LONDON - SEPTEMBER 26: An elderly gentleman walks past a hospital sign on September 26, 2007 in London, England. In a report to be released September 27, 2007 the Healthcare Commission outlines care by the NHS Trust should provide further dignity in care to the elderly. (Photo by Cate Gillon/Getty Images)
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Hospitals in England are drawing up plans for fresh cuts in services as figures show National Health Service trusts remained firmly in the red in the first quarter of the financial year.

Government plans to restructure the NHS announced in December are designed to make hospitals work together to find savings while maintaining levels of care.

But early plans drawn up by some hospitals suggest closures of accident and emergency departments, changes to maternity care and cuts in hospital beds, according to an investigation by the campaign group 38 Degrees.

The investigation also found early plans to cut the growth in staffing costs and consolidate back-office functions as well as cutting running costs and disposing of land.

It comes amid continued strain on NHS budgets despite a large emergency cash injection from the government aimed at restoring its financial position.

NHS trusts recorded a £461m deficit in the three months to June, according to figures published by NHS Improvement, the regulator. This was despite £1.8bn of extra spending allocated for the whole year to reform services and put hospitals on a sound financial footing.

Without the extra money — equivalent to £450m over the four quarters — the deficit would have been close to last year’s £930m over the same period.

Despite the large deficit, the regulator said there had been a 20 per cent rise in the number of NHS providers saying they had kept to their spending plans.

MPs on the Health Select Committee last month criticised the use of the extra money to plug the funding gap because its original aim was to reform services and improve care. They also attacked transfers from budgets for capital investment to fund day-to-day running of services, saying the practice was “storing up future costs as well as reducing the funding available for essential transformation of services”.

Jim Mackey, chief executive of NHS Improvement, said trusts were “starting to get a grip on their finances” although there “is still much work to be done”.

But NHS Providers, which represents trusts, said many of its members remain pessimistic about their ability to return budgets to a more stable footing.

It called on Jeremy Hunt, health secretary, Simon Stevens, chief executive of NHS England and other NHS leaders to make policy choices and either continue allocating more money, cut services or allow performance targets to slip.

“We have now reached a point where we cannot do everything,” said Chris Hopson, chief executive of NHS Providers. “We cannot provide quality required with the money available. We have got to take a conscious decision about where we are going to allow things to slide.”

He predicted that resources would probably shrink for specialist services such as dermatology or rheumatology and that smaller hospitals that find it hard to hire and retain specialist staff would also suffer.

Richard Murray, director of policy at The King’s Fund think-tank, said the figures for the first quarter flatter what is likely to be a bigger overall deficit by the end of the year and said it would be “a mistake to suggest that the financial pressures that have engulfed the NHS have eased”.

While many NHS trusts met their financial targets in the first quarter, a King’s Fund survey of finance directors showed that only a third are confident that they will be on track by the end of the year.

Furthermore, with demand for services rising, waiting times are continuing to increase. The NHS is “still just about coping for the time being, but the service is reaching a critical point,” Mr Murray said.

The extra cash from the government this year equates to a funding increase of about 3.8 per cent for NHS England, NHS Providers said. The increase falls to 1.4 per cent next year and 0.4 per cent the following year. Mr Hopson said demand for services was increasing by about 3 per cent a year and wages by about 1 per cent.

“How on Earth is the NHS going to make the numbers add up?” he said.

But the government insists the health service can be more efficient. A spokesman welcomed the progress but warned “there is no room for complacency”.

He pointed to a recent review by Patrick Carter which identified annual savings of about £5bn in acute hospitals. Lord Carter found average running costs a square metre ranged from £105 to £970.

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