The Public Accounts Committee (PAC) believes the Department of Health and Social Care (DHSC), NHS England and NHS Improvement have “painted an overly positive picture of the future financial stability of the NHS,” citing lack of detail over the delivery of the Long Term Plan.
In its critical report on the Long Term Plan, the PAC also expresses concern that the scale of this challenge has been under-estimated with particular areas for concern being staffing, finances, capital expenditure and the impact of capital-to-revenue transfers on services and patient care.
Although the NHS overall almost achieved financial balance in 2017-18, this is only by virtue of the planned £1.2 billion underspend by NHS England that largely offset the £991 million deficit from Trusts and £213 million deficit from CCGs.
More concerning for the PAC is the large disparity in financial performance across Trusts, with 100 from 232 in deficit, but just 10 Trusts accounting for 69% of the combined net Trust deficit. £3.2 billion in loans was given by the DHSC in 2017/18. With £4.5 billion of loan repayments due in 2020 alone, the PAC received confirmation from the DHSC that debt restructuring would need to be considered.
It also expresses concern that the expectation published in the Long Term Plan that by 2023-24 no Trusts will be reporting a deficit is “overly optimistic” and calls for planning guidance for 2020-21 from the national bodies to clarify the arrangements and timeline for achieving annual financial balance as well as dealing with historic debt.
Capital-to-revenue transfers peaked in 2016/17 at £1.2 billion and this practice is expected to cease from 2020/21. In its previous report on NHS financial sustainability, the PAC recommended that the DHSC should review the flow and application of capital in order to assess the impact of capital-to-revenue transfers on services and patient care. The DHSC was unable to give a definitive measure. NHS England has highlighted that critical backlog maintenance is reaching a point now where it needs addressing.
“There is a risk that Trusts are simply storing up problems by sacrificing long-term investment to meet the immediate needs of service provision,” the PAC states. With an estimated £6 billion now in backlog maintenance there is a recognition from the DHSC, NHS England and NHS Improvement that the cost of not upgrading equipment and the potential impact on patient care from inadequate and poorly maintained equipment and facilities must be considered.
The 2017 budgets announced an additional £3.9 billion of capital investment, which, in combination with the reduction in capital-to-revenue transfers, it is hoped will start to address the backlog. However, long-term capital investment plans along with how detail of how capital funding will be prioritised and allocated efficiently to support the transformation of services will not be confirmed until the 2019 Spending Review later this year.
The PAC has asked the DHSC to provide a breakdown of its capital budget for 2019/20 and how it is being earmarked for expenditure against a set of investment priorities, including backlog maintenance, by October 2019.
The problems of staffing shortages have been widely recorded and reported and there are no immediate signs that this position is improving. The Long Term Plan acknowledges that the current level of vacancies is unsustainable. NHS Improvement is developing a Workforce Implementation Strategy due for publication this year, after the Spending Review.
The PAC reports that Trust Chief Executives consider staffing shortfalls to be the biggest challenge they face and also the most significant threats to financial sustainability in the NHS. It is a situation that is likely to deteriorate further as senior staff opt not to do extra hours or to even reduce their working hours, with others planning to retire early.
The PAC has asked the DHSC to provide more information about how it plans to deal with these issues around the recruitment and retention of staff by July 2019, and how they will be reflected in the Workforce Implementation Strategy.
Integrated Care Systems are central to the delivery of the Long Term Plan. However, the PAC highlights that their progress may be impeded because they are not statutory bodies and “the legal and regulatory framework for the NHS is not compatible with the aspiration to system-wide working.” It has requested further detail by July 2019 around the governance arrangements, suggested legislative changes and how support will be provided to areas where partnership working is less well developed.
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