London – ICB roundup

North Central London

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
Break-even	4.4	6	39.8	£205.6m

 

This ICB only meets quarterly, next in November (so this report is based on May and July board papers).

While the financial outlook for 2024/25 for London and across England is “extremely challenging,” NCL ICB’s financial performance in 2023/24 means that the historic c£100m debt inherited from the previous Clinical Commissioning Groups has been written off.

“This will be a significant boost to both the ICB and the system going forward.” (p10)

The System submitted a 2024/25 balanced [budget] on 2 May 2024. As part of this, the ICB initially submitted a surplus plan of £10.6m, followed by an additional submission on 12 June, revising the required ICB surplus upwards to £14.6m. (p445)

This followed the report of a £38.2m system deficit at Month 2 of – £11.7m worse than the plan. The main drivers of the variance included

• Lower than anticipated demand for private patient services at the specialist trusts (GOSH, RNOH and MEH)
• High demand for outplacement services and increased use of medical agency at the mental health trusts.
• Underperformance on delivery of efficiency savings at M2.

Provider plans for 24/25 are underpinned by £205.6m of recurrent savings to be delivered representing 4.2% of the system’s influenceable income. (p450)

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Key points – ICS financial update

1. Due to the number of ICSs under extreme financial pressures and managing deficits, NHS England agreed on new financial targets (control totals) for the end of the financial year (2024/5), which allowed for deficits in many cases.
2.  Even with an agreed-upon deficit, some ICSs are still off course, with a worsening financial position (variance from control total).
3. Each ICS has also been required to improve productivity and make substantial savings. Our researchers across all 42 ICS have target savings totalling around £8bn, with the biggest impact on workforce budgets.

What are the reasons that ICBs give for their financial positions?

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North East London

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
£35m deficit	53.2	5	87.2	£289m

The July meeting heard that the year-to-date position across the NEL system was a deficit of £59.5m in month 3 – £32.4m worse than planned: a provider overspend of £26.4m combined with an ICB overspend variance of £6m.

The ICS forecast was still for a year-end deficit of £35m (assuming £289m of efficiency savings across North East London (NEL) providers and the ICB) in line with the submitted operating plan deficit. However, the position of month 3 suggests a higher year-end deficit. (p18-19)

The position was worse still by Month 5, with the ICS reporting an £87.2m deficit (£53.2m worse than plan, £5.1m of this down to the ICB. (p86)

Month 5 included the costs of the recent junior doctor industrial action, estimated at £7.6m across the ICS, but with no mitigation confirmed by NHSE. But both the ICB and system were still reporting a forecast breakeven position, “in line with reporting requirements.”

High risk?: based on the year-to-date position, the system could be facing a significant deficit at year-end. The total ICS unidentified savings (risk) within the forecast position was “circa £99.9m” [sic!], £9.8m of it down to the ICB, the remainder to providers, all of whom were in deficit and collectively £48m adrift from plan at month 5, with only one trust (ELFT) forecasting break even at the end of the year. (p88)

The financial pressures over and above industrial action all flow from increased local need for health care, worsened by higher costs of using private sector providers:

• mental health providers have reported pressures in relation to additional independent sector beds (ECRs) purchased above planned levels and increased acuity of patients on their wards.
• Run rate pressures at Barts Health include renal dialysis capacity,
• Barking, Havering and Redbridge University Hospitals Trust (BHRUT) has reported pressures on critical care, non-elective activity and mental health costs.
• Homerton Healthcare has reported pressures in relation to lost income and non-pay costs.
• The ICB has reported year-to-date pressures, mainly in relation to continuing health care (CHC) and independent sector activity costs. (p88)

Pressures on the ICB’s own finances also include a private sector element:

• Acute pressures in relation to the urgent care pathway, with independent sector activity increases forecast, thus increasing year-end financial forecasts.
• Continuing Health Care (CHC) run rate forecast extrapolated in excess of £3m. (p90)

The ICB is clearly beginning to doubt whether limiting the deficit to £35m is achievable:

“Despite efforts to date, we are not meeting our plan and currently have an unmitigated risk to delivering the plan of £127m which we are focusing on and prioritising. We need to balance meeting the needs of local people whilst living within our means.” (p41)

 

North West London

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
Break even	17.2	2		£207m

The Draft Annual Plan published in April, which gives a context to more recent financial reports, stated the target of £207m of ‘efficiency’ savings (p3), and the  intention to drastically reduce the workforce:

“to deliver ‘normalised activity’ in 2024/25 at 117% of 2019/20 Cost Weighted Activity. This requires a reduction in WTE [Whole Time Equivalent posts] of 3,000.” (p2)

However, the minutes of the April meeting explained that the plans developed for the system pull up well short of this target:

“The workforce plan did not reduce whole-time equivalents in line with the planning intentions and this would be worked through with each organisation.”  (p10)

By month 2 the plan was already unravelling:

“The ICS is seeing a challenging month 2 position with a overspend of £17.2m against the May plan. This is made up of providers overspend of £19.2m and the ICB a surplus of £1.9m.” (p34)

This ICB is cagey on its financial situation, publishing a bare minimum of clear information. However the report to its October Board meeting makes clear the scale of the problem:

The NWL underlying financial position had deteriorated in September to a deficit of £283m.

