NHS funding warning following Reeves’ £22bn black hole announcement

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The NHS’s chief executive has warned cash-strapped trusts to live within their means after Rachel Reeves laid bare a £22bn “black hole” in the country’s finances.

On Monday the chancellor outlined cuts including plans to pause and review the previous government’s hospital building programme – and to drop a proposed cap on people’s social care costs.

NHS England chief executive Amanda Pritchard has written to NHS leaders, saying the chancellor’s comments were confirmation that the government “has no financial headroom this year”.

“For the NHS that means a continued focus on living within our means,” she wrote.

“That is a task we always knew would be difficult this year – and as Julian Kelly set out at NHS England’s public board meeting on Thursday, the first months have shown just how difficult it is proving to be.”

Last week NHS England confirmed that 31 out of 42 NHS areas are set to end the year in deficit, resulting in a total overspend of £2.2 billion.

It warned: ”NHS England will cover this overspend, but this will leave no room to cover any further pressures.”

Ms Reeves’ speech coincided with the announcement of a 22.3 per cent pay rise offer for doctors in a bid to head off more strikes.

The chancellor blamed the previous Conservative government for unfunded commitments, but her predecessor, Jeremy Hunt, pointed the finger at the decision to offer above-inflation pay rises.

The axing of the cap on care costs, drew criticism from the architect of the social care reforms, Sir Andrew Dilnot, who told The Independent the Labour Party has “failed another generation of families.”

Ms Pritchard wrote that there will be concern about the future of the New Hospitals Programme. 

“No pre-determined savings from this programme have been counted as part of today’s statement, and we are working with the Department of Health and Social Care (DHSC) to conduct the review of projects and decision-making requested by the secretary of state as soon as possible to provide colleagues with the certainty they need,” she wrote.

In response to the chancellor’s statement, NHS Confederation chief executive Matthew Taylor said: “With, the chancellor confirming that at least £3bn out of the total £9bn the total cost for accepting all of the pay review body recommendations will be absorbed by government departments, health leaders are worried that they may face impossible choices if they are potentially asked to make cuts themselves to bridge this gap.

“It is crucial that the pay award is funded in full, as the NHS continues to work hard at recruiting and retaining staff and driving down waiting lists against the backdrop of an already very tight financial position, including managing a reported funding gap of £2.2bn this year.”