Nottingham hospitals ordered to reduce staff costs after £43m budget blackhole revealed

Nottingham hospitals' more than £40m budget blackhole is a 'significant concern' and costs will have to be cut, according to NHS bosses. NHS England has said the "deteriorating financial position" of Nottingham University Hospitals Trust, which operates Queen's Medical Centre and City Hospital, could mean the trust is breaching the terms of its licence.

The body, which leads the NHS in England, said NUH had a £43.8 million shortfall by October 2023 - when it had planned to break even in the 2023/24 financial year. The trust forecasted it could accumulate £69 million of unmitigated risk by the end of the fiscal year, NHS England added.

Julie Grant, NHS England's director of strategic transformation for the East Midlands, acknowledged the trust had been impacted by other pressures in a letter to NUH boss Anthony May but warned the deficit was among the largest in the Midlands. "Whilst recognising there have been significant external pressures outside the Trust’s control, these nonetheless do not provide a full explanation for all the concerns," Ms Grant said in January.

Get the latest news straight to your phone by joining us on WhatsApp

"The scale of the deficit risk is of significant concern and is one of the largest in the Midlands region both in absolute numbers and as a percentage of income." The senior NHS leader also raised the alarming rate of spending on the hospitals' staff, which she labelled unaffordable.

"The trust has reported significant growth in workforce over the last three years which is not financially affordable and has not led to a corresponding improvement in implied productivity," Ms Grant said.

The trust's workforce had grown by 3,337 (21 per cent) since 2019/20 and pay costs by £282 million (40 per cent), the letter added. "This has continued and at month seven (October 2023) had grown by 8.8 per cent in the last 12 months," she said.

"The growth in workforce costs does not demonstrate financial control or delivery of financial plans." An external review of NUH's financial controls identified "control weaknesses and variable maturity of financial control measures" across the organisation.

Earlier this month NHS England made an agreement with NUH to develop a financial recovery plan, which should address all recommendations from the recent external financial review which highlighted the worrying current deficit. NUH will have to reduce the monthly deficit and preserve cash.

This recovery plan should also reduce pay costs, minimise agency staff spending, improve financial controls, and as a result return to breaking even. The trust will report to NHS England on the delivery of its financial recovery plan every month and more frequently if required, a NHS England document explained.

Paul Matthew, chief financial officer at Nottingham University Hospitals NHS Trust, said: “We have produced a comprehensive plan to reduce our deficit and achieve a breakeven financial position by April 2026. The plan will look at every aspect of the Trust and we will work with our colleagues to maintain patient safety and protect frontline services.”

The trust said it had already reduced or stopped some non-essential spending, reviewed all job vacancies, and cut the amount of money spent on agency staff. NHS England had previously accepted enforcement undertakings from NUH in April 2022 in relation to its quality of maternity care and its leadership, governance and culture.

These have now been replaced by the new enforcement undertakings relating to the trust's poor financial performance.