News / First quarter financial reports paint gloomy picture

29 September 2014 Seamus Ward

Login to access this content

Image removed.Reports from Monitor, the NHS Trust Development Authority and NHS England showed an aggregate year-to-date overspend of almost
£500m in trusts, foundation trusts and clinical commissioning groups. This includes the first aggregate foundation trust deficit.

Monitor said foundations reported an aggregate year-to-date deficit of £167m in the first quarter of the financial year – an £80m deficit had been planned. In its report on first quarter performance, the regulator said 86 foundations reported deficits. Financial pressure was felt particularly in the acute sector, where 80% of trusts reported deficits, accounting for 90% of the total gross deficit.

The combined deficit of the 86 trusts was £227m, offset by 61 FTs making a surplus of £60m. Non-foundations reported a year-to-date deficit that was £76m more than planned. The NHS Trust Development Authority said the deficit stood at £300m at month four, compared with a planned figure of £224m.

Overall, NHS trusts forecast a net deficit of £409m at year end compared with a planned £425m deficit, a positive variance of £16m. The TDA reported 40% of trusts in London and 39% of those in Midlands and the East were forecasting a deficit, compared with 26% in both North and South regions.

While there is no year-end forecast for FTs, Monitor said that, given the level of cost pressures they faced, it was likely the sector as a whole would end the current financial year in deficit. Clinical commissioning groups recorded a small overspend of £13m at month 4 and forecast a £13m overspend against plan at year-end. 

Following the release of the figures, Labour leader Ed Miliband told his party conference that, if elected, his government would create a £2.5bn ‘time for care’ fund by 2020, paid for by a crackdown on corporate tax loopholes, a ‘mansion tax’ and a levy on cigarette firms.

HFMA policy and technical director Paul Briddock said Monitor’s Q1 figures showed a worrying decline in foundations’ overall financial position. In 2012/13, the FT sector showed an overall surplus of £491m, with 14% of FTs in deficit, he said. By 2013/14 this had declined to a £133m overall surplus, with 27% of FTs in deficit. But in the Q1 figures, 59% are in deficit and now have an aggregate deficit of £167m.

‘The figures come as no surprise given what our members have been telling us,’ Mr Briddock said. ‘The cumulative effect of year-on-year real-terms reductions in the NHS budget for FT providers of 4% per annum, coupled with increasing demand for services and the cost of quality improvements required, means the majority of FT providers are struggling to cope.

‘The NHS is at a crossroads. The reality is that, given the scale of the £30bn required savings on the £110bn NHS budget – a real terms reduction of more than 25% – this cannot be done by targeting efficiency savings alone. We simply can’t afford to carry on providing all the services that we currently do in the same way.’