New analysis shows health cuts to hospitals are pushing NHS into the red

By agency reporter
April 27, 2015

Cuts to tariffs – the prices paid to hospitals for different medical procedures – are starving health trusts of income and contributing to the growing financial crisis in the NHS, according to new analysis published by the Trades Union Congress (TUC) and UNISON.

With the NHS forced to find £20 billion in efficiency savings over the last five years, one of the main ways money has been saved is through cutting tariffs, typically by 10 per cent or more since 2010.

But the research conducted for the TUC and UNISON by False Economy shows that for many procedures the tariff cuts have been far more dramatic.

False Economy examined the tariffs for nearly 700 procedures. Since 2010 over half had been cut by more than 10 per cent, and a third by more than 30 per cent.

One in six elective procedures – including treatments for kidney stones, asthma, blood poisoning, glaucoma, tuberculosis, leukaemia, diabetes and sickle cell anaemia – had their tariffs slashed by more than 50 per cent since 2010.

Looking in more detail at hospital activity rates for almost 130 different NHS procedures, False Economy found that between 2009/10 and 2014/15 cuts to tariffs meant that hospitals had suffered a net income loss of £70 million. And as these procedures only covered around three per cent of total budgets, False Economy has estimated that the actual revenue losses for hospitals as a result of cuts to all tariffs could be more than £2 billion.

These stealth cuts are having a huge impact on hospital finances, say the TUC and UNISON. Recent evidence from Monitor (the health service regulator) showed that 60 out of a total of 83 acute foundation trusts were in the red, reporting a net deficit of £438 million. Evidence from the Trust Development Agency and Monitor suggests that the combined deficits of NHS trusts and foundation trusts at the end of 2014/15 could reach £800 million.

Almost half the NHS efficiency savings so far have come from tariff cuts, but a further £22 billion of savings will be needed by the end of the decade, according to NHS England’s Five Year Forward View. With the stealth cuts already biting deep into the NHS, this approach to efficiency savings looks increasingly unsustainable, says the TUC and UNISON.

TUC General Secretary Frances O’Grady said: “Despite government assurances that health spending would be protected, we’ve seen huge cuts to the funding that hospitals receive for the treatments and procedures that we all rely on. These stealth cuts may have been largely hidden from the public eye, but the effects are grave.

“The NHS is in a rapidly deteriorating financial position, with hospital finances in steep decline, making a mockery of the government’s claims to have protected health service spending.”

UNISON General Secretary Dave Prentis said: “Slashing tariffs might seem an easy way for the NHS to save money but these operations and procedures are no cheaper to do now than they were five years ago. Each time the money given to a hospital for a particular operation is cut, that trust goes deeper into the red. The more tariffs are squeezed, the more precarious the state of NHS finances become.

“As we approach the election, most voters care more about the NHS than they do about any other issue. They want the NHS to be funded properly, not forced to make even harsher efficiency savings, cuts which could spell financial doom for many hospital trusts.”


* False Economy

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