East of England ICBs brace for another year of austerity

A round-up by John Lister of the financial situation in East of England Integrated Care Systems (ICSs), drawing on the latest available Integrated Care Board (ICB) papers as of March 24.

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What ICBs must deliver

NHS England’s ‘Operational Planning Guidance, ‘ which outlines the expectations for all of England’s 42 ICBs in 2025/26, states that all systems must meet several requirements in their final Plans, which must be submitted with Board approval by 27 March 2025:

Deliver a breakeven revenue finance plan;

Meet key performance targets, including

Reduce patients waiting over 18 weeks for elective treatment to 65%, with every trust achieving a 5-percentage point improvement;

Achieve a minimum of 78% of patients admitted, discharged, and transferred from the Emergency Department (ED) within four hours;

Continue reductions in spending on bank staff (10% less) and agency use (30% less), in line the Long-Term Workforce Plan;

 Drive improvements in operational and clinical productivity ( 59)

ICBs are also collectively required to:

Provide an additional 700,000 dental appointments. Improve access to mental health services for Children and Young People (CYP) to meet the national goal of supporting 345,000 additional CYP aged 0-25 compared to 2019.

How they are expected to deliver this total without any breakdown of what each ICB is meant to contribute remains unclear: ICB catchment populations range from 3.8 million down to approximately 600,000, making any simple division of the target by 42 meaningless. Taking advantage of this lack of detailed planning, Suffolk and North East Essex ICB, for example, is planning to delay some dental procurements “to maximize the underspend up to £10 million.” (page 132)

Of course, Keir Starmer has now announced that NHS England’s staffing will be slashed back this year and that the whole body will be abolished in two years. The extent to which any demoralised NHSE leaders who have not yet announced their departure feel willing or able to crack the financial whip over ICBs remains to be seen.

New era of financial discipline
However, NHSE’s interim chief executive Jim Mackey has told a gathering of ICB chiefs that the previous comparatively relaxed financial regime is now a thing of the past, so it’s unlikely that much additional leeway will be available in 2025/26.

Whether it is actually possible to meet the demand to deliver a breakeven plan while at the same time meeting all of the performance targets is a moot question. From the board papers seen so far this year, it is difficult to see how all but a few ICBs could do so.

Bedford Luton and Milton Keynes (BLMK), one of the ICBs that seems to have come close to breaking even in 2024/25 despite requiring a massive cost improvement programme equivalent to 6.2% of turnover, has been warned of the further difficult choices that will be required in 25/26 and the desperate measures that may be considered:

“Delivering a breakeven revenue position for next year presents a very significant challenge to the BLMK system. There are a limited number of ways in which we can bring down our forecast deficit, namely:

“▪ Improving the scale of our Cost Improvement Programmes & productivity assumptions;

▪ Assuming stronger positive impact of system transformation next year;

▪ Non-compliance with performance targets; and,

▪ Taking difficult decisions, including disinvestment and de-commissioning decisions.”  (page 61)”

This investigation of six ICSs in the East of England suggests little information exists on how ICBs have been making (or attempting to make) the ambitious cash savings they need to balance the books or at least minimise deficits.

We don’t know, therefore, how many other ICBs have been discussing or agreeing to similar desperate measures of disinvestment or decommissioning of services: indeed, it’s clear that many are conducting their discussions behind closed doors in private sessions.

However, it can surely only be a matter of time before such issues erupt from closed discussions and private board meetings and are revealed to the public as cuts, closures, and exclusions of services.

Several ICBs have effectively delegated the tasks of drawing up recovery plans and monitoring the current situation to management consultants, with less-than-satisfactory results.

PWC, PA Consulting, Deloitte, and McKinsey have all been brought in by East of England ICBs, but they have proved unable to deliver the required answers or even (in the case of McKinsey in Suffolk and Northeast Essex) been accused of “poor governance” for failing to assess the situation accurately.

Nonetheless, the continued weakening of ICBs seems certain to result in even more NHS funds being squandered on costly management consultants.

Analysis of previous consultancy contracts suggests they are unlikely to yield more satisfactory outcomes than those achieved thus far, either from the perspective of management or regarding the prompt, efficient, and sufficient delivery of patient care. The ICBs in Eastern England:

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Bedford Luton and Milton Keynes (BLMK)

This ICB is one of a minority that astonishingly meets only quarterly rather than every two months, and so all kinds of questions were left hanging right through the winter months from December to the March meeting.

