NHS finances so bad entire service could collapse, spending watchdog says

The NHS’s finances are in such dire straits that the entire health service could collapse without a massive cash injection, Whitehall’s spending watchdog has warned.

Years of underfunding have left the NHS in England so strapped for cash that patients cannot be treated quickly enough, and rising levels of ill health are only going to make the situation worse, the National Audit Office (NAO) has said.

The NAO does not specify how much extra funding the health service needs to get back on its feet and ensure that trusts providing care can balance their books. But a leading think tank recently estimated that figure at £38 billion more a year by the end of this parliament.

The bleak conclusions raise serious questions about whether Keir Starmer’s government can deliver on its ambitious promises to save the NHS and return to key operating and emergency waiting times without spending significantly more money.

More and more NHS organisations have been overspending in recent years despite best efforts to prevent this, the regulator said in a sharply worded report published on Tuesday.

But it warned that, based on current funding trends, the situation is likely to get worse – and that the NHS will need a significant budget increase to cope with an increasingly sick population. Cancer, heart disease, dementia and other deadly diseases are set to rise sharply in the near future.

“Considering how the health needs of the population are expected to increase, we are concerned that the NHS may be operating at the limits of a system that could collapse before it can once again provide patients with care that meets standards of timeliness and accessibility,” the NAO said.

“There is a broader question for policymakers to answer about the potential growing mismatch between demand for NHS services and the funding the NHS will receive. Either high demand for healthcare in the future should be avoided, or the NHS needs much more funding, or service levels remain unacceptable and may even deteriorate further.”

Strikes by several groups of staff over the past 18 months, skyrocketing inflation, rising sickness absence and the increasingly dilapidated state of much of the NHS’s assets have left the institution without enough money to function properly in recent years, the NAO said.

NHS Confederation chief executive Matthew Taylor said health insurer bosses were “hugely concerned” that the service could go over budget by as much as £3bn this year after initially being underfunded.

“Despite their best attempts to balance the books, cuts to services and frontline clinical teams are now a reality in some areas. Unless the new government can act quickly, these risks will sadly increase and we will see a further deterioration in key areas, including waiting lists.”

The government blamed the previous Conservative government for leaving the NHS finances in such a poor state.

“The NHS is broken,” said a Department of Health and Social Care spokesman. “Not only has this government inherited the worst economic conditions since the Second World War, but also an NHS in deficit.

“Our priority is to get the NHS back on its feet, but that will take time.”

The DHSC pointed to Ara Darzi’s urgent inquiry into the state of the NHS and the ten-year plan for ‘radical reform’ that will follow, as evidence of its commitment to improving services.