NHS England and NHS Improvement have today published Strengthening Financial Performance and Accountability in 2016/17, a financial and performance “reset” on the same day that the Department of Health publishes it annual accounts. The aim of the reset is to address the deficits that many NHS trusts find themselves in after a difficult year when trust have had to meet tight “control totals” in order to get back into balance.

Alongside the reset, the DH accounts reveal that the departmental expenditure limit (DEL) has not been breached, but this goal has only been met by the narrowest of margins for the second year running.

Commenting on the reset and the accounts, Saffron Cordery, director of policy and strategy, said:

“The NHS is facing up to its most profound financial challenge, with constrained budgets, rising demand and now the fallout from Brexit. There is mounting evidence of a clear gap between the quality of care we all want the NHS to provide and the funding available. Leaders of acute, mental health, community and ambulance services know the service cannot continue on ‘business as usual’, and they are doing all they can to regain financial control. Today’s announcement from NHS England and NHS Improvement is a welcome recognition of the scale of this challenge.

“The difficulty that the Department of Health has had in trying to balance its budget has not come without a cost, for example cutting down on much needed capital investment. The wafer-thin margin also demonstrates the fragility of the system and proves just how precarious NHS finances actually are. It’s becoming increasingly clear that the financial deficit is the product of a system-wide, structural problem. Restoring financial balance and putting the NHS on a sustainable long-term footing will therefore depend on all parts of the health and social care system coming together to find solutions, with the right central support to do so.
 
“Simply loading up providers with savings targets they can’t achieve and exhorting them to try harder won’t work. Some trusts can improve their financial performance and NHS Improvement and NHS England have outlined a number of ways to do this. Putting clinical commissioning groups as well as trusts into financial special measures is one approach. The NHS has been down this road before so it’s important that we have learned the lessons about the potentially demotivating impact on staff. This action can be stigmatising and can undermine organisations already struggling to balance their books and attract staff. So, as well as creating clear criteria for when an organisation enters and exits financial special measures, the central bodies in the NHS must do all they can to support them through the process quickly and in better shape.

“Today’s announcement outlines a plan to try and stabilise finances in the immediate term. But we need a revised approach to financial planning in the long term and a much smaller set of priorities on which the NHS ruthlessly focuses in the short term, with everything else taking second place. Without these we cannot even begin to tackle the likely consequences of the middle years of this parliament when available funding reduces dramatically.

“Finally, as The King’s Fund, Health Foundation, Public Accounts Committee and other independent organisations have also argued, we need honesty, realism and an urgent public debate about where we go from here.”