The King’s Fund has warned that if Chancellor George Osborne does not announce additional funding in the Budget this week then the government will have to face consequences of damaging patient care or a Department of Health overspend.

Painting a very bleak picture of NHS finances, the health think-tank said in a Budget Briefing that 2015 will be “the most challenging” in the recent history of the health service, with money problems “now endemic” among NHS providers and even “the most prestigious and well-run hospitals forecasting deficits”.

Amid an unprecedented financial crisis, two-thirds of trusts are on track for posting a shortfall this year, up from 25% a year ago. And despite additional funding announced in the Autumn Statement, estimates suggest that provider deficits could rack up to £2 billion this year, “indicating that the NHS as a whole is heading towards a deficit,” it said.

The government already promised a real-terms increase in the NHS budget of £8 billion a year by 2020, but this is the “bare minimum” needed to maintain standards of care, and “will not pay for new staff, the upfront costs of essential changes to services or new initiatives such as the government's pledge to implement seven-day working across the NHS”.

Social care crisis

On the social care front, the system is under “sustained and growing pressure”, having suffered real-terms funding cuts which has cut the number of people accessing publicly-funded care by a quarter, which also risks magnifying the pressure on the NHS through increased emergency admissions and hospital bed blocks.

Given the enormity of the deficits, and the need to invest in the new models of care - as outlined in the NHS five year forward view - extra funding “must be front-loaded in the early years of the parliament,” and other cash will also be needed “to support large-scale service changes and manage the transition between old and new models of care”, the group noted. 

But the NHS itself must also redouble efforts to improve productivity if it is to cope with financial constraints and burgeoning demand, it stressed.

Osborne will unveil his Budget 2015 on Wednesday.