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NHS financial reset

Following NHS England's ‘Strengthening financial performance and accountability in 2016/17’ announcement, the RCP deputy head of strategy and policy, Alex Callaghan, analyses the impact of a financial ‘reset’.

There has long been tension between assertions that trusts can eliminate deficits through effective planning, good management and ‘belt tightening’, and increasing consensus that the long-term sustainability of the NHS is predicated on fundamental change in the structure and delivery of health and social care services. With eight in 10 trusts operating in deficit, the current financial crisis clearly goes beyond individual organisations’ financial discipline.

Many NHS trusts are struggling to meet competing demands: delivering safe, effective patient services that meet quality standards and national targets, while simultaneously undertaking the required service transformation, has remained a distant goal. 

Open and public debate about the limits of what the NHS can provide within the allotted cost envelope has also lagged behind what is needed.

Balancing oversight and protection

The regulatory regime must balance oversight of financial discipline and consequences for poor performance with equally vociferous protection for the fundamental components of safe patient care. Meeting staffing requirements is one such fundamental. We are aware that many trusts are failing to fulfil existing medical staffing establishments – highlighted by the RCP’s data on unfilled consultant vacancies and frequent gaps in rotas for trainee doctors[1] – and that consultants are already struggling to find workarounds and ways to fill the gaps to protect patients. If this crisis is not resolved, patient care will continue to be compromised.  

It is deeply concerning that the current emphasis from NHS Improvement on reducing the pay bill could have significant consequences, both intended and unintended, on the medical workforce and the wider staff team. The serious care failings at Mid Staffordshire NHS Foundation Trust between 2005 and 2009 are a warning of the consequences of cost-cutting taking precedence over safe patient care.

Special measures regimes raise an additional risk to doctor staffing levels, by deepening damage to morale and by increasing difficulties in recruitment and retention within organisations that are frequently already struggling to ensure adequate numbers of doctors. 

Slash and burn

More broadly, we share concerns that stringent special measures and financial control regimes are ‘slash and burn’ savings tactics, with inherent risks of service closures and potentially unsafe patient care. Historically, such short-term approaches to savings in the NHS have taken years of reinvestment to restore staffing establishments and services to the full capacity required to meet patient need.

The approach must go beyond enforcing financial discipline on individual organisations through cost savings, to encompass holistic redesign of health and social care delivery in local health economies. Moving to innovative new ways of delivering care across traditional boundaries – such as the RCP’s Future Hospital model[2] – is essential. This will require upfront investment, and relies on healthcare teams having the capacity to explore, implement, lead and share new ways of designing and delivering services. It therefore continues to be a concern that the allocations from the Sustainability and Transformation Fund to support innovative new models of care are far outweighed by the sums assigned to reduce the deficit. 

Successive governments continue, in large part, to pay only lip service to the importance of prevention in both improving health and wellbeing and reducing demand on health and care services. Accumulative cuts to public health funding demonstrate this: following in-year cuts of £200 million in 2015/16, the public health allocations published in February 2016 confirmed further cuts of £160 million over the next 2 years[3]. Without a whole-system approach to health, including prevention and social care, individual NHS trusts will continue to bow under the pressures of meeting patient need.

Notes to editors


  1. Royal College of Physicians. Census of consultant physicians and higher specialty trainees in the UK 2014–15. www.rcplondon.ac.uk/news/one-fifth-consultants-state-rota-gaps-are-causing-significant-problems-patient-safety 
  2. Royal College of Physicians. Future hospital: caring for medical patients. www.rcplondon.ac.uk/projects/outputs/future-hospital-commission 
  3. Department of Health. Public health grants to local authorities: 2016 to 2017. www.gov.uk/government/publications/public-health-grants-to-local-authorities-2016-to-2017