Skip to content

This content is more than five years old


Deficits in the NHS 2016

Unaudited figures indicate that NHS commissioners (clinical commissioning groups and NHS England) and providers in aggregate ended 2015/16 in deficit for the second year running.

This briefing draws on data from our quarterly monitoring reports, secondary research and interviews with health care leaders to consider commissioner and provider finances in the round and to provide an overview of the factors that have led to the NHS going into deficit. It goes on to outline some of the strategies being employed to restore financial balance, before drawing together our thoughts on the implications of these strategies for the NHS this year and in the longer term.

Key messages

  • NHS providers and commissioners ended 2015/16 with a deficit of £1.85 billion – the largest aggregate deficit in NHS history.

  • Evidence suggests that, in recent years, mental health and community services providers have delivered relatively strong financial performance, which may have come at the expense of cuts in staff and risks to patient care.

  • Over the past two years the financial position of local commissioners has deteriorated sharply.

  • The scale of the deficit signifies a system buckling under the strain of huge financial and operational pressures.

  • The principal cause of the deficit is that funding has not kept pace with the increasing demand for services.

  • It is touch and go whether the Department of Health has managed to stay within the budget voted by parliament in 2015/16.

  • There are significant opportunities for the NHS to deliver better value care, but these cannot be achieved at the pace or scale needed to deliver £22 billion of efficiency savings by 2020/21.

  • Programmes to implement new models of care and transform services offer significant opportunities to improve care, but these will not deliver savings in the short term.

  • The political and economic uncertainty following the UK’s vote to leave the EU adds to the risks facing the NHS.

  • The government must review its priorities for the NHS to ensure these can be delivered within the resources available.