Analysis from the Nuffield Trust has warned that NHS trusts are on course to spend almost £5 billion more next financial year than was anticipated when funding levels were set in 2018.
NHS trusts face ending this financial year, which ends in April 2022, with an overspend of £5 billion or 5.2 per cent of what was originally planned for, excluding the extra costs of dealing with coronavirus. Even if efficiency improvements return to planned rates, this will remain at £4.7 billion in the 2022/23 financial year (4.8 per cent), and £4.2 billion the following year (4.1 per cent).
At the time the NHS Long Term Plan was drawn up it was assumed that NHS England would have around £5 billion more to spend this year on new treatments and services, including dealing with the waiting list backlog, than it actually does.
These higher spending pressures are calculated after taking out spending which is specific to the pandemic. The gap is largely a result of intended efficiencies not being delivered, because targets were unrealistically high or because the service has more recently been consumed by the need to respond to the biggest pandemic in its history.
The projections show that the 2021 Spending Review must confront difficult options: giving the NHS billions in extra funding at a time when public finances are strained; dropping some goals from the Long Term Plan; and asking the health service to deliver efficiencies at a rate that has seemed impossible in the past.
Sally Gainsbury, Nuffield Trust Senior Policy Analyst, said: “These extra costs beyond what the NHS anticipated will exist even once the onslaught of Covid-19 finally stops. It is crucial that they are recognised in the forthcoming Spending Review. The NHS cannot expect the full gap to be wiped out by extra money, but the Treasury needs to be realistic about where the health service is starting from.
“Closing the gap by 2023-24, for example, would entail annual efficiency savings of around £4 billion a year - more than twice the savings rate the year before the pandemic struck. Given providers have to find around £1 billion in efficiencies just to stand still each year, it would be more realistic to assume that at best it will take five years to close this gap.”
