President's view: Overspent or underfunded? All the evidence points to the latter

President Ross Welch argues that it is time to review the Five Year Forward View’s achievability

There is a tangible sense of unreality around the current state of NHS finances. It is as if bearing witness to an accident aware of the inevitability that a collision will take place.

And so it is with the current, apparently inexorable, crash course on which health services in England are being propelled.

It is fuelled on the one hand by the growing impatience of policy-makers intent on reining in NHS spending. Added to this is the accelerant of the Five Year Forward View and the government’s pledge to deliver seven-day services.

And as NHS hospitals feel the pressure to find ever more efficiency savings, red warning lights flash – from MPs on the Commons Public Accounts and Health select committees, from our members, think tanks and media exposés, and from NHS providers themselves. The resulting conflagration appears unavoidable.

The Forward View set out a vision that is unquestionably required if the NHS is to meet the challenges of the modern age.

Few could argue with its reimagining of services to meet 21st century demographic and IT demands.

Yet, in an era of fiscal tightening, financial viability was the biggest concern.

The 2014 plan estimated an additional £30 billion a year in costs by 2020-21. It was hatched in tandem with a £22bn “efficiency challenge,” calling for sustained savings of an overall 2-3 per cent a year compared to a recent high of 1.5 per cent, itself nearly double the long-term average. In return, the public purse would cover the remaining £8bn annually.

But amid growing demographic pressures, cuts to social care and community health budgets and a continuing GP shortage, mushrooming demand at our hospitals appears now to have reached a critical point.

Past weeks have seen repeat warnings, with the Public Accounts Committee labelling a 4 per cent efficiency target set for trusts “unrealistic.”

It highlighted, too, the crippling impact of agency costs on hospital finances – a phenomenon that drives to the heart of concerns over public-sector pay restraint and recruitment and retention of permanent employees to lessen these inflated bills.

The Secretary of State for Health acknowledged the unassailable nature of the 4 per cent efficiency target for trusts, reducing it to 2 per cent for 2016-17.

But even this seems ambitious in the context of last month’s Commons Health Committee report on NHS finances.

It concluded that the real-term Department of Health annual funding rise by 2020-21, at £4.5bn, will fall far short of the £8bn identified by the Forward View.

With trusts’ collective deficit now at record levels and pressure on services showing no signs of easing, the DoH narrowly avoided breaching its budget through some agile accounting and a £950 million raid on capital budgets intended for infrastructure improvements.

The Health Committee’s call was clear: “It is time for the government and NHS England to set out how they will manage the shortfall in NHS and social care finances if the measures proposed by the Forward View fail to bridge the funding gap.

“If the funding is not increased, there needs to be an honest explanation of what that will mean for patient care and how that will be managed.”

With new challenges appearing in the wake of the Brexit vote, calls for a review are growing. Yet so far the signs have not been promising.

Days after the King’s Fund suggested that “cuts in staffing and reductions in quality of care are inevitable if the government’s priority is to restore financial balance,” hospitals have now been handed an ultimatum by NHS Improvement: shore up your finances or face special measures.

Amid other aspects of this so-called financial “reset,” whose goal this year is to reduce trusts’ deficits from £2.5bn in 2015-16 to £250m, particular concern has been reported from trusts over its new measurement of “overstaffing,” which could attract penalties under the new regime.

Increasingly squeezed between these two opposing forces – for efficiency and savings and transformation and modernisation – are the patients in need and staff delivering essential day-to-day care.

The hard questions must be asked. Are the efficiencies demanded affordable and, if not, what funding is to be made available to bridge the gap.

And crucially, what and who will bear the brunt of the impact if these questions are not answered satisfactorily?

In my view trusts are not being given anywhere near the funds they require to achieve the challenges asked of them.

Trusts are simultaneously being punished financially for not coming in to line, while in some areas decisions are being delegated away from local management, let alone the clinicians who have to make the day-to-day patient-level decisions, to anonymous and expensive external structures such as so-called “success teams.”

As we approach the Forward View’s half-way point next year, the need now is for a full and frank conversation on the real financial requirements of delivering safe modern services.

Front-line workers, who currently feel extremely alienated, need to be consulted fully and then involved in the process of evaluation and planning.

The alternative is an era of policy-making on the hoof that could spell disaster for our NHS.