NHS Trusts serving the most deprived populations experiencing the deepest revenue deficits
A new analysis by the Nuffield Trust has revealed that NHS trusts in England are experiencing their worst financial deterioration in a decade, raising concerns that the government’s reform plans could be at risk.
The report found that the NHS trust sector, which makes up three-quarters of NHS day to day spending, recorded a £1.2 billion overspend last year, amounting to 0.9% of income in 2023/24.
This is double the previous year’s overspend, recorded at £448 million, and significantly worse than the modest financial surpluses seen in 2020/21 and 2021/22.
The sector is in “as precarious a position it was in immediately prior to the pandemic,” the report said.
NHS trusts in the most deprived areas suffered the worst financial deterioration in 2023-24, with North West and Midlands reported the deepest deficits, accounting for 2.2% and 1.5% of revenues, respectively.
The North East and Yorkshire have also seen the steepest declines in financial health since 2022/23.
The underlying gap between stable incomes and outgoings across the provider sector was at least £4.5 billion last year.
The worsening of the sector’s financial health suggests “a wider financial problem for policymakers to tackle in the forthcoming spending review,” the Nuffield Trust suggested.
Sally Gainsbury, senior policy analyst at the Nuffield Trust, raised questions about government’s ambitious reform plans without the necessary financial backing.
“These findings reveal just how fragile the financial health of the NHS is, which should sound alarm bells over the government’s promise of extensive reforms but with no new money to pay for them,” she said.
The government is planning to shift care out of hospital and dramatically reduce waiting times, but Gainsbury argued: “With over 6 million people on an NHS waiting list – many of them needing treatment in a hospital – it is not realistic to assume expenditure on acute hospitals can just be switched to expand other services such as community and mental health care.”
“Those services do need to be adequately resourced, but the funding for that cannot be found by robbing Peter to pay Paul,” she added.
Gainsbury also expressed deep concerns that NHS Trusts serving the most deprived populations have been experiencing the steepest deterioration in their financial health.
She emphasised that people living in poverty have “poorer health, more complex conditions and die younger” and suggested that a strategy that targets investment in these areas is needed to reverse these worrying trends.
Of the 205 operational trusts that published accounts for 2023/24, 112 reported overspending, with an average deficit of 2.3% of income. Meanwhile, 76 trusts recorded surpluses, averaging 1% of income, while the rest broke even.
According to the report, current deficits remain below the record shortfall of £2.2billion in 2015/16, when overspending was largely concentrated in acute hospital trusts.
This time overspends were spread across acute, ambulance and mental health trusts.
While acute hospital trusts continue to report the largest revenue deficits, with overall overspending at 1.2% of revenues, the steepest declines since 2019/20 have been in specialist, ambulance, and mental health trusts.
Community health trusts are the only sector to generate a surplus in 2023/24, albeit modest and significantly reduced at 0.2% of income.
NHS England's latest board report indicated a £1.6bn deficit in the trust sector by December.
The report noted that although it is not directly comparable to full-year data, it suggests further financial deterioration this financial year.
Helen Morgan's letter to Health Secretary, Wes Streeting.