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Tuesday 18th June 2019

More organisations are struggling financially within a generally healthy NHS, says report

20th September 2012

NHS finances are healthy overall, but a growing number of organisations are in deficit, a new Audit Commission report says today.

NHS financial year 2011/12, finds that primary care trusts (PCTs), strategic health authorities (SHAs) and NHS trusts reported a combined under-spend and surplus of £1.6 billion in 2011/12. Most NHS trusts reported an improved financial position in 2011/12.

However, the number of NHS trusts and foundation trusts in deficit increased from 13 in 2010/11 to 31 in 2011/12. Thirty nine NHS trusts reported a poorer financial position in 2011/12 than in the previous year, and 18 NHS trusts and foundation trusts received financial support from the Department of Health.

The report shows stark differences in health finances around the country, with the majority of trusts in deficit located in London and the south-east. Within London there are substantial differences in the fortunes of trusts. As a region, London reported the highest surplus nationally, but it was home to the NHS trust with the highest deficit (South London Healthcare NHS Trust). Seven of the country’s nine PCTs with an under-spend of over £10 million were in London, as were the three PCTs that failed to achieve financial balance in 2011/12 (Barnet PCT, Enfield PCT and Haringey PCT). Overall healthcare organisations in inner London fared better financially than those in outer London.

Outside of London, other areas face significant challenges. For example, Peterborough and Cambridgeshire PCT cluster has outstanding legacy debt of £21 million – more than 40 per cent of the total debt that must be repaid nationally by PCTs in the coming year before clinical commissioning groups (CCGs) come into effect. In the same geographical area, Peterborough and Stamford Hospitals NHS Foundation Trust reported an operating deficit of £46 million before impairments.

Andy McKeon, Managing Director of Health at the Audit Commission, said:

"Overall, a combination of underspend, surpluses and non-recurrent spending in 2011/12 have given the NHS approaching £4 billion in uncommitted finances, providing financial room for manoeuvre in the future. The NHS has also delivered the first tranche of its £20 billion savings required by 2014/15.  While nationally the NHS appears to be managing well financially, and preparing itself for the changes and challenges ahead, a number of PCTs and trusts are facing severe financial problems. The Department of Health and other relevant national authorities need to focus their attention on the minority of organisations whose financial position is deteriorating, and on their geographical distribution and service standards."

The report also considers how PCTs have made savings and the impact on trusts’ income and services. Overall the savings programmes have had no material affect on the numbers of front-line staff, although the number of managerial and administrative staff has fallen significantly. But, the productivity of acute and specialist trusts does not appear to have increased and there is also little sign of services moving out of hospitals and into the community. These changes are both considered key to achieving the longer term financial sustainability of the NHS. 

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