Government cuts

The NHS has experienced an unprecedented financial squeeze since 2010. Funding has been increasing by 0.8% a year in real terms (generous compared to other public sector areas). However, a range of different factors combine to offset this modest increase, including:

  • A 4% increase in the costs of new medical treatments and an increased demand for services;
  • Cuts in the money paid to NHS providers by the government under the Payment by Results system.  Three quarters of each hospital’s fundings comes from this system through which hospitals are paid per treatment, according to prices set by a tariff. Payments have been cut by over 40% for a quarter of the treatments that hospitals provide. (
  • A 12% reduction in local authority spending on adult social care, which has knock-on effects for the NHS – such as increased use of A&E and hospital services;
  • The transference of at least £3.46 billion from NHS funds to the Better Care Fund, set up to support the integration of health and social care, largely by cutting costly hospital care for those who are chronically ill and the frail elderly and replacing it with supposedly cheaper care in the community;
  • The claw back of money from the Department of Health by the Treasury (around £1.4 billion in 2011/12);
  • The huge cost of Private Finance Initiative repayments on debt owed by NHS trusts and Foundation trusts following the end of government lending for capital projects, such as new hospital buildings. (Barts Health Trust, for example, is paying private investors £2.4million per week under its PFI deal, with interest rates rising every year and 30 years of the contract still to go.)

On top of these costs, the Coalition government has argued that we must accept austerity in order to deal with the UK’s economic problems and so required the NHS to make ‘efficiency savings’ of almost £20 billion between 2011 and 2014 – the so-called Nicholson Challenge. (Cuts to tariff payments (see above) account for almost half of these savings.) The likelihood is that even greater ‘austerity measures’ will be required after 2015, even though these measures are already seen to be widening health inequalities and providing a huge setback to the health of the public  (see

Efficiency savings are supposed to be achieved through new ways of working, less red tape and reduced waste (not to mention a huge reduction in real term salaries for all but the lowest paid NHS staff) – and not by cutting frontline services. But it has quickly become evident that many Trusts cannot find ways of reducing costs without cutbacks to patient services (see and

According to a report in the Times, by October 2014:

  • 60% of patients have to wait more than 48 hours to see a GP.
  • Patients are now waiting on average 10% longer for treatment.
  • The numbers waiting over 18 weeks and over 26 weeks for outpatient appointments and treatment have gone up by 25%.
  • The number of patients waiting for operations has risen by one million to 3.3million people.
  • Last minute cancellation of operations last year hit the highest level for nine years.
  • The number of patients well enough to leave hospital but whose discharge is delayed has hit a new record level.
  • Cancer treatment targets have been missed for two quarters in a row.
  • A&E departments have been failing for over a year to meet targets for treatment within 4 hours.
  • Trolley waits for a bed have almost trebled in the last three years.


Standards of patient care are also suffering. In order to try to make ends meet, many NHS organisations have cut staffing levels (see, for example,, raising concerns about what is happening to patient care ( A recent survey of 5,000 nurses found that 65% were concerned that patients were missing out on basic care, some going without food and water, because of nurse shortages. Almost half of those surveyed thought staffing levels had got worse since 2010, with an inadequate number of number of staff to be able to provide safe care. 70% regularly worked through their breaks to try and make up for the shortage (

Scandals about patient care (see, e.g ., the Francis Report) have recently drawn attention to the staffing levels necessary to provide safe and compassionate nursing care, and put pressure on trusts to ensure these. However, poor morale in the NHS, together with a recent cut back in training places to save money, has made it difficult for many NHS trusts to recruit and retain sufficient nurses. Shortfalls are being addressed by employing agency nurses (generally costing twice as much as those employed by the NHS), or by recruiting nurses from overseas (with recruitment costs at approximately £5,000 per nurse). (Figures from File on 4: Where have all the nurses gone? (broadcast on BBC Radio 4, 27.1.15).

The NHS Providers (the Association of Foundation Trusts and Trusts), has estimated that England’s hospital trusts are facing an unprecedented financial shortfall of £1.86 billion, with two third of trusts projected to show a deficit this year. ( (Barts Health Trust alone currently has a deficit of £93 million).

A new 5 year plan for the NHS, produced in October 2014 by NHS England (whose Chief Executive came directly from managing part of the US health insurance company UnitedHealth), estimates that the NHS will need an extra £30 billion by 2020 to deal with its funding gap. The report states that, of this money, £22 billion will need to be found through further ‘efficiency savings’ (see There is no mention of the savings that could be made by reversing the privatisation of the NHS and the compulsory competitive tendering of its services.

Further reading

Francis R (2013) Report of the Mid Staffordshire NHS Foundation Trust public inquiry.

For an argument on how the ‘need for austerity’ is being used as a strategy for introducing rapid social change, not least dismantling the welfare state, see

updated May 2015

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