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| Department of Health may need emergency cash injection | Department of Health may need emergency cash injection |
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| The Department of Health may need an emergency injection of extra money so it can pay its bills between now and the end of next month, Whitehall sources have told the Guardian. | The Department of Health may need an emergency injection of extra money so it can pay its bills between now and the end of next month, Whitehall sources have told the Guardian. |
| There is growing speculation at senior levels of the NHS that Jeremy Hunt’s department may have overspent its £116.3bn budget for 2015-16, despite having received £3.1bn more than last year. | There is growing speculation at senior levels of the NHS that Jeremy Hunt’s department may have overspent its £116.3bn budget for 2015-16, despite having received £3.1bn more than last year. |
| On Thursday the DH said it will cut around 650 jobs to reduce its running costs. Non-senior staff numbers will be slashed from 1,800 to between 1,200 and 1,300 by April 2017 in a bid to decrease its running costs by 30% in the next five years. It will also merge employees from the three London offices to premises at 39 Victoria Street. | |
| The Treasury and DH have been examining the possibility that the latter may need to have its departmental expenditure limit (DEL) for this year raised because the NHS’s deepening financial crisis means it can no longer balance its books, well-placed Whitehall sources with knowledge of the discussions said. | The Treasury and DH have been examining the possibility that the latter may need to have its departmental expenditure limit (DEL) for this year raised because the NHS’s deepening financial crisis means it can no longer balance its books, well-placed Whitehall sources with knowledge of the discussions said. |
| In recent weeks the Treasury has been looking into giving the DH what one NHS finances expert called “an in-year bailout”. If the DH does receive extra cash it will prompt questions about its handling of the NHS at a time when, unlike most other government departments, it has enjoyed real-terms increases in its budget ever year since austerity began in 2010. | In recent weeks the Treasury has been looking into giving the DH what one NHS finances expert called “an in-year bailout”. If the DH does receive extra cash it will prompt questions about its handling of the NHS at a time when, unlike most other government departments, it has enjoyed real-terms increases in its budget ever year since austerity began in 2010. |
| Both the DH – which is responsible for health spending in England – and Treasury refused to answer detailed questions about health potentially receiving a bailout. The DH insisted that it was on course to balance its books for 2015-16. However, it refused to say if that was on the basis of its original £116.3bn budget or a revised, enlarged budget. | Both the DH – which is responsible for health spending in England – and Treasury refused to answer detailed questions about health potentially receiving a bailout. The DH insisted that it was on course to balance its books for 2015-16. However, it refused to say if that was on the basis of its original £116.3bn budget or a revised, enlarged budget. |
| A DH spokeswoman said only that: “We have regular conversations with the Treasury about NHS finances and our forecasts show we are on track to balance the books.” | A DH spokeswoman said only that: “We have regular conversations with the Treasury about NHS finances and our forecasts show we are on track to balance the books.” |
| If the DH does need extra money Hunt would have to write to Greg Hands, the chief secretary to the Treasury, formally seeking a raising of its DEL, as Whitehall rules dictate that any cabinet minister whose department is facing an overspend must do. | If the DH does need extra money Hunt would have to write to Greg Hands, the chief secretary to the Treasury, formally seeking a raising of its DEL, as Whitehall rules dictate that any cabinet minister whose department is facing an overspend must do. |
| The DH is Whitehall’s biggest-spending department and gives NHS England its £101.6bn budget. If the department has exceeded the 2015-16 budget that parliament approved, that will be the first time that has happened since 2005-06, when the last financial crisis hit the NHS in England. That led to Nigel Crisp, the then-chief executive of the NHS, who at the time was a senior DH civil servant, losing his job. | The DH is Whitehall’s biggest-spending department and gives NHS England its £101.6bn budget. If the department has exceeded the 2015-16 budget that parliament approved, that will be the first time that has happened since 2005-06, when the last financial crisis hit the NHS in England. That led to Nigel Crisp, the then-chief executive of the NHS, who at the time was a senior DH civil servant, losing his job. |
