The King’s Fund issues stark warning ahead of the Budget as new survey shows nine out of ten hospitals forecasting deficits

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The King's Fund has warned that unless additional funding is found, a growing black hole in NHS finances could have significant consequences for patient care.

In a briefing published before next week's Budget, the think tank warns that financial problems are now endemic among NHS providers, with even the most prestigious and well-run hospitals forecasting deficits. New findings from its latest survey of NHS finance directors show that:

  • two-thirds (66 per cent) of trusts are forecasting an end-of-year deficit, up from 25 per cent at the same time last year
  • 62 per cent say their forecast depends on the provision of additional financial support, running down their reserves, or both
  • among acute trusts, 89 per cent are forecasting a deficit, up from 21 per cent this time last year.

The Secretary of State for Health and the Chief Executive of NHS England, Simon Stevens, have recently warned that the NHS will not receive any further funding increases this year. The briefing argues that, although there is scope to improve NHS productivity, initiatives to reduce spending on agency staff and increase financial control will not be enough to close the black hole in NHS provider finances which estimates suggest could top £2 billion this year. 

Despite additional funding announced in the Autumn Statement, pressures on NHS budgets have been exacerbated this year by a cut in the prices paid to hospitals for treatment and the transfer of more than £3.4 billion in NHS funding to the Better Care Fund, the government's flagship scheme to promote integrated care. The social care system is also under huge pressure, with growing numbers of people unable to access publicly funded care.

The briefing also warns that the £8 billion a year in additional funding pledged by the government by 2020 is the bare minimum needed to maintain standards of care and will not pay for new staff or the government's pledge to implement seven-day working across the NHS. Looking ahead to the Spending Review later in the year, it argues that the £8 billion must be front-loaded early in the parliament and that additional funding must be prioritised to support essential changes to services and for social care.

Richard Murray, Director of Policy at The King's Fund, said: 'Last year’s deficit among NHS providers was unprecedented, but this year is shaping up to be much worse. If the Chancellor does not find additional funding in the Budget, the government must face the consequences – either patient care will suffer or the Department of Health will overspend its budget this year. NHS leaders have signalled a stronger focus on financial control and there is still significant scope to increase productivity in the NHS, but this will not be enough to close the black hole in NHS finances.'

Notes to editors

The survey of NHS trust finance directors was carried out between 5 June and 22 June 2015. Of 254 trust finance directors contacted, 100 responded. The full results of the survey will be published in our next quarterly monitoring report later this month.

For further information, or to request an interview, please contact the Press and Public Affairs team on 020 7307 2585 (if calling out of hours, please ring 07584 146035).

The King's Fund is an independent charity working to improve health and health care in England. We help to shape policy and practice through research and analysis; develop individuals, teams and organisations; promote understanding of the health and social care system; and bring people together to learn, share knowledge and debate. Our vision is that the best possible care is available to all.