The key drivers for the overspend is within NWL providers

• through under-delivery against the elective recovery fund,
• slippage on efficiency programmes,
• and under-recovery on high-cost drugs and devices.

As a result, NWL’s underlying deficit deteriorated by £13m between August and September.

The ICB’s determination to postpone any long-term solution to problems is summed up in the financial report to the October Board:

“NWL financial position remains in deficit in September, although the ICS has committed to break even this year. This will be achieved through one-off initiatives.” (p5)

 

South East London

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
£100m deficit	7.8	2	41.5	£250m

The report to the Board’s July meeting summed up the financial challenge facing the system:

“A system deficit plan of £100m had been agreed for the year, and at month 2 the system had reported a deficit of £41.5m which was £7.8m adverse to the agreed plan. The main driver of this was slippage and unidentified identified savings for the year, although some weighting of the delivery of cost improvement programmes towards the latter end of the year was expected.” (p14)

The ICS has recognised that it faces a significant challenge in seeking to cut spending to deliver a “balanced and sustainable position,” and has already begun to back-track on efforts to tackle inequalities:

“recovery was likely to involve some trade-offs in relation to the delivery of the ICS’s wider ambitions, with some difficult decisions already made for example in relation to the investment in health inequalities, although it had been possible to protect investment in mental health, dental services and primary care access work.” (p15)

The October papers include a report on “A successful workshop of SEL system leaders” on 18 September 2024, with around 60 attendees from all parts of the system, but the report is a word salad that offers no clues as to what might be cut to balance the books:

“Attendance showed strong engagement from senior leads in addressing the financial challenge in SEL, and there was a shared sense that the scale of the financial gap requires a new approach. This brings opportunities as well as challenges, and bravery will be needed to deliver change. There was agreement that a system approach and effective partnership working was needed to bridge the gap – and attendees welcomed the emphasis on this new way of working.” (p43)

The October ‘Update on System Sustainability Approach’ makes clear that the problem is much bigger than the £250m savings required to deliver £100m forecast deficit for 2024-25:

“The SEL system is facing a significant financial challenge which needs to be addressed to ensure SEL’s financial and operational sustainability. In order to deliver system financial sustainability, there is a requirement for:

• current cost improvement programmes at a provider level to deliver in full every year and
• a further £300m of recurrent system savings to be delivered over the next 3-5 years.” (p138)

The full extent of this challenge is emphasised in the ‘System Sustainability Programme’:

“We are projecting an aggregated System financial deficit of circa £300m unless mitigating action is taken. Importantly, this deficit position is after an assumed delivery of annual ‘business as usual’ annual Cost Improvement Plan (CIP) targets.

• The main causes of the shift from in-year balance (recognising in the current year, 2024/25, SEL has a System Plan of £100m deficit) is
  • • i) a recognition of an underlying deficit across the System and
    • ii) the impact of Convergence (£40m/annum). Convergence is a national funding reduction linked to SEL being above its ‘fair share’ level, as defined by the capitation formula. (p142)

The risk of not achieving the ICS revenue plan is red-rated, with a maximum score of 25. (p66)

However, the focus on the heavy pressure to develop a Sustainability Programme means that the October meeting did not receive an update on the ICS position in the current financial year.

 

South West London

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
£120m deficit	7.3	4	75.6	£257m

SW London in September reported that it was broadly on track with its plan to deliver a £120m deficit, although there are continuing risks  to delivering the required efficiency savings of “circa £257m” (“over circa 5.7% of costs, including a reduction in workforce”) of which £77m (30%) is expected to be non-recurrent. (p237)

The Month 4 report to the September Board Finance report Month 4 was that the ICB itself was more or less on track to deliver its planned surplus of £3.1m, but the SW London system had a £75.6m deficit, which was £7.3m adverse to plan. This was driven by:

“industrial action impact on costs and lost elective income (£5.4m), additional costs and lost income at St George’s Hospital (SGH) resulting from the cyber-attack in South East London (£0.9m) and shortfall in Royal Marsden Hospital (RMH) paediatrics income from NHSE (£1.0m).

