The NHS in England is facing an unprecedented financial challenge following the longest period of constrained funding that it has ever faced. It is widely acknowledged that the NHS is facing a funding gap of £30 billion by 2020/21, with £8billion promised by the Government by 2020/21 and a further £22 billion expected to come from efficiency savings. Detailed plans to achieve this have yet to be published. However, it would require a sustained rate of productivity improvement much faster than has recently been recorded for either the NHS or the wider private economy.

At the same time, the NHS is facing a financial black hole with NHS hospitals heading for an unprecedented end-of-year (2015/16) deficit of £2 billion. On the back of the first quarter's (2015/16) financial figures, financial regulator Monitor felt compelled to label this as the “worst” financial position facing providers for a generation.

As an independent think tank, we have a key role to play in providing independent scrutiny and analysis of the state of NHS finances, as well as contributing to wider debates about the long-term funding requirements of the system. This programme of activities outlines how we will do that.

1. £22billion efficiency challenge: how are local health economies responding?

We are working with three local health economies to understand how they are approaching the £22 billion challenge – we will host workshops in these local areas and follow up with a briefing early in 2016. This will outline how local areas are responding to the need for significant efficiency savings. This project is being led by our new Senior Policy Analyst Sally Gainsbury.

2. 2015 Comprehensive Spending Review

As part of our role, we have been active in debates leading up to the next Spending Review (SR) in November 2015. We formally responded to the sSR with a detailed briefing for the Treasury and other officials and stakeholders in September 2015.

In our response we welcomed the Government’s commitment to increase NHS funding in England by £8 billion in 2020/21, given the settlement other departments have received. However, we warned that this level of funding will be exceeded by the upward pressure on spending driven by an ageing and growing population, the increase in chronic disease and the rising cost of treatments. We warned that over the SR period the NHS will increasingly struggle to maintain standards and meet growing demand.

3. Commentary and analysis on the state of NHS finances

More generally, we continue to provide expert analysis and commentary on the state of NHS finances. This continues a long-standing work programme from the Trust on efficiency and financial matters.

We were the first organisation to raise concerns about the Government’s commitment to ring-fence other budgets held by the Department of Health beyond the narrower budget for NHS England. We have urged policy-makers to commit to ring-fence the DH budget at large – failure to do so will come at the expense of other important budgets, such as training and education, which provide revenue and vital long-term support to NHS providers.

We were prominent in the run up to the election in calling for the Government to commit to bringing in the £8 billion minimum of extra funding – that NHS England says is required – smoothly over the course of the Parliament. We also recommended that the Government and health service leaders develop a plan to enable NHS hospital trusts to achieve financial balance over the next two to three years, as well as to demonstrate that this will be sufficient to support the transformation of services and to deliver on pledges such as moving to a ‘seven-day’ NHS. These recommendations were published in our report: Health and social care priorities for the Government: 2015–2020.

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