Official figures released on Friday by NHS Improvement showed that NHS trusts in England, which predominantly run hospitals, ended the 2015-16 financial year £461m worse off than the organisation had forecast. The combined deficit is almost three times bigger than the £822m overspend incurred the year before, and more than 20 times the size of the £115m deficit in 2013-14.
The overspend is a major embarrassment for the government, because the Treasury told the NHS last year that it should not be more than £1.8bn. The size of the figure threatens to wreck this year’s financial planning for the NHS, which was based on wiping out a deficit of that size. The service, already strapped for cash as it negotiates a decade-long period of historically low annual increases in its budget, will now have to find £700m to bridge that gap.
NHS finance experts said the true scale of the deficit was much worse than the £2.45bn headline total but had been masked by a series of accounting devices. Around £1bn originally earmarked for capital spending last year – for building and maintaining hospitals and buying equipment – was transferred into the NHS’s resource budget to help cover normal running costs. The trusts – which include acute and specialist hospital trusts, mental health care providers, ambulance trusts and providers of community services – came under pressure from NHS Improvement and the Department of Health in January, February and March to make their year-end overspends as small as possible.
Trusts made “crisis-driven decisions” to use “accounting tricks”, such as selling assets, to disguise the true extent of their financial plight, said Tom Kibasi, director of the IPPR thinktank. He called for an investigation by the National Audit Office to ascertain the NHS’s true financial situation.
The NHS in England has run up a record deficit of £2.45bn – the biggest overspend in its history – as it struggles to cope with a surge in demand for care while suffering a major budget squeeze.