Section nine – Conclusion

The NHS could not continue with a trend of rising deficits among trusts and commissioners. Action was required to stabilise the system, and focusing funding on front-line services in 2016/17 has had a positive impact on provider finances. However, this has come at the expense of long-term investment, and funding for transformation. It will therefore have implications for the sustainability of NHS services in the future.

As its name suggests, the STF was originally intended to support transformation as well as to improve financial performance. But transformation did not occur, and appears to no longer be an aim of the fund, as reflected by its change in name from the STF to the PSF – the provider sustainability fund.

The manner of allocation of the STF also meant that most funding went to acute trusts in 2016/17. This may have worked against the transformation principles set out in the Five year forward view, which envisions more services moving out of hospital and towards primary and community services.

Forgoing long-term investment to protect day-to-day services may be an appropriate tactic for a short period of austerity; however, the NHS is now in its seventh year of very low funding growth. Without significant investment above current plans, this is likely to continue until at least 2020/21. Continuing to forgo long-term investment will make the challenge of meeting demand pressures through improvements in efficiency increasingly difficult.

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