services for long-term financial sustainability.”

Even if NHS providers can make cost savings of 2% year on year to 2020/21, a £6 billion deficit will still remain.

The Trust concludes, “if commissioners fail in their attempts to reduce the rate at which demand is growing, or if additional funding cannot be secured, the NHS will face some unpalatable decisions in order to curb the growth in activity”.

The ramifications of this failure could include extending treatment wait times, raising the eligibility threshold for treatment, cutting certain services altogether, or closing whole sites or hospitals, says the Nuffield Trust.

Christina McAnea, UNISON head of health, commented today: “UNISON pointed out from the start that the drive for £22bn of so-called ‘efficiency savings’ was unachievable.

“Of course the NHS should always look to improve the way it delivers services. But international comparisons show that we already have one of the most efficient healthcare systems anywhere in the world.

“The level of efficiencies demanded has never been attempted anywhere before. The simple fact is that previous, similar initiatives mean there is little left to cut if the NHS is to continue delivering the highest quality care.”