NHS deficit soars to £822m in 2014-15 in spite of Government bailouts

Posted: 27/05/2015

It has been reported that hospitals and other NHS organisations in England ended the financial year with a total deficit of £822m, compared with £115m the previous year. The deficit has occurred despite a number of multimillion pound bailouts provided by the Government to help struggling hospitals. 

The figures from the health regulator, Monitor, demonstrate the excessive spending by health trusts. According to the BBC, Foundation Trusts, the leading health trusts in England which make up two-thirds of trusts in England, and run some hospitals, ambulance and mental health services, have a deficit of £349m, compared with a planned deficit of £10m. Other NHS Trusts have incurred a deficit of £473m, bringing the total to £822m. 

It is thought that rising patient demand and an increase in spending on agency fees has contributed to the deficit. A report carried out by the regulator found that trusts spent £1.8bn on contract and agency staff, more than double the amount planned. 

Richard Murray of the health think tank, The King’s Fund, told the BBC that “plugging the black hole in NHS finances must be an urgent priority for the Government.” He warns that there is a real prospect of the deficits “snowballing” which he suggests will lead to a decline in NHS performance and patient care. 

The chief executive of Monitor, Dr David Bennett, acknowledged that the past year has been “exceptionally challenging” but suggested that 2015-16 financial year would be tougher. However, it is hoped that the Government’s planned investment of £8bn a year into the NHS until 2020 will go some way to relieving the financial pressures. A spokesperson from the Department of Health said that it still expects the NHS to “show tight financial grip and live within their means.” 

In June 2014, the BBC reported that the NHS’s budget in England for 2015 had been set for £100bn. However, a funding gap of £2bn for the next financial year had already been identified, as it was predicted that the growing costs would outstrip the money the NHS would receive. At the time, Penningtons Manches raised concerns in this article about the lack of funding and the effect this has on the reduction of services and patient care.

Camilla Wonnacott of Penningtons Manches' clinical negligence team said: "Far from improving, the financial crisis in the NHS appears to be getting much worse. A year on, we still see many clients who have sustained injuries which could have been avoided if proper funding had been in place. It is yet to be seen whether the additional NHS funding will assist with the current deficits and prevent deterioration in NHS performance in the future."

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