News / Q2 figures raise prospect of first deficit in nine years

Half way through the financial year, the foundation trust sector as a whole projected a £271m net deficit for 2014/15. Sixty foundations predicted a year-end deficit, totalling £531m – this was £115m worse than planned.

However, it was offset in part by 87 foundation trusts forecasting a surplus of £260m – this was £136m less than planned.

While 72 non-foundation trusts forecast they will break-even or generate a surplus this year – with a combined value of £154m – 26 predicted they will be in deficit at year-end, with an aggregate value of £436m. Overall, the NHS trust sector is projecting a deficit of £282m. This is better than planned – the sector planned for a net £424m deficit this financial year, a positive variance of £142m.

Overall, the commissioning sector is forecasting a £184m overspend against plan. This is made up of projected overspends in clinical commissioning groups (£21m), running and programme costs (£43m) and direct commissioning (£120m).

However, speaking at the NHS England November board meeting, chief finance officer Paul Baumann said mitigations were available to reduce the overspend to £122m. Further mitigation, particularly in central running costs and programme budgets, would be identified as he completed a stock take of spending.

‘I anticipate looking at the year-to-date trends and some of the actions we are going to be able to take, we will recognise some positive reduction in central costs. As a consequence, we will start to offset some of the £122m. Taking this together with smaller areas, that gives us, overall, a good chance of squaring the position in most foreseeable scenarios to the end of the year.’

He stressed to the board that there was no reserve to cater for spending not identified in the risk and mitigation analysis.

‘This feels, as I have said all through the year, to be the year that we are absolutely on the knife edge of balancing or not balancing the position,’ he said.

Monitor urged foundations to get a grip on agency staff spending and increase their efforts on efficiency savings. Its quarter two report said foundation trusts spent £831m on contract and agency staff, more than double the £377m they had planned over the first half of the year. They also made £492m of cost savings, which is £126m less than planned.

Monitor chief executive David Bennett said it was a tough year for many FTs but more could be done to contain costs. ‘Trusts can and need to deliver greater efficiencies while also planning for more significant change over the next two to five years, so that they can continue providing the quality services that patients value,’ he said.

The month six figures emerged amid calls for additional funding in the chancellor’s autumn statement at the beginning of December.

Following its latest financial temperature check, the HFMA said the current level of funding was insufficient and called for ‘above-inflation’ funding alongside service transformation to put the NHS on a more sustainable footing.  It highlighted a ‘real risk that the NHS in England would be in deficit for the first time since 2005/06’.

There were other calls for additional funds in 2015/16 – the King’s Fund said the NHS needed £2bn next year to avoid a financial crisis. The Foundation Trust Network said a cash crisis felt ‘inevitable’ after NHS England and Monitor unveiled a 3.8% efficiency factor in proposals for next year’s tariff.

King’s Fund chief executive Chris Ham said recent pledges from the main political parties to increase funding were welcome, but they had not yet addressed the scale or the urgency of the financial challenge. ‘With deficit reduction still a high priority, finding an additional £2bn in the autumn statement is a very big ask,’ he said.

‘However, unless more money is found, a financial crisis is inevitable next year and patients will bear the cost as waiting times rise and quality of care deteriorates.’