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Foundation trusts report almost half a billion pound deficit in three months

NHS hospital finances have seen a ‘severe deterioration’ in the first part of 2015/16 with foundation trusts almost half a billion in the red.

Monitor’s quarterly report on the financial performance of 151 foundation trusts showed they ran a £445m deficit between April and June, £90m more than expected.

NHS finance experts said trust finance directors were so financially squeezed that they ’face a nigh-on impossible job trying to balance the books at the moment’, calling on the Government to invest its promised £8bn extra investment in the NHS as ‘a priority’.

The situation raises fears for NHS funding as a whole, with Pulse reporting today on GPs in one CCG asked to shave almost a million extra off prescribing budgets to plug gaps in secondary care.

Paul Briddock, director of policy at the Healthcare Financial Management Association (HFMA), said: ’Monitor acknowledge it as a “severe deterioration” and that “the current level of deficit is not affordable”. With 78% of all FTs now in deficit this is patently obvious and indicates that it is a systemic problem facing FT finances which needs addressing urgently.

’It has now been 182 days since the Government vowed to inject £8bn of much-needed extra funding into the NHS and we still await confirmation as to where and when this investment will be made. They now need keep their promise and make their pledged investment a priority.’

But the calls come as the Government has already promised some of the extra funding pledged for the NHS into new initiatives rather than plugging gaps, such as for example the new seven-day GP contract announced by Prime Minister David Cameron last weekend.

The NHS’s own Five Year Forward View had argued that £8bn was the minimum required to plug gaps in funding, and only after £22bn efficiency savings were achieved, by 2020. It had also promised a ‘much higher proportion’ of the NHS budget to be spent on general practice.

Monitor’s report said: ’NHSFTs in aggregate reported a year-to-date deficit, before impairments and transfers, of £445m at Q1 2015/16, which was £90m worse than plan and £96m more than the full-year deficit for 2014/15.

’This rapid decline in NHSFTs’ financial performance saw 118 NHSFTs in deficit this quarter, with a total gross deficit of £485m. This was offset by just £40m gross surplus at 33 trusts.’

A recent Pulse investigation into measures taken by financially troubled CCGs found some were using ’ethically questionable’ incentives for GPs to cut referrals to hospitals to reduce pressures.

GPC chair Dr Richard Vautrey said that ’the financial pressures facing the NHS are alarming’ but failed to acknowledge the ’hidden deficit within general practice funding’.

He said: ’In relative terms we only receive three-quarters of the share of NHS funding now that we received in 2006. As currently UK general practice receives approximately £10.5bn, we’ve actually got a funding deficit of at least £2bn just to deliver the same level of services we were doing almost a decade ago. The reality is our workload has gone up significantly and so the funding deficit being managed by general practice is even greater than that.

’We urgently need additional investment just to maintain current service provision. The promised £8bn cannot just be used for more hospital investment at the expense of general practice and nor can it be used to pay for an expanded service when big cracks are appearing in the current foundation, which must be repaired first.’