However, the March papers also offer less than a full account of the current and future situation:

“An update on the latest revenue position for next year, including the impact of Cost Improvement Programmes (CIPs) and productivity improvements, will be provided in the private section of today’s meeting.” (page 61)

A committee report in the December board papers revealed fears for the coming year:

“The modelling shows an unmitigated financial challenge in 2025-26 of c£140m – this assumes that the in-year 2024/25 challenges can be resolved, and the financial plan can be delivered.” (p83)

In the March papers, the ICB again warns of some of the possible consequences of next year’s tighter financial squeeze, but the Board is keen to ensure that any details are withheld from the public and news media until after any decisions have been made.

Both acute providers, Bedfordshire Hospitals FT and Milton Keynes University Hospital FT, seek to escape significant year-to-date deficits and failures to deliver their full savings targets by over-delivering elective care and hoping to recoup extra from the Elective Recovery Fund (ERF).  However, Milton Keynes’ (ERF) performance is 141% above pre-COVID levels, putting the trust well above both the 106% national target and the BLMK internal budget target of 124%. (pages 150-151).

It’s not clear whether this will now be hampered by the decision in January by NHS England’s then-financial director to impose a cap on ERF payments.

BLMK is one of the very few ICBs to include any report of the local authority’s spending pressures alongside the analysis of NHS bodies. It notes that Luton Council’s General Fund is projecting a  £13.5m (£7.4m) overspend against its £167.3m approved revenue budget, largely due to a forecast overspend in Supported Living Accommodation Costs; a £2.1m forecast overspend in Children, Families and Education services; and an overall forecast overspend in Adult Social Care services driven by increases in home care and residential care.

Apparently, “urgent action is being taken” to update and revise the deficit recovery plan as the service pressure has increased by £4m in just three months. (p161)

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Cambridgeshire and Peterborough ICB (CPICB)

While BLMK are reticent about the financial problems ahead, Cambridgeshire and Peterborough ICB appear positively cavalier in their approach: minutes of their January board meeting include no discussion on the financial situation of the ICS!

Nor, as we head towards the end of the financial year, is there any published discussion of the prospects for 2025/26.

The March Integrated Performance Report, however reveals all is not necessarily going so well:

“Month 9 was a deficit of £11.4m against a planned deficit for this period of £0.4m.”

The explanation is that “The deficit position includes £900k resulting from unfunded Industrial Action, a provider income shortfall linked to 2024/25 pay awards of £7.2m, prescribing pressures in the ICB and an under delivery of efficiency plans year to date.” (page 5)

The 2024/25 CPICB plan, predicting breakeven on a total expenditure of £3.85bn, was underpinned by a number of key assumptions:

“• As last year, in line with national direction and guidance, the plan assumed no monetary or activity impact of industrial action

• Delivery of £135.6m of efficiencies.
• Achievement of the elective recovery target of 109.7% weighted value above 19/20 baseline.” (p45)

By Month 9 “total system efficiencies were £8m behind plan, with a forecast to under-deliver on the £136m plan by £7.9m at year end.” However, the trend was improving.

The plan to bring in more cash from the Elective Recovery Fund by overdelivering on elective care was also problematic. The system hoped to deliver 137.8% of 19/20 levels, way above the NHSE target of 109.7% and the local target of 127.7%.

“However NHSE in January confirmed a cap to the ERF funding, limiting payment to £64.9m in the ICS: The system finance teams have worked through the implications of this cap and our latest forecasts estimate a gap of £5.2m. Any risk to overperformance on the cap will need to be managed by the system.”  (p46)

While this is a problem for the acute providers, the ICB does not discuss any of the underlying issues that have left Cambridgeshire and Peterborough Foundation Trust, the main mental health provider, facing the largest current and forecast deficit in the ICB. (p48)

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Hertfordshire and West Essex ICB (HWE)

This ICB seems to have come close to balancing the books in 24/25 “helped by an additional allocation from NHSE” of an extra £11m, £4m of which was to cover costs of rolling out the Electronic Patient Record in East and North Herts Hospitals trust.

But while “ICS organisations have collectively delivered 96% of the year-to-date efficiency target of £166m. … of the total £159m delivered, only £103m (65%) was delivered recurrently,” stacking up a bigger problem for next financial year. (p90) If the percentage of non-recurrent remains the same it would leave a £74m gap for 25/26.

Even if all £212.5m of planned “efficiency savings” were achieved, the system’s original financial plan would still have resulted in a £20.0m deficit (to be covered by NHSE funding).

The problems of 25/26 are already worrying: “Unfortunately, next year’s plan is likely to be just as challenging to deliver.” (p30)

HWE’s January Board papers report the ‘rapid review’ of financial improvement plans conducted for the ICB by PWC. This turns out to have been a disappointment.

