UK: The State Of The State: Implications For The NHS

Last Updated: 22 October 2015
Article by Karen Taylor

Most Read Contributor in UK, August 2017

This week Deloitte LLP and Reform published their fourth report on the State of the State Recalibrating Government (link). This report analyses material from a wide range of public sources, including the government's accounts, public spending data, departmental reports and official economic figures; augmented by insights from roundtable discussions and interviews with leaders from across the public services, collectively responsible for £16billion of public spending. The result is a compelling report that highlights the realities of our public finances, summarising a wealth of data in an accessible manner to present a thought-provoking and independent view of the UK public sector. This week's blog considers the main finding in the report and the implications and outlook for the NHS.

The State of the State 2015-16 report

This year's report finds the UK in the middle of a decade-long recalibration aimed at lowering levels of public spending. The fiscal consolidation programme, begun in the wake of the 2008 global financial crisis, is now half-way through and, by 2020, the UK's spending on public services is likely to be at its lowest level for 50 years. As a result many public bodies across the UK have experienced austerity and cost reduction with a reduction in the size of the public sector workforce and pay restraints for those remaining. The key findings from this year's report are:

  • over the course of this decade, UK Government spending is forecast to decline by a fifth
  • the deficit – the difference between what the Government earns and what it spends over a year – is expected to be £69.5 billion this financial year
  • public sector net debt is at £1.5trillion which equals £23,428 for every UK resident
  • this year, debt interest will cost the Government more than it spends on the police and criminal justice system
  • for the local public services, continued austerity measures and demand pressures have begun to trigger signs of financial distress – more than 200 NHS trusts, councils, police forces and further education colleges could face serious financial difficulties in the course of this Parliament
  • productivity gains can help the public sector maximise its efforts, focus on the impact it delivers and make the most of its funding. Every hour of public sector staff time saved through productivity is worth £72million to the UK's public purse.

Asked to reflect on their challenges since 2010 and outlook to 2020, interviews with more than 40 local public leaders found:

  • their organisations were more efficient and productive as a result of budget pressures however the next five will be challenging
  • morale has suffered as a result of redundancies, pay freezes and reduced promotions
  • ongoing public sector transformation has made the need to keep talented, skilled people greater than ever
  • technology is seen as critical to a more productive and customer-centred public sector, but funding and cultural change are seen as the key barriers to harnessing it more effectively.

The report also considers the next five years for the UK's governments and public sectors through the lenses of productivity, talent and the balance sheet. In doing so, it provides recommendations for the UK's central governments and acknowledges that whilst reshaping government will be challenging, the potential is there to create a more cost-effective, citizen centred and mission focused public sector by 2020.

The report findings in relation to the NHS – a 100 or so organisation in financial distress

While all of the report's findings and recommendations are relevant to the Department of Health, its non-departmental public bodies and NHS organisations, the report acknowledges that the NHS faces a unique set of challenges, largely due to a growing mismatch between supply and demand for its services.

The report identifies that more than 200 front line public sector organisations in the NHS, local government, police and further education in England could be at risk from financial distress and require intervention; around half being NHS trusts. Indeed, England's NHS ended the financial year 2014-15 with a record deficit of £822 million, driven by a combination of high costs for agency staff, rising patient demand and financial plans that proved inaccurate. Despite exhortations from the centre to reduce spending and tackle the predicted deficit, NHS trusts are already reporting a £930 million overspend in the first three months of 2015-16 alone.

How has the NHS got itself in this position? As previous blog's have discussed, although NHS funding, unlike much of the rest of the public sector, has been ring-fenced, with year on year increases of around 1 per cent; demand has been growing at between four to five per cent a year. As a result, although the NHS managed to largely balance its books for the first five years of the austerity decade, this was only possible by picking all the low hanging fruit –involving pay restraint, controlling spend on consumables and improving procurement. There were also cuts in central budgets and the abolition of some tiers of management.

What's different now, compared to the past five years, is that the NHS is increasingly affected by cuts in social care while facing shortages of key staff groups (GPs, primary/community care nurses, emergency care staff etc) leading to increasing (rather than decreasing) reliance on much more expensive agency staff. There are also a host of other demand and supply challenges, not least the increasing volume and complexity of demand from an ageing population, at one end of the spectrum, and an increase in birth rates at the other, both groups, heavy users of NHS resources. As a result hospitals are caught between a rock and a hard place in trying to meet the requirements of both the financial and quality regulators.

The NHS appears to have all but exhausted its options for becoming more efficient without radical transformation in the way that services are delivered. This will require smarter ways of working, including using new digital technology to improve the efficiency of staff. But this needs time and upfront investment. There is also a need to reduce unwarranted variation in clinical practice and the overuse, underuse, and misuse of different aspects of care. Again difficult to achieve in the short term and will take time undermining the Department of Health's requirement to balance the books by April 2016. Indeed, the NHS will need a significant proportion of the £8billion extra funding promised in the spending review sooner than later.

If the NHS is given the time and space and the upfront investment needed to seize these opportunities then, and only then will its books be balanced. The alternative is to think radically about how services are funded. I have ended this week's blog with some of the quotes from NHS leaders responding to the State of the Sate survey which together with the above, provides a glimmer of optimism that our highly valued NHS services can be should be safe for future generations.

"We need to look at the efficiency of how we deploy the workforce and align supply and demand. It is a struggle to recruit new clinicians and we have to start deploying new roles. For example, rather than asking nurses to work 'harder' we have to train them to work in a different way." 
 - Strategic Director, NHS Foundation Trust

"We've got a legal responsibility to provide primary medical services to the population but it may not be GPs in the future. It may be hospital consultants working more in the community. So there's a whole mind shift needed in the NHS. I don't think the NHS will survive if it tries to carry on being the way it is for the next five years."
 - Chair, NHS Trust

"One challenge is going to be retaining and motivating top quality directors and senior management because it's a fairly thankless job being a director of a hospital trust, and with no money being put in to the system it's going to get increasingly tough."
 - Chair, NHS Trust

"I think that it has worsened. I think that the motivation of staff has significantly deteriorated. They see the NHS as completely focussed on finance, and that wasn't what they signed up for. It really gets to them and annoys them. They see every decision that we make as detrimental."
- Finance Director, NHS Trust

An NHS official described his trust's technology as "not good", adding that "if I had a magic wand, technology is what I'd throw all the money at".

"If I was honest, I think [the main barrier] is the will and the commitment of the people... it is getting the motivation and the culture change."
- NHS Trust Finance Director

"It's a difficult conversation but it's a public one we need, which is: what is the healthcare people really expect us to do for them at different stages in their life?
- Chair, NHS Trust

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.