The Five Year Forward View: do the numbers add up?

The financial assumptions underpinning the Government’s plans to close the NHS’s 30-billion-pound funding gap by 2020/21 are unrealistic and are likely to lead to a decline in the quality of and access to healthcare for patients. Subsequently there is a growing risk that that some vital services will collapse. 18th May 2017

 

The full report can be found here.

 

To tackle the widely-publicised funding gap, the Government promised in 2015 that it would provide a real term increase in NHS funding for England, starting with an additional £2bn in 2015/16 and reaching £8bn a year by 2020/21. The NHS was left to close the remaining funding gap by achieving a net efficiency gain of 2-3% every year until 2020/21 via England’s 44 Sustainability and Transformation Partnerships (STPs).

 

The report assesses 7 key assumptions on which the plans for achieving the required efficiency savings rest and finds them to be unrealistic.  Key findings are that:

  • £1.8bn out of the £2.1bn of this year’s up-front funding earmarked for transforming NHS services has instead been spent on reducing hospital deficits. This leaves only £300 million available for the NHS to invest in achieving its efficiency targets.
  • Last year hospitals were only able to find recurrent cost savings of 2.8% and yet average targets of 4% and 4.2% have been set for this year and next. NHS Improvement has conceded that targets of 4% in previous years were unrealistic.
  • A 1% pay cap on NHS staff wages will be hard to maintain with national average earnings expected to grow by 2.9% a year and inflation at 1.9% a year. A 0.9% real wage cut amidst 6% staff shortages is unlikely to hold.
  • Social care is expecting a funding shortfall of £3.5bn by 2020/21. Less social care provision will mean longer stays in hospital for older people who are well enough to leave and higher costs being passed onto the NHS.

 

Commenting on the report’s findings, author Vivek Kotecha said:

“With the NHS under unprecedented financial pressure and the Government reaffirming that there will be no new money for the NHS after the election, it is time to take a closer look at how the NHS has been asked to plug the now infamous 30 billion funding gap.

If, as the report suggests, the ways in which the NHS has been asked to find efficiency savings are not achievable, the NHS funding gap will not be closed.  Unless additional funds are made available local NHS organisations will be forced to take more drastic measures to reduce costs. Rationing non-emergency care, the withdrawal of services, and/or reducing cost by reducing quality will be the only options.

Commissioners will be forced to limit the number of non-emergency operations, or the kinds of operations, that they will pay for, or the kinds of patients who can have them (tougher thresholds of need). Instead of the intended improvement in care there will be a decline in quality and access and there is a risk that over the coming years the NHS will degrade into two services: a more or less adequately funded urgent and emergency health service, and an underprovided and oversubscribed non-emergency service.

Public concern about the NHS is high and staff morale is crumbling in the face of this financial pressure. The Government needs to make clear what they are going to do if the STPs are unable to meet their target efficiency savings or patients will face longer waits for care, with some services at risk of being lost altogether.”

 

The full report ‘The Five Year Forward View: do the numbers add up?’ can be found here.

Vivek Kotecha

About Vivek Kotecha

Vivek previously worked as a manager in Monitor and NHS Improvement analysing and reporting on the operational and financial performance of the provider sector. Prior to that he worked as a management consultant at Deloitte for 4 years. Vivek holds a BSc Economics (Hons) from the LSE and is a chartered accountant. He is currently studying for a MSc Economics at the University of London.