Digital overhaul needed to address NHS operational challenges

The House of Commons Public Accounts Committee has raised significant concerns about the financial sustainability of the NHS in England.

The report, published today, highlights a worsening financial position, with local NHS systems overspending by £1.4 billion in the 2023–24 fiscal year - more than double the £621 million deficit recorded in 2022–23. This deterioration is attributed to rising demand, underinvestment in infrastructure, inflation, and workforce challenges.

The Committee criticises both the Department of Health and Social Care (DHSC) and NHS England for their complacency regarding these financial challenges. It points out that NHS England is relying on an "extremely optimistic assumption" of achieving unprecedented productivity improvements of 2% annually by 2028–29. Historically, long-term productivity gains in the NHS averaged only 0.6% per year between 1996–97 and 2018–19, and productivity has declined since then.

The report also highlights delays in financial planning processes. In both 2022–23 and 2023–24, NHSE did not approve Integrated Care Boards' (ICBs) financial plans until months after the financial year had begun. For 2024–25, planning guidance was issued just a week before the start of the financial year. The Committee emphasises that such delays hamper effective budgeting and service delivery at the local level.

Looking ahead, the government plans to introduce a 10-year strategy for the NHS in the first half of 2025, focusing on three major shifts: from hospital to community-based care, from analogue to digital systems, and from treating illness to preventing it.

While these goals are deemed essential for the NHS's future sustainability, the Committee expresses concern over a "lack of fresh thinking and decisive action" from DHSC and NHSE. It notes that senior officials appear to lack the ideas and drive necessary to implement these significant changes.

The Committee makes several key recommendations:

1. Advancing Digital Transformation: NHS England should establish clear milestones to reduce reliance on paper within NHS providers over the next 18 months and set a specific deadline to eliminate the use of fax machines.
   
   

2. Timely Financial Planning: DHSC, NHSE, and HM Treasury should commit to issuing guidance and indicative budgets to NHS systems no later than Christmas each year, with final budgets approved at least a month before the start of the financial year.

3. Long-Term Strategic Planning: As they develop the 10-year plan, DHSC and NHSE must adopt a more disciplined approach to funding activities that can make the NHS fit for the future, particularly in preventing ill health, community healthcare, and digital technology. They should measure, track, and report spending in these areas to allow Parliament and the public to assess progress over time.

4. Realistic Productivity Targets: Detail specific actions and initiatives expected to contribute to the planned 2% annual productivity improvement, including measures to address staff retention and sickness rates.

5. Incentivising Equity: Review current payment systems to ensure they incentivise local systems to work with populations most in need, addressing potential disparities in funding distribution.

6. Investment in Prevention: DHSC, NHS England, and HM Treasury should define what constitutes health prevention spending, track it annually, and set out the necessary funding increases, granting local systems the flexibility to direct resources where they can have the greatest impact.

The report underscores the urgency for DHSC and NHS England to move beyond short-term fixes and to implement strategic, long-term solutions to ensure the NHS can meet current and future challenges effectively.