News / Department reports 2016/17 underspend

18 July 2017

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The accounts also show underspends in other areas of its budget, including a £60m underspend in the capital department expenditure limit (CDEL) and more than £6.6bn in its revenue annually managed expenditure (RAME). The latter relates in part to potential changes to clinical negligence provisions that were not implemented.

The outturns of health bodies in England are consolidated into the accounts, including NHS providers, commissioners and arm’s length bodies. The revenue DEL of £117.6bn was underspent by £563m – in 2015/16 it was overspent by £207m. charlesworth

Though the provider deficit was £791m, when provisions and other adjustments were taken into account this increased to £935m. The report said that while trusts reported a position that exceeded the planned deficit of around £600m, the trend of rising provider deficits had been reversed. The year-end position was a significant improvement over 2015/16, when the net deficit was £2.45bn. The number of trusts in deficit was 105, compared with 172 in 2015/16, while 75% reported year-end positions equal to or better than their agreed control totals.

The Department transferred £1.2bn of the capital budget to revenue. Providers’ capital spending was £126m higher than planned, but this was offset by underspends in non-NHS bodies in the Department’s group, resulting in a £60m underspend.

The NHS England annual report and accounts says the commissioning sector delivered a managed revenue underspend of £902m. This includes the 1% risk reserve – £799m – set aside by the sector, which has been used to balance the overall financial position of the NHS.

Clinical commissioning groups had an aggregate overspend of £556m before the release of the risk reserve – 85 CCGs reported an overspend totalling £607m.

NHS England had an underspend of £439m against plan, largely due to non-recurrent measures, while there was a £296m underspend in direct commissioning and £13m less than planned was spent on historic continuing healthcare claims.

Anita Charlesworth, Health Foundation director of research and economics, (pictured) argued that the Department had re-established financial control at a price. ‘Despite primary care being a priority, last year spending on GP services fell as a share of the health budget and the number of GPs working in the NHS declined,’ she said.

‘The Five-year forward view sets out how the NHS plans to improve and transform services for patients, providing care closer to home. But financial pressures will make it harder and harder to deliver on that vision,’ she added.

‘The financial outlook for the next few years is incredibly tough – funding per person will fall in both 2018/19 and 2019/20 under current spending plans. The acute financial pressures facing the NHS mean that it is difficult to see how the government can deliver on its commitments to deliver parity of esteem for mental health, improve primary care and transform health services for patients across the country. ‘

NHS Providers head of analysis Phillippa Hentsch said that while the financial position had stabilised, it was concerned about the underlying position.

‘[NHS trusts] have made significant progress in reducing the provider sector deficit in 2016/17 as a result of a clear plan, financial support and a lot of hard work from trusts. However, they now enter a difficult year ahead, with lower funding increases and expectations to make even greater savings.

‘For the third year in a row investment in NHS buildings and equipment has fallen. It is concerning that the funding that has been set aside for this purpose is being used to relieve day to day financial pressures. There is strong evidence that the sector is facing a large and growing gap in capital funding.’