The financial state of acute NHS hospital trusts significantly declined in the last year and is still on a downward spiral, according to a report by the National Audit Office.

The “severe deterioration” in the financial position of NHS trusts and foundation trusts (FT) was worse than expected, as debts of £843 million were racked up - a far cry from the £91 million shortfall booked in 2013/14 - and net deficit for the current year is now on track to hit £2.2 billion.

Overall, NHS bodies - NHS England, clinical commissioning groups, NHS trusts and NHS FT - swung from a surplus of £722 million in 2013/14 to a deficit of £471 million in last year, but this includes an underspend of £190 million by NHS England of £182 million by CCGs.

The Department of Health has already put in place some measures to curb trust spending, but the public spending watchdog is warning that the response by the Department, Monitor and the NHS Trust Development Authority might come too late to improve the 2015-16 financial position.

The auditor is also questioning whether a coherent plan in is place for the extra £8.4 billion promised by the government for the NHS and how to get trusts’ finances back on track “to close their estimated £22 billion gap between resources and patients’ needs by 2020/21”, and reiterated its warning that the trend of declining financial performance is not sustainable.

Pressure 'will not go away'

“Continued demand for healthcare services means that the pressure on acute trusts will not go away. Until there is a clear pathway for trusts to get back to financial stability, we cannot be confident that value for money will be achieved,” said NAO head Amyas Morse.

Meg Hillier, chair of the Committee of Public Accounts, told the Telegraph: “It is simply unacceptable that the finances of acute hospital trusts have deteriorated at such a severe and rapid pace. Some NHS and foundation trusts are only getting by on handouts, costing the taxpayer £1.8 billion in 2014-15.”

The NAO is recommending that all NHS bodies work together to improve the trust planning process and their oversight of financial risk, that the DH fully considers how any proposed cost containment measures will be implemented successfully in practice, and that it moves “ambitiously and more thoroughly’ to set savings goals and secure financial sustainability.