Trusts had been asked to develop plans to mitigate “circa £84m of identified risks.”

However, these plans are far from assured and are “currently worked up to differing levels of completion with varying risk levels across programmes, which includes some that are very high risk.”

There are also plans to cut jobs to save money:

“Total Whole Time Equivalents (WTEs) have reduced month on month due to the transfer of services from Hounslow & Richmond Community Healthcare (HRCH) to North West London, but are still above plan. The plan assumed a significant reduction in month 4 from efficiency schemes, which has not been achieved and this remains a significant risk.” (p224-5)

The system continues to face operational pressures in relation to demand for urgent care and mental health services, which could lead to increased costs. (p235-6)

The ICS is now under pressure from NHS England to develop actions to mitigate risk: the actions will be reviewed and monitored on a monthly basis. The actions “fall into four categories:”

1. Stopping future spend
2. Reducing pay spend
3. Reducing non-pay spend
4. Operational performance mitigations – increases in ERF, productivity and going further faster
5. Income and technical

No, that wasn’t a Lowdown slip. It’s an indication of the stress and pressure on the NHS systems and trust management as the cash squeeze continues.

 

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PREVIOUS REPORT FROM NOVEMBER 2023

North Central London ICB (NCL)

July Board papers reveal (in minutes from the May meeting) the extent to which NCL bowed to NHS England pressure to reduce the apparent scale of the deficit they face for 2023/24 without securing any additional income.

“This had been an extremely challenging planning round, with a hugely demanding financial position evident across NCL and London in general

• The NCL position was affected by the withdrawal of a significant amount of nonrecurrent funding it received for the previous financial year, as well as the move to a more population-based funding model which adversely affects NCL due to the number of Trusts which provide services to a population from outside the area. This was further compounded by the fact that NCL was being asked to deliver the highest elective target in the country.” (p14)

An initial financial plan with a deficit of £95m was rejected in March, with additional risks of £70m.

The revised plan in May projected a deficit of £47.8m, but the July Board meeting heard that a further revised plan projecting break-even was submitted and accepted on May 17^th. (p186)

As part of this the ICB committed itself to deliver a surplus of £10.6m, subject to the achievement of a number of challenging targets including full achievement of the ICB’s efficiency target, £25.6m.

The Board was told that the month 2 position “if extrapolated (straight-line) would give a £235.9m deficit for 23/24. For reference, the M2 position in 22/23, when extrapolated on the same basis, resulted in a £279.5m deficit for 22/23.” (p191)

The whole plan now depends on an “ambitious cost reduction programme of 5.6%”, for which of course no detailed proposals have been published, while “not all risks currently have mitigations.” (p206)

 

North East London ICB

The Board’s May minutes report:

“The operating plan has a balanced overall system position, however includes some organisations in significant deficit, largely in the acute provider sector, offset by surpluses elsewhere. Whilst the operating plan is balanced overall it contains an unprecedented level of financial risk and represents a significant challenge to deliver.” (p14)

This rather understates a plan that assumes a total of £487m in efficiency savings (£278m, with a risk of delivery slippage) and unmitigated risk (£209m). (p14)

As of month 3, just £103m out of the total system risk had been mitigated (p167) and the ICS was working on a financial recovery plan including:

• Identify unpalatable measures to achieve the financial plan (p168)

The first finance report of 2023/24, based on data from month two, showed the system already adrift, by £25.7m across the ICS, including £7m within the ICB.

“This was largely driven by pressures relating to inflation, run rate pressures such as ICB prescribing and Continuing Health Care (CHC) expenditure and the under delivery of efficiency schemes.” (p292)

Another warning sign was the level of overspending on agency staff, breaching the NHs England “cap”:

“The 23/24 cap is set at just under £141m. Reported year-to-date spend across providers is reported as £47m (or 33% of the total cap). The year-end submitted forecast on agency spend is £147m (£6m above the cap). However, the month 3 run rate on agency spend suggests that year-end spend could be in the region of £188m.” (p166)

 

North West London

There is an air of mystery over the NW London ICB finances, which were estimated a year ago to be running an underlying deficit estimated at £283m in September 2022 and rag rated red. (p134)

However, against the general run of play elsewhere it appears that the ICB has experienced a movement of non-recurrent funding to recurrent allocations and growth (£217m) enabling NWL to propose a balanced plan for the financial year, “reducing the underlying deficit from £52.8m to £36.3m.

