Cash is king: trying to do more with less

By Stefano Gortana

11 August 2015


Secretary of State for Health Jeremy Hunt recently gave a speech in which he laid out the progress being made in the pursuit of a more human-centred NHS. Hunt described 21 Trusts in special measures hiring more doctors and nurses, ‘buddying arrangements’ and their role in pulling Trusts out of special measures and the completion of investigations into safe staffing levels. Yet recent news regarding the financial state of Foundation Trusts (FTs) and the implications for staffing levels suggests such optimism should be tempered.

Why the money isn’t going far enough

Last May, the problem was clear: a report to Monitor’s board  on FT performance revealed a deficit of £349 million, compared to £10 million expected. FTs did also treat almost 550,000 more patients than expected, but the major cause of this growing deficit has been largely attributed to a rise in cost pressures. NHS providers’ costs rose by £1.4 billion in 2013-14 as the number of temporary staff in the NHS increased by 16%. NHS spending on such staff rose to a record high £3.3 billion; a 31% increase in just one year. With spending on agency staff alone rising by a further 30% for FTs in 2014-15, it is no surprise that 77 FTs (just over 50%), ended 2014-15 in deficit.

Responding to rising staff costs

Consequently, Dr. David Bennett, the Chief Executive of Monitor, recently sent a letter to NHS Trusts emphasising that ‘current plans are quite simply unaffordable’ and in light of the ‘unprecedented financial challenge’, all Trusts must ‘make the money we have go as far as possible’. He instructed all FTs to apply safe staffing guidance in a ‘proportionate and appropriate way’ and to make sure ‘only essential’ vacancies are filled. He added that reviewing plans of the 46 FTs with the biggest deficits will not be enough to close the funding gap. Instead, even those FTs expecting a surplus must consider whether they can do more. 

As staffing is the largest cost for the NHS, the government has since endorsed these strategies of essentially freezing recruitment beyond ‘essential’ staff and reconsidering efficiency plans. This is in addition to the recent moves to cap staffing agency fees and curb the immigration of skilled healthcare workers. The government has committed to providing the requisite £8 billion by 2020 as outlined in the Five Year Forward View , but there may be growing pressure to provide most if not all of it as soon as possible, and the NHS will still have to find £22 billion in efficiency savings. The question remains whether it will all be enough to achieve the government’s ambitious promises, especially the highly touted seven-day services.

Complexities and concerns

The aforementioned strategies are not without controversy. In response to limiting recruitment and approaching safe staffing in a ‘proportionate and appropriate way,’ Chief Executive of the Royal College of Nursing Janet Davies argues that ‘money cannot determine how staff is needed and that there can be “no compromise” on safe staffing levels’. She also argues that while it is unclear what constitutes a ‘non-essential’ job, staffing levels are decided based on patient need. Ms. Davies and Louise Silverton, director of Midwifery for the Royal College of Midwives, both add that the excessive reliance on agency staff and the resulting exorbitant costs are ‘primarily the consequence of staffing shortages’, a concern that gains greater importance in the pursuit of a seven-day NHS. As Nuffield Trust Chief Executive Nigel Edwards concludes: 'It is a worrying signal that there is a big problem coming and we are talking about transactional changes rather than some of the very major changes that may be required to confront the situation'. 

After six years of one percent funding increases despite an increase in demand of four percent per year, and many critics arguing that £22 billion in efficiency savings is ‘impossible’, the NHS faces a perfect storm of both demand and supply pressures. We should be prepared to see more drastic measures to come if the public is to retain an NHS that is free at the point of access. 

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