| The DH has been struggling to tackle a sharp deterioration in the finances of hospitals, which are due to post a £2.2bn collective deficit after seeing the cost of hiring expensive agency staff hit £4bn a year. It has ordered trusts to spend less on agency staff and management consultants to hep restore the service’s financial health. | The DH has been struggling to tackle a sharp deterioration in the finances of hospitals, which are due to post a £2.2bn collective deficit after seeing the cost of hiring expensive agency staff hit £4bn a year. It has ordered trusts to spend less on agency staff and management consultants to hep restore the service’s financial health. |
| Anita Charlesworth, chief economist at the Health Foundation, said: “Last year the Department of Health avoided an overspend by a hare’s whisker. This year it is increasingly difficult to see how they can pull off the same feat. Provider deficits have mushroomed and commissioners are beginning to struggle, with many more [GP-led] clinical commissioning groups now forecasting an overspend. | Anita Charlesworth, chief economist at the Health Foundation, said: “Last year the Department of Health avoided an overspend by a hare’s whisker. This year it is increasingly difficult to see how they can pull off the same feat. Provider deficits have mushroomed and commissioners are beginning to struggle, with many more [GP-led] clinical commissioning groups now forecasting an overspend. |
| “The Department of Health has held back large chunks of [its] capital investment funding to bail out the overspend [in its resource budget] but all the signs are that this is not enough and unless it gets very lucky the Department of Health as a whole will be in deficit in 2015-16.” | “The Department of Health has held back large chunks of [its] capital investment funding to bail out the overspend [in its resource budget] but all the signs are that this is not enough and unless it gets very lucky the Department of Health as a whole will be in deficit in 2015-16.” |
| Until recently the DH was so good at sticking to the money parliament gave it to perform its duties that it generated large surpluses, which it returned to the Treasury. As recently as 2012-13, for example, it underspent by £1.53bn or 1.5% of its budget. However, last year (2014-15) it spent all but £1.2m (0.001%) of its massive £110.5bn resource budget, which it uses to fund the running of the NHS. | Until recently the DH was so good at sticking to the money parliament gave it to perform its duties that it generated large surpluses, which it returned to the Treasury. As recently as 2012-13, for example, it underspent by £1.53bn or 1.5% of its budget. However, last year (2014-15) it spent all but £1.2m (0.001%) of its massive £110.5bn resource budget, which it uses to fund the running of the NHS. |
| Any overshoot would constitute a serious breach of Whitehall protocol and would be likely to trigger an inquiry by the public accounts committee (PAC), the powerful cross-party group of MPs which scrutinises all government spending. | Any overshoot would constitute a serious breach of Whitehall protocol and would be likely to trigger an inquiry by the public accounts committee (PAC), the powerful cross-party group of MPs which scrutinises all government spending. |
| The National Audit Office (NAO) said that in such a case the PAC could call the DH’s permanent secretary and senior officials to give evidence. And in addition, an NAO spokesman added: “The Treasury of course also have an interest in such instances, so there would be discussions with the department concerned regarding the size of the overspend, why it occurred and remedial action.” | The National Audit Office (NAO) said that in such a case the PAC could call the DH’s permanent secretary and senior officials to give evidence. And in addition, an NAO spokesman added: “The Treasury of course also have an interest in such instances, so there would be discussions with the department concerned regarding the size of the overspend, why it occurred and remedial action.” |
| The Treasury’s expectations of spending by all departments is spelled out in great detail in its publication called Managing Public Money, which was updated most recently last August. It makes clear that money raised through taxes has to be spent “only within the agreed limits”. | The Treasury’s expectations of spending by all departments is spelled out in great detail in its publication called Managing Public Money, which was updated most recently last August. It makes clear that money raised through taxes has to be spent “only within the agreed limits”. |
