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Feeling the crunch: NHS finances to 2020

The NHS faces a £22 billion funding shortfall four-and-a-half years from now. That is no longer an abstract number designed to scare the NHS into action. Its reality is hitting home already: a £3.7 billion underlying provider deficit in 2015–16; commissioners only balancing their books through one-off, non-recurrent funds; and finally the Department of Health busting its budget by £200 million despite having made over £1 billion worth of technical adjustments and switches.

Yet we still know little about how the £22 billion gap will be closed. Regional Sustainability and Transformation Plans are in development – largely behind closed doors – and are not due to be completed until October this year. A new ‘financial special measures’ regime is now underway, but that is an attempt to stop the hole getting any deeper, rather than filling it. This analysis is an attempt to set out how the gap might be closed in theory, if things – many things – go well, and to raise some alarms about what might happen in practice if they don’t.