NHS England could face a £7bn budget deficit next year, finance chief warns | NHS

GP services, cancer care and mental health could be cut next year due to a shortage of NHS budget of up to £7bn, the health service chief said.

Wait times could become longer and overburdened emergency departments could face even greater challenges in dealing with the surge in patients requiring medical attention, he added.

Julian Kelly revealed that NHS England may have to cover £6 to £7bn in unexpected extra costs in 2023-24 due to ongoing waves of Covid-19, part of the bill for pay increases for NHS staff, and inflation that will drive costs of supplies.

The potential £7bn gap is a big increase from the estimated £4bn in additional costs the NHS will have to absorb this year for similar reasons. It sparks a potentially tense conversation about additional funding between NHS bosses and the Treasury, which has made it clear that all Whitehall departments will have to cover inflation-related price increases with existing funds.

In a presentation to the organisation’s board meeting, Kelly – the NHS’s finance director – said the amount came on top of the estimated £14bn in efficiency savings it must also make in the three years between this and 2024-25.

He pointed out that the NHS was facing a major deficit as budgets for this year and next were set when inflation was around 2% and staff wage increases would be about the same. Nevertheless, inflation is now at 10.1%, while the staff has been paid 5%, although the Ministry of Health and Social Care is funding only 3%.

Kelly said: “Remember [that] we were funded on the basis of a 2% inflation and a 2% payment scheme, we could see further cost pressures of around £6 to £7bn in addition to the, say, around £14bn that we already think we might need to consume at that point.”

The NHS would have to completely rethink investment in other services if it is to absorb the £7bn shortfall, Kelly said. As a result, he added, both the government and the government were faced with “some fairly strict choices about where investments can be made and have figured out how to do that while reducing the long wait times.” [for elective surgery]the improvements in cancer performance and indeed how we deal with emergencies and how we also improve access to primary care, and the investment in mental health and other issues”.

Matthew Taylor, the chief executive of the NHS Confederation, which represents hospitals and other healthcare providers, said: “This is a sobering warning from NHS England. A financial blow of this magnitude will undoubtedly have a very real and hard impact on primary care patient care and must be addressed urgently.

“Patients will understandably worry about what this means for their care and treatment, as will health leaders at a time when waiting lists are growing and there are 132,000 job openings.”

Kelly said NHS England had already spoken to ministers about the need for a budget increase to cover the additional costs, including providing staff with Covid testing.

A government spokesman said the NHS received record levels of funding. “Over the past two years, an additional £36bn has been added to NHS budgets specifically to fund temporary effects of Covid on the NHS such as PPE, testing and infection control measures meaning a comparable comparison to last year is not accurate.

“We recognize that public services are under pressure due to the global economic situation caused by the pandemic. England’s NHS funds budget currently stands at £152 billion and will grow to over £162 billion by 2024-25 – the highest expenditure on health and care in a government’s history.

“The NHS is focusing on new ways of working to increase efficiency, save staff time and ensure value for money. Our plan for patients outlines the next steps, including removing unnecessary bureaucracy to improve patient access and speed up hospital discharge.”

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