Many organisations within the health service are grappling with a "perilous" financial situation, as analysis reveals NHS trusts collectively ran a deficit exceeding three-quarters of a billion pounds last year.
This is compelling health leaders to make "increasingly difficult choices" that are impacting patient care and could result in further job cuts, according to the King’s Fund.
Experts have criticised Chancellor Rachel Reeves’ spring statement for not doing enough to bring "financial pressures back into the balance", cautioning that current spending levels do not align with the government’s ambitions for the NHS.
The King’s Fund said that while budgets for the broader NHS and the Department of Health and Social Care "may appear manageable", this is not the reality for numerous individual organisations.
Its analysis found that NHS trusts ran a deficit of £780 million in 2024/25.
Acute hospital trusts account for three-quarters of trust spending, and 69 per cent were in deficit.
The percentage of trusts in deficit ranged from 10 per cent of ambulance trusts to 44 per cent of community trusts.
Danielle Jefferies, senior analyst at the King’s Fund, said: “At first glance the NHS and DHSC budgets may appear manageable, but as soon we look under the bonnet it is clear many organisations within the health service still face a perilous situation.
“Our own research tells us it is leading to NHS leaders having to make increasingly difficult choices that are directly impacting patient care.
“Greater reduction in the numbers of frontline staff or further reprioritisation of investment in services could become more commonplace as these organisations try to cope, all of which will worry patients as they fear a decline in the quality of care.”
The King’s Fund also said that NHS trusts have been in deficit for eight of the last 10 years.
The exceptions were during the pandemic when new funding and financial arrangements were put in place.
There were no health-specific announcements in the spring statement earlier this month, but Chancellor Rachel Reeves used the autumn 2024 budget to announce a £22.6 billion cash injection for the NHS.
Ms Jeffries added: “The spring statement did little to bring these financial pressures back into balance for many NHS trusts as they grapple with delivering on the government’s ambitious targets and reforms all while trying to maintain standard of care.
“Put simply, the current spending envelope does not match the government’s ambitions, and the spring statement did not change this reality.
“This is before even considering the future impacts of potential industrial action, new pay deals and global events driving up the cost of drug prices.
“If the government is to tackle these issues over the long term it is going to require them considering how to sustainably manage the increasing costs of delivering health care, so that NHS organisations can avoid financial deficits whilst still meeting the care needs of the population.”
Ms Jeffries called for a greater focus on preventing people from becoming ill, which is a key part of Labour’s 10-year health plan.
However, she warned that ministers “risk treating steps such as the smoking ban as an end point rather than a springboard to go further in this area”.
She said there is a “lack of follow-through on strengthening restrictions of junk food advertising and mandatory calorie reduction targets for the food industry”.
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