Additional funding aimed at helping the NHS get on a financially sustainable footing has instead been spent on coping with existing pressures, according to a report.
The National Audit Office (NAO) warned that “repeated short-term funding boosts could turn into the new normal” when funding with a long-term plan would be more effective.
Clinical commissioning groups and trusts are increasingly reliant on one-off measures to deliver savings, rather than recurrent savings that are realised each year, the report said.
The NHS was given an additional £1.8 billion Sustainability and Transformation Fund in 2016/17 ahead of the service having to survive on significantly less funding growth from 2017/18 onwards. It was also intended to give it stability to improve performance and transform services, to achieve a sustainable health system.
The report said this financial boost helped the NHS improve its financial position and overall the combined trust deficit reduced from £2,447 million in 2015/16 to £791 million in 2016/17.
But despite its overall financial position improving, the report said the NHS is struggling to manage increased activity and demand within its budget and has not met NHS access targets.
Furthermore, measures it took to rebalance its finances have restricted money available for longer-term transformation, which it said is essential for the NHS to meet demand, drive efficiencies and improve the service.
It said that, for example, the department transferred £1.2 billion of its £5.8 billion budget for capital projects to fund the day-to-day activities of NHS bodies.
On top of this funding, many trusts are receiving large levels of in-year cash injections, most of which are loans from the department, which have worsened rather than improved their financial performance. Extra cash support increased from £2.4 billion in 2015/16 to £3.1 billion in 2016/17.
But the report added that, in reality, partnerships’ effectiveness varies and their tight financial positions make it difficult for them to shift focus from short-term day-to-day pressures to delivering transformation of services.
Amyas Morse, head of the National Audit Office, said: “The NHS has received extra funding, but this has mostly been used to cope with current pressures and has not provided the stable platform intended from which to transform services”
“Repeated short-term funding-boosts could turn into the new normal, when the public purse may be better served by a long-term funding settlement that provides a stable platform for sustained improvements.”
Chief executive of the King’s Fund, Chris Ham, said: “Across the country, there are encouraging examples of areas that are changing services so that they better meet the needs of local people. But transforming services requires investment, and the speed of progress in Greater Manchester, for example, has only been possible because of upfront investment.
“Yet, most of the Sustainability and Transformation Fund is being spent on addressing acute hospital deficits rather than being invested in new service models, which is holding back progress.”
British Medical Association council chairman, Dr Chaand Nagpaul, said: “This report provides clear evidence that investment designed to help the NHS transform and improve patient services is instead being used to firefight and meet existing pressures and deficits.
“With pressure on NHS services intensifying year-on-year, we agree with the report’s findings that the short-term funding is not meeting patients’ needs.”