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Knowledge Hub

Nuffield Trust suggests NHS budget goals may be impossible to meet

Why do policy analysts believe NHS trusts will fail to deliver sayings demanded by the DH?

A think-tank analysis of Department of Health accounts argues that claimed small improvements mask continued serious difficulties, particularly in secondary care.

Secondary care, which is made up of 238 separate hospitals and other provider trusts, accounts for well over two thirds of total DH spending.

The Nuffield Trust’s analysis shows that NHS trusts have begun the 2017/18 financial year on course for an underlying deficit of £5.9bn and, that to meet the current deficit target of £500m, operating costs must be cut by £3.6bn.

This would require trusts to make savings equivalent to 4.3% of operating costs, which the think-tank’s policy analysts argue will be almost impossible to deliver.

If, instead, trusts achieve savings equivalent to those made last year, they will still end the year with a deficit of around £3.5bn.

The DH’s annual accounts showed a modest underspend of £560m on its £118bn current expenditure budget for 2016/17 compared with a £200m overspend during 2015/16.

Projections of future years suggest that, even under optimistic assumptions for inflation and continued high levels of savings, NHS providers will continue to run a large collective underlying deficit until at least 2020/21.

Further information

Nuffield Trust: Understanding the NHS deficit and why it won’t go away