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NHS finances are as precarious as they were before the pandemic with deficits at health service trusts in England more than doubling over the past year, underscoring the challenges facing ministers in boosting community care.
The overall deficit for NHS provider trusts in England, which largely manage hospitals, stood at £1.2bn or 0.9 per cent of revenue in 2023-24, according to research by the Nuffield Trust think-tank.
The figure, up from about 0.4 per cent of revenue in 2022-23, marked the third consecutive year of worsening finances at trusts.
A temporary funding boost during the pandemic pushed the sector into surplus during the financial years ending 2021 and 2022. But dwindling revenues, rising temporary staffing costs and increased outsourcing to the private sector have since weighed on the health service.
Sally Gainsbury, senior policy analyst at the Nuffield Trust, said the findings revealed “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”.
Ministers have pledged to reduce patient waiting times and reform the NHS over the course of this parliament, setting out three “big shifts” in how the service delivers treatment, including by moving more care away from hospitals and into the community.
NHS providers are being asked to undertake a 1 per cent reduction in cost base, while also raising productivity and efficiency by 4 per cent.
Health secretary Wes Streeting last month said “2025-26 must be a year of financial reset for the NHS”. But health leaders have warned the ambition will be “unbelievably stretching” for the NHS amid a backlog of more than 6mn people waiting for routine procedures and appointments.
Gainsbury said community and mental health services did “need to be adequately resourced, but the funding for that cannot be found by robbing Peter to pay Paul”.
Trusts, which make up three-quarters of day-to-day spending in the health service, are largely responsible for hospital finances but also mental and community healthcare, as well as running ambulance services.
The think-tank found trusts providing acute hospital care had the biggest operating deficits, with average reported deficits equivalent to 1.2 per cent of their revenue.
The analysis removed the impact of recent accounting changes, producing a fair comparison of trust finances in 2023-24 with previous years for the first time.
It showed that 55 per cent of trusts had a deficit in 2023-24, up from 48 per cent in 2022-23, and that those whose financial position deteriorated the most were in areas of greatest deprivation.
Trusts in the North West and Midlands recorded the deepest overspends last year, with deficits equivalent to 2.2 per cent and 1.5 per cent of revenue respectively, according to the analysis.
Liverpool Women’s NHS Foundation Trust had the largest deficit of any individual provider at more than 15 per cent, a sharp deterioration on 1.7 per cent the previous year.
Official data shows 23.5 per cent of the population of Liverpool was income deprived in 2019, making it the fourth poorest local authority in England.
Meanwhile, acute hospital trusts serving the most deprived patients experienced the steepest declines in their finances in the year to March 2024.
The Nuffield Trust found trusts with the most significant deteriorations in their finances had been unable to reduce temporary staff costs. It said one reason for this was that 2023-24 was a year of widespread strikes among medical staff.
Separately, trusts with the steepest declines in their finances had on average significantly increased their expenditure on outsourcing care to the independent sector.
NHS England said staff were “working incredibly hard to deliver record levels of care and treatment for patients”.
“It is essential NHS organisations operate within their budgets, and we are giving them greater flexibility to focus funding where it’s needed the most — while continuing to take action to address any financial issues.”
The Department for Health and Social Care said: “This government inherited a broken NHS with trusts facing severe financial challenges, which is why we announced a £26bn increase in health and social care funding at the Budget. But investment must go hand in hand with a strong grip on any money spent, and proper reform alongside it.
“We have set an extremely tough productivity and efficiency target for the NHS next year, but we are giving the heath service the tools to hit it, bringing our analogue NHS into the digital age, tackling waste and cutting out millions of pointless and missed appointments.”
