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The Public Accounts Committee report finds that the Department for Health and Social Care must set out plans to secure a long-term funding settlement that reflects real need.

• Read the report summary
• Read the report conclusions and recommendations
• Read the full report: Sustainability and transformation in the NHS

NHS budgets unable to keep pace with demand

Despite a rescue fund worth £1.8 billion in 2016–17, the financial position of the NHS remains in a perilous state. The NHS is still very much in survival mode, with budgets unable to keep pace with demand.

The Department of Health and Social Care, NHS England and NHS Improvement are too focused on propping up the system and balancing the books in the short term and have not paid enough attention on transforming and improving patient services in the long term.

This short-term view was apparent over the winter when, despite early warning of a looming crisis, the Chancellor only announced additional funding in November.

With trusts forecasting a deficit of over £900 million in 2017–18, the NHS still has a long way to go before it is financially sustainable.

Department's lack of action disappointing

We are disappointed that the Department’s lack of action means we have to repeat some of the same messages as our previous reports on the dangers of short-term measures used to balance the NHS budget and the risks of raiding investment funds to meet day-to-day spending.

Despite our earlier warnings, the Department has not yet assessed the impact on patients or services of repeatedly raiding its capital budget to fund the short-term needs of the NHS.

Local health bodies are quickly setting up new integrated care systems, which offer the potential for more strategic and long-term planning and better joined-up services for patients. But we are concerned that the witnesses could not clearly explain how accountability within these systems will work in practice or how they will improve the care that patients receive.

The announcement to lift the 1% pay cap for NHS staff is welcome but we will be watching to see whether this will lead to better retention of staff. We also need to be clear that this is not robbing Peter to pay Paul.

Chair's comments

Comment from the Committee Chair, Meg Hillier MP

"The National Health Service continues to scrape by on emergency hand-outs and funds that were intended for essential investment.

We have said it before and we will say it again: rescue packages and budget transfers are no substitute for a coherent, properly funded strategy that enables NHS trusts to plan, focus on patient care and lay the groundwork for long-term financial sustainability.

Government’s last-minute response to what were entirely predictable winter pressures is just the latest vivid demonstration of why fresh thinking is so desperately needed.

Our committee has repeatedly called for a long-term plan for the NHS and by July we expect the Department for Health and Social Care to explain in detail exactly how it is approaching this task.

Key to this will be securing a funding settlement from the Treasury that properly reflects current and anticipated demand for NHS services.

But there is work to do on the ground now. It is a basic point but new initiatives devised with the best of intentions are no use if they don’t work in practice.

It remains unclear how local partnerships, set up to develop strategy and help to transform services, will be held to account for their performance. This must be addressed.

Government should also move more quickly to identify successes in its piloting of new care models and ensure best practice is shared for the benefit of patients across the country."

Further information

• About Parliament: Select committees
• Visiting Parliament: Watch committees