GP services, cancer care and mental health treatment may face cutbacks due to a National Health Service budget shortfall of up to £7bn next year, the health service’s chief finance officer has said.
Wait times could increase and overloaded A&E units could face even greater challenges in dealing with the surge in patients needing care, he added.
Julian Kelly revealed that England’s NHS may have to cover £6-7bn of unexpected extra costs in 2023-24 due to ongoing waves of Covid-19, meet part of the bill from wage increases of NHS staff and inflation driving up the cost of supplies.
The possible £7bn gap is a big increase on the estimated £4bn additional costs that the NHS has to absorb this year for similar reasons. It sets up a potentially tense conversation about additional funding between the heads of the NHS and the Treasury, which has made it clear that all departments in Whitehall will have to cover inflation-linked price increases from existing resources.
In a presentation to the organisation’s board meeting, Kelly, the NHS’s chief financial officer, said the sum was on top of the estimated £14bn efficiency savings it also has to make in the three years between now and 2024-25.
He pointed out that the NHS was facing a major shortfall because its budgets for this year and next were set when inflation was around 2% and its workforce pay rise was thought to be about the same. However, inflation is now at 10.1%, while staff have received a 5% salary premium, although the Department of Health and Social Care only finances 3%.
Kelly said: “Remembering [that] we finance ourselves with 2% inflation and a 2% salary settlement, we could see further cost pressures of around £6bn to £7bn on top of, say, around £14bn that we’re already thinking we should be consuming at that point.”
The NHS would have to completely review investment in other services if it is to cover the £7bn shortfall, Kelly said. As a result, he added, both he and the government were faced with “some reasonably hard choices about where the investment can go and have been working on how we can do that while reducing the long waits.” [for elective surgery]improvements in cancer performance and indeed how we deal with emergency pressures and how we also improve access to primary care, and investment in mental health and other issues.”
Matthew Taylor, chief executive of the NHS Confederation, which represents hospitals and other care providers, said: “This is a sobering warning from NHS England. A financial hit of this magnitude will undoubtedly have a very real and harsh impact on frontline patient care and must be addressed urgently.
“Patients are understandably concerned about what this will mean for their care and treatment, as are health leaders at a time when waiting lists are growing and there are 132,000 openings.”
Kelly said NHS England was already talking to ministers about the need for a budget increase to cover additional costs, which also include providing staff with Covid tests.
A government spokesman said the NHS was receiving record levels of funding. “Over the last two years, an additional £36bn has been added to NHS budgets specifically to fund temporary Covid impacts on the NHS, such as PPE, testing and infection control measures, meaning that a similar comparison with last year’s budget is not correct.
“We recognize that public services are under pressure due to the global economic situation caused by the pandemic. The NHS resource budget in England is currently £152bn and will rise to more than £162bn in 2024-25, the largest spending on health and care in the history of any government.
“The NHS is focusing on new ways of working to increase efficiency, save staff time and ensure value for money. Our patient plan lays out the next steps, including eliminating unnecessary bureaucracy to help improve patient access and speed hospital discharge.”