This report details the results of an online survey of NHS trust finance directors carried out between 7 January and 25 January 2016. We contacted 236 NHS trust finance directors to take part and 83 responded (35 per cent response rate). The sample included 38 acute trusts; 28 community and mental health trusts; 4 specialist trusts; 2 ambulance trusts and 11 unknown. This sample broadly reflects the composition of NHS providers in England.

In addition, we contacted 171 clinical commissioning group (CCG) finance leads and 50 responded (29 per cent response rate). Between them these finance leads covered 61 CCGs (29 per cent of CCGs).

Respondents were asked about their organisation’s financial situation and the financial outlook for their local health economy over the past financial year; the state of patient care in their area; the financial situation looking ahead to 2016/17; the key organisational challenges facing trusts and CCGs; and workforce issues.

• These figures confirm that NHS providers are heading towards an unprecedented end-of-year deficit.

• Halfway through 2015/16, NHS trusts and foundation trusts reported a net overspend of £1.6 billion. Monitor and the NHS Trust Development Authority suggested that this could imply an end-of-year deficit in the region of £2.2 billion (Monitor 2015; NHS Trust Development Authority 2015).

• Our third survey for this financial year confirms this extremely difficult financial situation: 67 per cent of all providers forecast a deficit for the end of year and 89 per cent of acute trusts are expecting to overspend (Figure 6).

• The total net deficit forecast for the end of 2015/16 for the 83 provider organisations surveyed amounted to £721 million. For acute providers the net deficit is £708 million (ranging from £3.7 to £62 million). Scaled up for each type of provider organisation, these figures suggest a net overall provider deficit across the NHS by the end of this financial year of around £2.3 billion.

• The financial situation for CCGs has been and remains less precarious than for providers. However, the latest survey confirms our September finding with the proportion of CCGs forecasting an overspend by the end of the year almost double that in the previous two quarters (Figure 7).

• Around 64 per cent of finance directors reported that their forecast position this year would include additional financial support, either via loans, additions to their public dividend capital (PDC) from the Department of Health, or drawing on their own reserves (Figure 8).

• The average cost improvement programme (CIP) target for trusts for 2015/16 is 4.5 per cent, ranging from 1.8 per cent to 8.5 per cent of turnover.

• The average quality, innovation, productivity and prevention (QIPP) target for CCGs for 2015/16 is 2.5 per cent, ranging from 0.8 per cent to 4.8 per cent of allocation (Figure 9).

• While CIP/QIPP targets have remained at similar levels for a number of years, confidence in the ability to achieve plans has been reducing each year since 2011. Around 53 per cent of all NHS trust finance directors now feel fairly or very concerned about achieving their savings plans this year (Figure 10); this is the most pessimistic finance directors have been at this time of year since our survey began.

• CCG finance leads were more optimistic than their counterparts. However, just under a third (29 per cent) of all CCG finance leads were fairly or very concerned about achieving their QIPP plans this year (Figure 11).

• For the first time, a majority (53 per cent) of trust finance directors felt that care had worsened in their local area in the past year (Figure 12), and a total of 46 per cent of all CCG finance leads thought that care in their local area had worsened over the past year (Figure 13).

• For trust finance directors, the four-hour waiting time target in A&E is the biggest concern for the first time since our 12th report in June 2014. The 18-week referral-to-treatment time target also moves up the list of concerns. Staff morale drops down the list – although continues to be one of the top three concerns (Figure 14).

• CCG finance leads continue to be most concerned about the four-hour waiting time target in A&E, delayed transfers of care and the cancer treatment waiting times targets (Figure 15).

• In June 2015, the government announced controls for spending on agency staff. These included setting a maximum hourly rate for agency doctors and nurses and placing a cap on total agency staff spending for each NHS trust.

• More than half of all providers in our survey (55 per cent) were fairly or very concerned about their organisation staying within the total agency spend cap for 2015/16.

• When asked whether the proposed controls would affect their ability to ensure safe staffing levels, 22 per cent NHS trust finance directors said they would. A further 35 per cent were not sure of the impact on safe staffing levels, indicating an increasing uncertainty about the effect of the controls (Figure 17).

• Previous surveys have revealed a high degree of scepticism about the achievability of the productivity challenge as set out by the Forward View.

• This survey shows that around 68 per cent of finance directors and CCG finance leads think there is a high or very high risk of failing to achieve the productivity gains suggested by the Forward View (Figures 18 and 19).

• When asked for their views about the financial state of their wider local health and care economy over the next 12 months, 89 per cent of trust finance directors were fairly or very pessimistic (Figure 20). The proportion stating they were very pessimistic has dropped since the previous survey in September last year and may reflect the outcome of the Spending Review in November – an important aspect of which was the frontloading next year of this parliament’s NHS settlement. Nevertheless, the proportion reporting they were optimistic remains very low.

• Around two-thirds of CCG finance leads felt fairly or very pessimistic (Figure 21). A similar fall in those reporting to be very pessimistic may also reflect the outcome of the Spending Review.

• With 67 per cent of trusts forecasting an end-of-year deficit for 2015/16, the situation looks worse for 2016/17: 71 per cent of NHS trust finance directors are very or fairly pessimistic about balancing their books in 2016/17 (Figure 22). It should be noted that the timing of our survey means that while the outcome of the Spending Review was known, not all respondents will have known about some of the detail of the sustainability and other deficit measures for next year when answering the survey.

• Overall, CCG leads are more optimistic; however, 30 per cent are very or fairly pessimistic about achieving financial balance in 2016/17 (Figure 23).

• Monitor (2015). ‘Quarterly report on the performance of the NHS foundation trust sector: 6 months ended 30 September 2015’ [online]. GOV.UK website. Available at: www.gov.uk (accessed on 15 February 2016)

• NHS Trust Development Authority (2015). ‘Quarterly report on the performance of the NHS foundation trusts and NHS trusts: 6 months ended 30 September 2015’. Available at: www.ntda.nhs.uk (accessed on 15 February 2016).