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Friday 28 October 2016
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Department of Health budget reveals ‘one-off’ accounting measures used to reduce deficit

The Department of Health has revealed an overspend of £149m on its health budget set by the Treasury for 2015/16

The Department of Health has revealed an overspend of £149m on its health budget set by the Treasury for 2015/16.

In its annual accounts, the Department also reported a deficit of £207m against its £114.5bn revenue Departmental expenditure limit.

While this is much lower that the recurrent underlying deficit in NHS providers, which was reported last month as £2.8bn, the Department used a series of one-off accounting measures to reduce the deficit.

Anita Charlesworth, director of research and economics at the Health Foundation, said: “To avoid a bigger overspend the Department relied on a large raid on the capital budget and one-off accounting measures that are not repeatable. As the NAO [National Audit Office] says, while this approach may be understandable, it is unsustainable. The cupboard is now bare.

“2015/16 and 2016/17 were supposed to be the years of relative plenty, with front-loaded budget increases designed to put NHS finances back in order and kick-start the Five Year Forward View.

“Despite this, providers are heading for a £0.55bn overspend in 2016/17. And time is running out – from next year, the financial position of the NHS only gets worse. The NHS urgently needs a strategy to improve its efficiency and crucially, to ensure it has the workforce needed to deliver high quality patient care.”

Despite the overspend, the Department was saved from admonishment from Parliament by a £58m underspend against its capital expenditure limit, which is voted on by parliament, as a result of administrative error.

The Department received £417 million of receipts from the National Insurance Fund more than originally anticipated.

The Department did not notify the Treasury of these extra receipts and, therefore, neither the Treasury nor Parliament had the opportunity to consider whether to reduce any voted funding for the Department by the same amount.

According to NAO, without these extra receipts, the Department would have exceeded its voted budget.

In a statement, NAO described not notifying the Treasury as a “failure to follow well-established practice”.

Amyas Morse, head of the National Audit Office, said: “The NHS in England remains under significant financial pressure which is demonstrated in its accounts.

“It has again used a range of short term measures to manage its budgetary position but this is not a sustainable answer to the financial problems which it faces.

“The Department and its partners need to create and implement a robust, credible and comprehensive plan to move the NHS to a more sustainable financial footing.”

However, Jeremy Hunt MP, secretary of state for health, did come under fire from the chair of the committee of public accounts for the timing of the accounts’ release.

The letter from Meg Hillier MP says: “I write to express dismay that you published your Department’s accounts today – the day that Parliament rises for summer recess.

“This does not allow MPs to consider the accounts before recess and smacks of an underhand attempt to cover up the poor state of finances in your department.”

Hillier also expressed concern over the NAO’s conclusion that the way the budget was balanced, using short-term measures, “do not provide a good basis for a sustainable long term budget”.