It was also reported that NWL was “working to cut the underlying deficit over three years. (p11-12)

No summary of the total efficiency savings to be delivered appears to have been published, leaving a skeletal Financial Report that notes a significant £20m variation at Month 2, with a deficit of £29m instead of the planned £9m, which is apparently “driven by industrial action, ERF [Elective Recovery Fund], inflationary pressures, and profiling of efficiency schemes.” (p9)

Another report shows the acute trusts running at a deficit, while the ICB had three key areas that continued to overspend:  Continuing Healthcare; Discharge to Assess; and Primary Care, mainly Prescribing and the costs of non GP /additional roles. (p74)

Interestingly NWL is the only ICB identified so far as planning a very significant reduction in provision of virtual wards:

“from 1,100 to 300-400 beds, based on the expected requirement for these beds and current occupancy.” (cutting by 64%-74%) (p24)

Acute providers, faced with overspending, have implemented heavy handed controls:

• Recruitment freeze
• Stopped all discretionary spend
• Apply additional grip and control
• Peer review across the different acute trusts
• Executive led meetings with service leads to identify recovery plan

 

South East London ICB

 

The July Board papers give no hard information at all on the financial situation, and no Performance Report. Annual accounts which should have been published at the end of August had not appeared by September 1.

Since the Board only meets quarterly this leaves us searching the April Board papers for scraps of almost inevitably out of date information.

A month 9 2022/23 finance report to the February meeting notes a deficit of £60m “driven by the cost of delivering elective recovery.” (p11)

The April Finance report notes:

“The Committee also considered the wider ICS financial position which showed a month deficit of £53.9m, noting this was an improvement from the month 9 reported position of a £60.3m deficit. The Committee discussed the key drivers which were higher than planned levels of covid activity and spend, increased utilisation of private sector overspill capacity for mental health, the impact of urgent and emergency care pathway pressures, pressures associated with elective recovery, inflationary pressures and efficiency delivery being behind plan. Despite this the ICS was forecasting a breakeven position for year end, with the release of non-recurrent funding across ICB partners to support the position. Whilst this supports a positive year end position it results in a recurrent carry forward pressure to address in 2023/24.” (p68/9)

The SEL Planning and Finance Committee in April received an update on the ICB’s operational plan submitted at the end of March. It complacently noted that the problems could be dumped on to the acute hospitals:

“A significant improvement of over £100m in our forecast financial position but with a remaining gap to break even of just under £100m, after applying ambitious productivity and efficiency improvement assumptions of 4.5%, noting the gap resides in the ICB’s acute sector. (p72-3)

NHS England were clearly not so easily persuaded that the SE London ICB had no real responsibility for acute trust deficits and a gap of £100. The Committee noted:

“As a result of our financial position and the financial positions reported by other ICBs nationally at end March 2023 the planning process remains on going with further submissions focussed particularly on finance expected through to early May 2023.” (p121)

We may have to wait some time to find out what happened four months ago.

 

South West London ICB

SWL is another ICB that has stuck with a deficit plan. Its July meeting was told:

“The financial position submitted on 4 May shows a system deficit of £81.6m, this had been agreed at our meeting with NHSE in April 2023.” (p119)

This can only be delivered if £210 million of efficiency savings can be achieved. (p141)

As a result of the deficit the ICB and the system providers are covered by a tight regime:

“NHSE has mandated that enhanced financial controls are in place. This builds on the controls that were implemented for all systems during 2022/23 (such as the sign off by NHSE of consultancy spend over £50k and monitoring of agency usage). … All NHS organisations in SLW ICS are subject to the additional controls including the ICB.

Examples of these actions include:

• Non-pay expenditure control process: All non-pay spend (with exceptions for drugs, in house delivery of clinical goods and services, depreciation and clinical negligence) must be approved by SWL ICS CFO and then NHSE finance.
• Agency non-patient facing control process: for all non-patient facing agency will need to be approved by executive locally before being approved by SWL ICS CFO and then NHSE finance.
• Vacancy Control Process: All current vacancies to go through an internal QIA process and remove from the establishment where there has previously been growth and it is safe to do so.
• Workforce Cost Planning Reduction: All organisations have set out their WTE (Whole Time Equivalent posts] reduction plans for 2023/24 and presented to the Financial Recovery Board in May. (p121)

Across the ICS total WTEs are currently 2% (838) above plan. Clinical Support is the largest variance by staffing group, particularly in St George’s, SWL St George’s and Royal Marsden hospitals. (p142)

So far £11m of the £212m efficiency plan has yet to be identified, and £50m is only a list of “opportunities”. (p141)

To make matters worse the ICS is spending more than planned on agency costs – and will breach the nationally set agency costs cap for the year if spending at current levels continues. (p131)

As things stand the system is set for a deficit driven by acute trusts with likely end of year deficits in Epsom & St Helier (£38m) Kingston (£17m) Croydon (£16m) and St George’s (£16m). But SWL is happy to blame the failure to deliver their plan on “the impact of industrial action.” (p131)