A new Audit Commission report has found that the overall financial performance of the NHS was good in 2010/11, with primary care trusts (PCTs), strategic health authorities (SHAs), and NHS trusts delivering a surplus of £1.5 billion.
Of 276 organisations, all bar nine, six in the south east,balanced their books.However,some NHS organisations required financial assistance to do so.But 2011/12 will be a more challenging financial year, soPCTs, SHAs, and NHS trusts will need to become even more efficient to avoid falling into difficulties.
'NHS Financial Year 2010/11' analyses the accounts of all PCTs, SHAs and NHS trusts for the last financial year. It also looks at auditors' conclusion on the value for money (VFM) arrangements in place in each organisation. The overall financial performance of most health bodies was good, but almost a quarter of NHS trusts and 12 per cent of PCTs received qualified VFM conclusions. This means that auditors identified notable weaknesses in their arrangements to secure financial resilience and/or challenge how they secure economy, efficiency and effectiveness.
The NHS has been challenged to make efficiency savings of £20 billion by 2015. The report finds that most NHS trusts and PCTs made good progress in reducing costs in 2010/11. On average, PCTs saved nearly 2 per cent of their gross operating costs, and NHS trusts saved over 4 per cent of their gross expenditure. Most of the savings have been found through improving clinical productivity and reducing workforce costs.
Savings targets for 2011/12 are more ambitious. Furthermore, nearly £1 in every £4 saved resulted from one-off or non-recurrent savings, meaning that the saving would not continue to be delivered in consecutive years. This money will need to be found again in 2011/12, although the full-year effect of recurrent 201/11 savings will help. With funding very tight over the next few years, and increasing pressure on services, the NHS will need to focus on finding recurrent savings.
Andy McKeon, Managing Director Health at the Audit Commission, said:
“It is impressive that the NHS overall performed so well financially last year, even if some organisations struggled. But there is no room for complacency. Tighter funding, and the need to continue to improve services and implement reforms will make the next three years much tougher. NHS organisations will need to make a determined effort to find further recurrent savings while continuing to deliver high quality services.”
The Audit Commission and Monitor will together publish a guide later this year setting out practical advice to draw up and deliver cost improvement programmes, drawing on good practice identified by auditors.
Notes to editors
- The Audit Commission is a public corporation set up in 1983 to protect the public purse.
- The Commission appoints auditors to councils, NHS bodies (excluding NHS Foundation trusts), police authorities and other local public services in England, and oversees their work. The auditors we appoint are either Audit Commission employees (our in-house Audit Practice) or one of the private audit firms. Our Audit Practice also audits NHS foundation trusts under separate arrangements.
- We also help public bodies manage the financial challenges they face by providing authoritative, unbiased, evidence-based analysis and advice.
- The government has announced plans to disband the Audit Commission and put in place new arrangements for auditing England's local public bodies.
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