It was supposed to look at “the current efficiency plans and pipelines within the ICB and system providers to advise on whether plans are adequate in scope, breadth, and composition. …” and identify “areas of potential risk (i.e. unidentified gaps, duplication high risks schemes, schemes without sufficient evidence or plans to materialise a financial benefit).”

However the review did not find any “significant additional in-year opportunity” that did not require investment, although it did highlight “potential additional opportunities” which could save up to £28m – in return for an unquantified prior investment.

The ICB report expresses frustration that “Despite requests to do so, the work did not explore in any real detail opportunities linked to service transformation (eg reducing avoidable non-elective admission)” (page 25-26)

The most interesting aspect of the PWC report seems to be in identifying some of the “difficult choices” that HWE and other ICBs may feel they have to make in the quest for a balanced budget. Suggested ‘Financial Improvement Opportunities’ include what appear to be outright cuts:

• Review frailty pathways to reduce non-electives by 25% [this is not explained].
• Convert operational improvement plans into financial improvement plans.
• Review Mental Health/Learning Difficulty bed growth and costs.
• Consider funding and contract arrangements for bulk purchase of MH/LD beds.
• Collaborate with clinical networks for service transformation and redesign.
• Reduce spend across the HWE System through holistic contract review and service rationalisation. (p28)

On “Care closer to home” the ICB is also advised that:

“It is predicted that there will be a 42% rise in non-elective admissions for the over 65 year olds over the next 20 years.  On average, systems that invested more in care in the community saw 15% lower non-elective admission rates and 10% lower ambulance conveyance rates.” (p32)

This may well be true: but without extra funds to invest, and with the existing services still under pressure, it’s not clear how HWE (or any other ICB in 25/26) could sensibly take up this suggestion.

The West Essex acute provider, Princess Alexandra Hospital Trust, in Harlow, has had its promised rebuild (once on a shortlist of six “shovel-ready” schemes supposedly given the go-ahead under Boris Johnson’s government) been postponed to 2032 at the earliest.

Its relatively recently-appointed chief executive, has now warned of the need for short-term funding of up to £120m for infrastructure repairs to keep the hospital running until then.

Thom Lafferty told the HSJ the hospital’s ageing water and electrical systems, inadequate airflow, fire safety works, and resilience to power failures all needed to be addressed. “They’re about fixing the fundamental basic infrastructure that you’re required to run a hospital.”

He warned that staff are suffering “moral injury” as deteriorating estates disrupt their ability to provide care. But while the necessary work has been estimated at around £120m, the Trust has only been allocated around £5m for the estate’s repair backlog.

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Mid & South Essex ICB

In month 10, the MSE system agreed a revised forecast outturn position of £32.5m deficit (a total of £128m deficit after receiving deficit support funding received in year).  (p145)

MSEICB argues it is not the only system in the area with a challenged financial position, pointing out that:

“Two East of England systems were in the top 8 most challenged systems across the country, with MSE sitting at number 8 and Norfolk and Waveney at number 4.”

In fact MSE and Norfolk and Waveney are the only two East of England ICBs among the 19 (almost half of the 42 ICBs) that are now subject to NHSE’s investigation and intervention regime.

However, “The regional position at month 7 demonstrated all ICBs were extremely challenged in terms of their financial position. Most of the East of England systems efficiency plans had started to deliver, however MSE were 70% in terms of confidence with the in-year delivery of efficiency, so there was more work required in year.” (p212-213)

The ICB has begun the Medium-Term Plan (MTP) process – but is relying on PA Consulting to do the main work. The company:

“joined the organisation for eight weeks with an ambitious programme of work, phased into three areas. The current phase (Phase 1) was undertaking a diagnosis of the real challenges in the system to fully understand the forecast position.” (p213)

Quite why the ICB directors needed external management consultants to do this work is not explained. It seems that the thinking so far is abstract rather than concrete, since with current financial constraints shifting investment to new priorities means cutting existing services. Nevertheless:

“the aim was to move to left shift, sickness to prevention model and acute to community, but would need to prioritise to achieve this.

“An intelligent analysis was required of the activities modelled as quick result and quick impact to transfer the resource to activities with longer term benefits. … the model would be optimised in the next few weeks with PA Consulting.”

In the January ICB Board papers MSE noted that the barriers to financial recovery included:

• New and emerging financial challenges being driven by workforce challenges, performance, quality and delivery.

• System pressures to manage delivery (capacity).
• Capacity due to vacancy chill. (p114)

It also noted that the steps to address the system’s financial problems consisted of a series of meetings, plus “Additional workforce controls” and  “Additional spend controls – triple lock arrangements.”

