The health select committee holds an oral evidence session with Chris Hopson and other health representatives as part of its inquiry into the impact of the comprehensive spending review on health and social care. The scale of the financial challenge facing hospital, mental health, community and ambulance trust providers was outlined today with the emphasis that the NHS deficit will only be eliminated by the end of 2016/17 if all parts of the health system – not just providers – play their part. This is a challenge for the whole NHS.

In presenting evidence to the health select committee, which met as part of its inquiry into the spending review settlement for health and social care, NHS Providers, the association of foundation trusts and trusts, raised the following issues:

• Challenge for the whole NHS: the financial problems facing NHS providers are systemic rather than down to individual NHS trusts and foundation trusts – 95 per cent of acute hospital trusts, for example, are now in deficit.

• Deficit: the net deficit for the provider sector over the first three quarters of this financial year was £2.26 billion and could increase to £2.8 billion by the end of March. Additional funding will help to restore balance but our current estimate is that providers will end 2016/17 with a deficit of around £500 million.

• New policy commitments: further clarity is needed on what new policy commitments, particularly those relating to mental health, are in and out of the extra £10 billion of funding that the government is handing to the NHS.

• The need for a clear savings plan: the NHS is facing a funding gap of £23.5 billion by 2020. Clarity is needed on how these savings will be realised, what the provider sector share will be and what the expectation on each individual provider will be.

• Scale and pace of change: the NHS is being asked to deliver large-scale transformational change in five years – this has taken other countries over a decade to achieve. The new ways of delivering care (the vanguards) are promising but many will not achieve savings for several years to come.

• Support for providers: our members require greater support at a national and whole-system level if they are to realise further savings. In particular, system leadership is required to address shared health and social care issue of delayed transfers of care.

• Funding levels: as the economy grows there is a strong case for more of the UK’s national wealth to be devoted to health: we are heading towards spending around 6.6% of GDP which will not be enough.

Put simply, demand on services and the costs of delivering care are outstripping revenue

NHS Providers chief executive, Chris Hopson, said:

“NHS foundation trusts and trusts are in a precarious financial position with the overwhelming majority now expecting to be in deficit by the end of 2015/16. It will take longer than a year to eliminate the deficit in the provider sector – our best current estimate is a deficit of around £500 million by the end of 2016/17. While the NHS received a good settlement compared to other parts of the public sector in the Spending Review, it is in the middle of the longest and deepest financial squeeze in its history. The ‘front-loaded’ investment over the next two years will help to ease the pressure, but there must be concern over the back-end of this parliament when the funding increases will be much lower.

“Providers managed to achieve the £20 billion of efficiency savings that were required during the last Parliament and they are doing much to improve the efficiency and quality of care they deliver. However, the financial challenge before them today is much tougher than before." Read the full evidence and watch the session.  

Read full press statement.