Extra health and social care funding is being used to deal with short-term pressures rather than long-term transformation, says the National Audit Office (NAO).

The NHS received an additional £1.8bn Sustainability and Transformation Fund in 2016-17 in order to support the integration of health and social care at the local level.

This helped improve the health service’s financial position, taking it from a £1,848m deficit in 2015-16 to a £111m surplus in 2016-17. However, the NHS is still struggling to manage increased activity and demand within its budget and has not met its access targets.

The NAO report, published today, warns the NHS’ efforts to balance its books has ‘restricted money available for longer-term transformation’ which it argues is ‘essential’ for the sustainability of the health and social care system.

One example of such short-term thinking the auditors found was when the Department of Health and Social Care transferred £1.2bn of its £5.8bn budget for capital projects to fund the day-to-day activities of NHS bodies.

‘The NHS has received extra funding, but this has mostly been used to cope with current pressures and has not provided the stable platform intended from which to transform services,’ said Amyas Morse, head of the NAO.

‘Repeated short-term funding-boosts could turn into the new normal, when the public purse may be better served by a long-term funding settlement that provides a stable platform for sustained improvements.’

The auditors also found a similar pattern with clinical commissioning groups and trusts. They are increasingly reliant on one-off measures to deliver savings rather than recurrent savings that are realised each year.

Progress has been made in setting up 44 new partnership arrangements across health and local government, the NAO said.

However, it warns the performance of partnerships varies and their tight financial positions make it difficult for them to focus on long-term transformation rather than dealing with short-term pressures.

Responding to the report, Cllr Izzi Seccombe, chairman of the Local Government Association’s (LGA) Community Wellbeing Board, said: ‘This alarming report shows that despite receiving £1.8bn in extra funding last year, the NHS is struggling to cope with the costs of increased demand and has not been able to make enough progress in the vital long-term transformation of services because it has had to spend most its extra money on current pressures.

‘Prioritising funding for the NHS over social care will not help reduce pressures on hospitals. Instead of making costly short-term bailouts to treat the symptoms of pressures, money would be better invested in treating the causes of these pressures.

‘Government needs to give urgent funding to councils to invest in prevention to reduce the need for people to be admitted to hospital in the first place, which will help to reduce costs to the public purse.’