Once again the key work is delegated to management consultants rather than the ICB’s own senior staff: “Consultants (PWC) undertook Investigation and Intervention work with local implementation of identified actions.” (p114)

The January meeting also heard that – while all of the NHS bodies in the ICS are facing severe financial pressures and scrutiny – 3-year contracts have been agreed for 4 main NHS providers, but also for four Independent Sector Providers (totalling £62m/year, £185m over 3 years):

• Ramsay Health Care – Springfield
• Spire Healthcare – Wellesley, Hartswood, London East
• Spa Medica
• And Nuffield Health – Brentwood (p51)

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Norfolk and Waveney ICB (NWICB)

The ICB is one of the 19 ICBs branded as category 4 on NHS England’s Investigation & Improvement framework, and requiring the most proactive intervention. Its March board papers include some worrying projections for 2025/26, which emphasise the worsening of the financial situation year by year:

“Our financial performance was good last year, we set and delivered a balanced budget for 2023/24. However, the financial position of the NHS as a whole and public services has become more challenging since then. We are expecting to make even greater efficiencies this year than we did last year, but it will not be enough to breakeven…” (p31-32)

The ICB is projecting a c£36m system deficit for 2024/25, despite delivering a forecast c£149m of efficiencies: and for 2025/26 the situation is worse again, with the ICS needing to deliver almost twice as much (c£280m) in efficiencies and savings to break-even. There is a warning that this is likely to mean cuts in services:

“We will do everything we can to make efficiencies to protect services. However, given the scale of the challenge, we must make savings, and this will mean making changes to some services. Ultimately, we have to operate in the budget allocated to us.” (pdf p31-32)

The more detailed Finance report to January (Month 10) states that the underlying deficit is £122.4m, a deterioration against the planned deficit of £101.8m:

“This arises from the full-year effect of Recurrent CHC [Continuing Healthcare] packages and the removal of the Non-Recurrent in-year savings being used to deliver the 2024/25 Financial Position.” (pdf p206)

The system position at M10 is a £49.7m deficit, (£44.6m adverse against plan) even after receiving the non-recurrent deficit funding of £21.0m from NHS England. The forecast outturn for the system is a £53.9m deficit for the year.

All three acute providers are expected to end the year in deficit, with the largest being the crumbling RAAC-ridden Queen Elizabeth Hospital King’s Lynn (-£37.7m) and James Paget Hospital (£7.8m), as well as an £8.4m deficit at Norfolk and Norwich Hospital. (pdf p209)

The long-awaited rebuild of the two RAAC hospitals is now scheduled for 2027/28: but that was an announcement in February, before Rachel Reeves further tightened the clamp on public spending. With QEH now literally supported by thousands of props there must be doubts whether it can stay standing until the new building is ready.

These problems are also reflected in the full year forecast for the efficiency programme, which is expected to deliver £148.7m, £30.2m below plan. Two thirds of this is due to QEH (forecasting £21.3m lower than planned), while the ICB itself is also £7.4m lower than planned – mainly due to under delivery of savings on Non-NHS procurement. (pdf p 210)

N&W March papers also include Deloitte’s January 2025 Report, commissioned as part of the Investigation and Rapid Intervention Programme,

Deloitte appear to have focused almost exclusively on cutting staff and spending on staff, specifically Vacancy Control; Nursing Agency and Temp Spend; Nursing Rostering; Other Staff Agency and Temp Spend; Medical Locums and Temp Spend; Medical additional shifts; Medical Rostering; and Absence Management.

By contrast, other savings are vaguely summed up as “Non-Pay Controls,” “Reporting, Review and Governance,” and “Financial Recovery Arrangements”. Perhaps vaguest of all is the call for:

“Implementation of stronger non-clinical non-pay controls across the system” (p229)

It seems that staffing in N&W has grown faster than ‘weighted activity’, with the largest growth in NHS Infrastructure Support, up 33%, although this is not explained or defined. The possibility that this might be related to the constant pressing tasks of keeping two major RAAC-ridden hospitals functioning is not addressed.

Instead, Deloitte comes up with the vaguest of suggestions that:

“Reducing WTE in line with weighted activity could reduce pay spend by £39 – £79m (including Medics).”

None of this is helpful, in that the potential saving varies so hugely from maximum to minimum, no specific proposals are made as to which staff posts should be axed in which departments of which trusts. (p240)

After receiving such an insubstantial report N&W should be demanding a refund from Deloitte.

