NHS England has criticised a Public Accounts Committee (PAC) report into its financial sustainability as ‘flawed’ and containing ‘basic factual inaccuracies’.
The PAC report, published yesterday, suggested there was a lack of ‘fresh thinking’ and decisive action within NHS England and the Department of Health and Social Care (DHSC), calling them ‘complacent regarding the NHS’s finances’.
It also said senior health officials seemed to be ‘unambitious’ when it comes to taking the radical steps needed to implement the government’s forthcoming 10-year health plan and set out a number of recommendations on each of the health secretary’s three key shift ambitions.
These included approving ICB final budgets at least one month before the start of the financial year and ensuring enough funding is allocated to the commitments in the 10-year plan (see box below for full list).
However, an NHS England spokesperson said the report contained ‘basic factual inaccuracies and a flawed understanding of how the NHS and the government’s financial processes work’.
They said: ‘While NHS productivity is now improving at double pre-pandemic levels – far from being complacent, NHS England has repeatedly been open about the problem and the actions being taken to address it, including in the December public board meeting, and we will be publishing further improvement measures later this week in planning guidance.
‘Reform is part of the NHS’ DNA and has ensured performance improvements for patients in the past year, including innovations such as virtual wards – despite the huge challenges the NHS has faced, including capital starvation, unprecedented strikes and a fragile social care sector.
‘Lord Darzi’s report was clear many of the solutions can be found in parts of the NHS today, and we are working closely with the government to drive this innovation forward as we develop the ambitious 10 Year Health Plan to build an NHS which is fit for the future.’
Matthew Taylor, chief executive of the NHS Confederation, said that many of the recommendations in the PAC report would ‘find support’ among NHS leaders, especially the need to ‘shift more investment into the community, to prioritise prevention, and to provide clarity on budgets and priorities earlier in the year’.
He said: ‘These are going to be absolutely vital if we are going to put the NHS on a sustainable footing following more than a decade of underinvestment. But much of this requires action from government and is where hold-ups can often occur.
‘Any steps we take now when reforming the NHS must work towards achieving the government’s long-term shifts. That’s why we endorse the committee’s recommendation that more funding year-on-year is spent in the community. Investing more of the NHS budget in primary and community care is not just good for patients but is also cheaper than hospital care. The economic case for investing more in primary and community care is clear, with our research showing that for every £1 spent there could be increased economic output (GVA) by £14.’
However, he said NHS Confederation ‘takes some issue’ on the report’s assessment of NHS productivity and that ‘we should not underplay the progress that has been made on this front’.
‘NHS productivity is now improving at double the level that we were achieving before the pandemic. Introducing virtual wards and other innovations will see further improvements, so we do not entirely recognise the committee’s view that progress has been glacial in this area,’ he said.
He added that some of the criticisms of officials at DHSC and NHS England were ‘unfair’.
‘We see committed individuals working towards the government’s reform agenda, often in difficult circumstances given the state of the public finances,’ he said. ‘However, we would like to see the centre spend more time on how it can best support the NHS to deliver rather than on how it instructs the service. It can and should play a more enabling role that sees more power and autonomy delegated to local leaders.’
The Health Foundation’s director of policy, Hugh Alderwick, meanwhile said the committee was right that the current assumptions on NHS productivity were ‘overly optimistic’ and that the ‘short-termism and dysfunction in financial planning’ for the NHS was ‘no surprise’.
He added: ‘Ambitions to develop new ways of delivering care, improve the NHS’s ailing infrastructure, and boost spending on preventive services repeatedly get crowded out by day-to-day pressures.
‘While it might be tempting to blame officials and accounting rules, the root causes of these problems are political. Pressures on the NHS increase each year – for instance, as the population ages and wages and other costs grow – meaning government investment needs to increase just to stand still. Short-term political decisions, including cuts to capital budgets, reductions in the public health grant, and the failure to reform social care, have taken a severe toll.’
He suggested that a mix of policy changes could help, including investment in buildings, equipment, and technology, as well as understanding how much the NHS spends on preventive services to help improve planning and accountability.
‘The question for the new government is what package of investment and policy change they will offer the NHS to help achieve these ambitious productivity targets – or even get close to them,’ he added.
Health leaders have recently called on the NHS to increase general practice’s share of funding in 2025/26.
The PAC recommendations in full:
- DHSC, NHSE and HMT [Treasury] should publicly commit to issue guidance and meaningful indicative budgets to systems no later than Christmas in future, and NHSE should approve ICB final budgets at least a month before the start of each financial year.
- a. As they develop the ten-year plan, DHSC and NHSE must take a more planned and disciplined approach to ensuring that enough funding is allocated to those activities that can make the NHS fit for the future, particularly preventing ill health, community healthcare, and digital technology. They should measure, track and report what they spend in these areas, and what they are achieving, so Parliament and the public can assess progress over time, and should take actions to strengthen longer-term strategic financial planning. b. The Department and NHS England should not look for loopholes to get round the new regulations and instead should prepare for how it will manage its finances properly without access to the safety valve of moving money from capital to revenue.
- NHSE should set out in detail which specific actions and initiatives it expects to contribute to the unprecedented increase in productivity it has committed to, and by how much. This should include specific measures to address poor staff retention and sickness rates, which contribute to low productivity.
- NHSE should review current payment systems and processes to ensure they incentivise local systems to work with those most in need of help.
- a. DHSC, NHSE and HMT should define what counts as health prevention spending for the whole of government within the next six months, and track that spending annually, using 2024-25 as a baseline year. b. DHSC and NHSE should set out the funding increases required for prevention and give local systems the flexibility and autonomy they need to direct this funding where it can have the greatest impact.
- NHSE should ensure that, year on year, a greater proportion of its funding is spent in the community, in line with its own policy ambition. Any review of Continuing Healthcare funding and the Better Care Fund, DHSC and NHSE should not make changes that will see these community-based funds redirected to hospitals.
- Alongside its Treasury Minute response, NHSE should write back to the committee setting out its plans to reduce the reliance of NHS providers on paper within 18 months, including key milestones, and the proportion of NHS institutions it expects to be paperless at each milestone. A specific deadline should be set to end the use of fax machines within the NHS.
Source: PAC committee report
