What does it mean that the NHS is in deficit to the tune of £930m? It’s not a business trying to make a profit for its shareholders – the deficit doesn’t refer to losses. The forecast is that the deficit will be as much as £2.8bn by the end of the financial year next April. But that’s the difference between the actual costs of delivering NHS services, still mostly free at the point of delivery, and the budgeted costs agreed by the Health Secretary for the financial year. It looks like the Health Secretary got the figures badly wrong.
The budget figures are set and NHS Trusts have to work out how such targets can be met. Clearly a major component of costs relate to staff: doctors, nurses and other staff. The only way the budgeted figures could be achieved is to reduce numbers employed. So those cuts are made as a result of the annual budget process. The shadow health secretary quoted a figure of 6,000 nursing posts, for example, as being cut during the last parliament.
Therefore, most NHS Trusts embark on each new financial year knowing they are unlikely to achieve the expected NHS service level at the budgeted cost. The Care Quality Commission, assessed 54% of hospitals as falling below the expected service level and needing improvement. In practice, Trusts are quickly confronted with the impossible decisions: do they simply turn patients in need away? Or do they hire temporary staff to deal with the additional workload. Thankfully, our NHS is still dedicated to delivery of needed clinical services, so they hire temporary staff employed by the shareholder wealth focused private sector.
According to the Health Secretary, the annual bill for agency staff rose from £1.8bn to £3.3bn over the past three years. Foundation trusts had planned to cut that agency spend by 44% over that period, but, because of stupid budgeting, it unavoidably rose by 29% year on year. The Health Secretary appears not to understand the extent of his personal responsibility for this huge waste resulting from the NHS being left “in the grip of private staffing agencies”.
Hiring agency staff is only part of the problem. Outsourcing other NHS services to the private sector so that shareholders can make more money, adds further cost to NHS provision. So the £2.8bn deficit is not a surprise. Nor is it surprising that it will be extremely difficult to reduce costs while achieving the necessary improvements in meeting the ever more complex needs of a growing and ageing population.
Unrealistic budgeting, aggravated in many cases by the predatory after-spend on government sanctioned PFI finance payable to financial sector shareholders, produces the ‘deficit’ which will inevitably go on increasing till decisive action is taken to budget realistically and exclude the costs of ever increasing shareholder value.
If the government is really serious about reducing the stranglehold the staffing agencies have over the NHS, they must agree budgets to cover the costs of recruiting and training far more doctors and nurses. And they need to do it immediately, rather than waiting for when the present government no longer has responsibility.