Meanwhile N&W’s Finance Committee is warning loud and clear that cuts are on the agenda for 2025/26:

“The Committee was presented with the draft numbers, showing a ca. £(80)m deficit, assuming a delivery of ca. £200m in efficiencies, i.e. a total £280m required to be made. Further work is happening to reduce this £80m gap, but it will in all likelihood require certain services to be reconfigured, curtailed or not renewed as part of Sustainable Commissioning Programmes.”(p248)

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Suffolk and North East Essex ICB (SNEE)

At first sight this ICS seems to have escaped most of the pressures that have knocked other East of England ICSs off track. At month 11 the system is “on plan year to date and all organisations have submitted forecast outturns in line with the approved changes.” (page 49)  the system is on track to deliver £71.6m of £71.9m “efficiency” savings, although 34% of these are non-recurrent. (p 50)

But while the trusts and ICB (with the exception of West Suffolk Foundation Trust, which is a RAAC infested building awaiting a rebuild that is not due to start until 2027/28) are all delivering on or better than plan, and increased costs have been balanced by increased income, there is still a gnawing fear of the worsening situation coming for 2025/26.

The ICB’s Finance Committee, meeting in February, warned that:

“[2025/26] is one of the most challenging funding rounds experienced particularly with the number of complex issues to look at over a very short period of time. …

“It is necessary to have a road map of how to navigate the very difficult financial decisions that will need to be taken before the end of March.” (p128)

However no hint is given as to what such decisions might involve.

The Committee was clearly not at all impressed with the quality of the information that had been produced for the ICB (no doubt at considerable cost) by McKinsey consultants:

“The Committee were in receipt of the Sustainability Review slide which is part of a larger pack that was tabled to the steering group last week and had been prepared by McKinsey who are supporting the review. …

“It is important to note that the starting positions on the slide are not reflective of where we currently are and conversations with McKinsey are currently taking place to understand the impact of this funding settlement as it is likely to be the same for the remainder of this parliament. It was felt that poor governance on behalf of McKinsey in preparing these slides should be noted.” (p129, emphasis added)

Exactly what the shortcomings of the slides may have been is not clear, since they are not included with the SNEE board papers, and are presumably being kept confidential.

Nevertheless the Committee has decided to use the slides they have complained about:

“The importance of working with provider colleagues and using the McKinsey sustainability review as a starting point was highlighted.”

Key Actions of the Committee include drawing up a “comprehensive list” of decisions and their impacts that the ICB and providers are making to address the financial position – but there seems to be no intention of sharing this information with the local communities covered by SNEE or with staff and their organisations. (p134)

The Finance and Performance Committee, meeting in early March heard a worrying overview of the planning submission for 2025/26:

“Both [acute] trusts [East Suffolk & North Essex and West Suffolk] are planning for a 2% reduction in whole-time equivalents. … It was highlighted that they are not meeting any of the key elective targets,….

“The £65 million deficit was detailed, split as follows: £5 million for ICB, £29.4 million for ESNEFT, £30.9 million for West Suffolk, and a small £100,000 surplus at EEAST [East of England Ambulance Service].

“The increased pressure across all organisations was emphasised due to the real terms funding reduction and the shortfall of elective funding.” (p 131)

The BBC report of the March ICB meeting states that the two acute trusts are each to shed 3% of their workforce rather than 2%, suggesting a total of 468 jobs could be axed in efforts to balance the books. The two trusts appears to be querying the figures, and so far there is no indication which jobs might be cut: ESNEFT has 12,900 staff, and WSFT has around 5,000.

One of the acute trusts, East Suffolk and North Essex FT (ESNEFT) has defied several weeks of strike action to force through the outsourcing of non clinical support services at Colchester Hospital to Sodexo. The decision to outsource was pushed through private meetings of the Board despite its Full Business Case revealing that there is no immediate saving to the trust.

UNISON has challenged the ICB’s own outsourcing – of non-emergency ambulance (Patient Transport) services – which the union argues has been costed in such a way as to make it uneconomic for East of England Ambulance services, which currently runs PTS services in North East Essex to bid for a new ICS-wide contract. UNISON is warning that any company that takes over the new contract would have to cut corners on standards and attack staff pay and conditions to make a profit, and urging the local care board to work with the ambulance service and UNISON to come up with a contract that allows the service to continue to be run by the NHS.

Other than outsourcing there is so far no other indication of the scale of anything else that might be passed off as “efficiency savings” to address the looming financial problems: but if SNEE ICB has lurched from a year in balance to such gloomy projections it seems almost every ICB is facing big problems for 2025/26.