| The document spells out the seriousness of any department ending up spending more than was originally permitted. If that happens, it explains: “The Treasury presents parliament each year with a statement of excesses to request retrospective authority for any unauthorised resources consumed above the relevant limits or outside the ambit of the [department’s] estimate. | The document spells out the seriousness of any department ending up spending more than was originally permitted. If that happens, it explains: “The Treasury presents parliament each year with a statement of excesses to request retrospective authority for any unauthorised resources consumed above the relevant limits or outside the ambit of the [department’s] estimate. |
| “Parliament takes these excesses seriously. The PAC or departmental select committee may call witnesses to account in person or ask for a written explanation.” | “Parliament takes these excesses seriously. The PAC or departmental select committee may call witnesses to account in person or ask for a written explanation.” |
| The Treasury is getting together its final figures for what it expects every department to have spent during this year. It will become clear next week if it has been forced to increase the health department’s spending limit when it publishes its spring supplementary estimates in parliament. | The Treasury is getting together its final figures for what it expects every department to have spent during this year. It will become clear next week if it has been forced to increase the health department’s spending limit when it publishes its spring supplementary estimates in parliament. |
| If the DH has overspent, that will have happened with the £15bn the department uses to fund health bodies other than NHS England and its own running costs. It also uses that sum to give cash-strapped NHS trusts extra financial assistance during the year to help keep them going. | If the DH has overspent, that will have happened with the £15bn the department uses to fund health bodies other than NHS England and its own running costs. It also uses that sum to give cash-strapped NHS trusts extra financial assistance during the year to help keep them going. |
| NHS England, which is run by chief executive Simon Stevens, expects to underspend its £101.6bn budget, although only by £145m – or 0.1% of its total income – despite the unprecedented financial pressures on the service. | NHS England, which is run by chief executive Simon Stevens, expects to underspend its £101.6bn budget, although only by £145m – or 0.1% of its total income – despite the unprecedented financial pressures on the service. |
| “NHS England is statutorily required not to exceed its allocated funding totals. We are on track to meet this obligation in 2015/16,” Paul Baumann, its chief financial officer, told its board last week. | “NHS England is statutorily required not to exceed its allocated funding totals. We are on track to meet this obligation in 2015/16,” Paul Baumann, its chief financial officer, told its board last week. |
| In all more than 190 of the 241 NHS trusts cross England which deliver acute, mental health, community and specialist services are likely to end 2015-16 in the red – by far the most ever. Almost three-quarters of them are already receiving individual bailouts from the DH, including 88% of acute trusts, recent King’s Fund research found. | In all more than 190 of the 241 NHS trusts cross England which deliver acute, mental health, community and specialist services are likely to end 2015-16 in the red – by far the most ever. Almost three-quarters of them are already receiving individual bailouts from the DH, including 88% of acute trusts, recent King’s Fund research found. |
| The DH’s financial planning has also been hit by it receiving £156m less than expected from drugs firms through the pharmaceutical price regulation scheme. Under it, the industry’s trade body gives back to the DH amounts it has made in profit from NHS drugs purchases over an agreed limit. It was expected to yield £796m for the DH this year but will now only generate £640m by the end of March. | The DH’s financial planning has also been hit by it receiving £156m less than expected from drugs firms through the pharmaceutical price regulation scheme. Under it, the industry’s trade body gives back to the DH amounts it has made in profit from NHS drugs purchases over an agreed limit. It was expected to yield £796m for the DH this year but will now only generate £640m by the end of March. |
| Heidi Alexander, the Labour shadow health secretary, said: “If Jeremy Hunt has been forced to go to the Treasury cap in hand to ask for more money, then the financial crisis in the NHS is far more serious than we have been led to believe. Patients are going to bear the brunt of Jeremy Hunt’s financial mismanagement of the NHS, as hospitals are forced to cut staff and services in an attempt to balance their books.” | Heidi Alexander, the Labour shadow health secretary, said: “If Jeremy Hunt has been forced to go to the Treasury cap in hand to ask for more money, then the financial crisis in the NHS is far more serious than we have been led to believe. Patients are going to bear the brunt of Jeremy Hunt’s financial mismanagement of the NHS, as hospitals are forced to cut staff and services in an attempt to balance their books.” |