NHS England could face £7billion budget shortfall next year, finance chief warns | NHS

General medical services, cancer care and mental health treatment could face cuts due to an NHS budget shortfall of up to £7billion next year, the finance chief has said of the health service.

Wait times could increase and overburdened A&E units could face even greater challenges to cope with the increase in the number of patients requiring medical attention, he added.

Julian Kelly has revealed NHS England may have to cover £6-7billion in unexpected additional costs in 2023-24 due to continued waves of Covid-19, paying part of the bill for pay rises NHS staff and inflation driving up the cost of provisions.

The possible £7billion discrepancy represents a sharp increase on the estimated £4billion extra costs the NHS has to absorb this year for similar reasons. It sets up a potentially tense conversation over additional funding between NHS bosses 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 organization’s board meeting, Kelly – the NHS’s chief financial officer – said the sum was on top of the £14billion in efficiency savings he also needed to make over the three years between this and 2024-25.

He pointed out that the NHS was facing a major shortfall as its budgets for this year and next were set when inflation was around 2% and pay rises for its workforce were considered to be approximately the same. Nevertheless, inflation now stands at 10.1%, while staff received a 5% salary bonus, although the Department of Health and Social Care funds only 3%.

Kelly said: “Remembering [that] we were funded on a 2% inflation and 2% wage settlement basis, we could see further cost pressures of around £6 billion to £7 billion on top of, say , around £14billion that we already think we need to consume at this time.”

The NHS can neither cover the £14billion savings nor next year’s potential £7billion shortfall from its allocated budget, he stressed. As a result, Kelly added, he and the government faced “reasonably tough choices about where to invest and have been working on how we can do that while reducing long waits. [for elective surgery]improvements in cancer performance and actually how we deal with emergency pressures and how we also improve access to primary care, as well as investment in mental health and other issues” .

Matthew Taylor, 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 harsh impact on frontline patient care and must be addressed urgently.

“Patients will understandably be worried about what this will mean for their care and treatment, as will health officials at a time when waiting lists are growing and there are 132,000 vacancies.”

Kelly said NHS England was already speaking to ministers about the need for a budget increase to cover additional costs, which also include providing staff with Covid tests.

A government spokesperson said the NHS was receiving record levels of funding. “Over the past two years, an additional £36billion has been added to NHS budgets specifically to fund the temporary impacts of Covid on the NHS, such as PPE, testing and infection control measures, which means that a like-for-like comparison with last year’s budget is not accurate.

“We recognize that public services are under pressure due to the global economic situation caused by the pandemic. The NHS resource budget in England currently stands at £152billion and will rise to over £162billion in 2024-25 – the highest health and care expenditure 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 plan for patients sets out the next steps, including removing unnecessary bureaucracy to help improve patient access and speed up discharge from hospital.

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