Background to the report
This is our ninth report on the financial management of the NHS
in England. We published our last report in February 2020,
finding that, to bring about lasting stability, NHS England
(NHSE) needed to engage in financial restructuring. We stated
that the delivery of long-term financial sustainability would
remain at risk unless all NHS bodies were on a realistic
path to breaking even.
Since we last reported, the Health and Care Act 2022 has
introduced Integrated Care Systems (ICSs) on a statutory footing,
which brings together NHS bodies, local government, and other
organisations.
There are 42 ICSs covering England, each with an Integrated Care
Board (ICB) – an NHS body with members nominated by NHS trusts,
providers of primary medical services, and local
authorities. ICBs receive funding from NHSE, and commission and
pay for NHS services in their area.
Scope of the report
The scope of this report is NHS England's (NHSE) and
Department of Health & Social Care's (DHSC) financial
management of the NHS in England. Specifically, it looks at
how much the NHS can manage its current operations within the
financial resources it has available while making progress
towards its long-term goals.
The report sets out:
- the NHS's current financial position and operating
context
- whether NHSE's financial management processes allow accurate
and timely decision-making and support for NHS bodies that are
struggling
- the relationship between financial management and NHS
performance, productivity, and efficiency
- the challenges to the NHS's financial sustainability in the
longer term
Conclusions
The scale of challenge facing the NHS today and foreseeable in
the years ahead is unprecedented.
Following the statutory introduction of Integrated Care Systems
(ICSs) in 2022, we concluded that they needed time and capacity
to build relationships and design services that could better meet
local needs. While some transformation is occurring, the pace of
change has been slow as ICSs struggle to manage the day-to-day
pressures of elective recovery following the pandemic, continual
rising demand for NHS services, and significant workforce and
productivity issues.
As they are statutorily required to do, NHS England and NHS
systems have prioritised trying to live within their allocated
funding. But, despite great in-year efforts to do so – some of
which privilege the short term at the expense of the long term –
an increasing number of NHS bodies have been unable to break
even.
When we consider how the health needs of the population look set
to increase, we are concerned that the NHS may be working at the
limits of a system which might break before it is again able to
provide patients with care that meets standards for timeliness
and accessibility.
Our report identifies operational improvements which can help the
NHS to do more with the resources it has. However, there is a
wider question for policymakers to answer about the potential
growing mismatch between demand for NHS services and the funding
the NHS will receive. Either much future demand for healthcare
must be avoided, or the NHS will need a great deal more funding,
or service levels will continue to be unacceptable and may even
deteriorate further.
