NHS England has belatedly come up with a promise of more money, which it claims would cover some of the inflation-driven costs faced by 42 new “Integrated Care Boards” (ICBs) which take over local health budgets from next month. 

But of course there’s a catch: the extra £1.5 billion announced at the end of last month will only be available to those ICBs who have already committed to more draconian cutbacks to balance the books, this year and next:

And even if all of this money is factored in, alongside hugely optimistic “efficiency savings,”  the Health Service Journal is warning ICBs will still face a combined financial gap of over £1bn this year – a substantial reversal of the £1.2bn combined surplus at the end of 2021/22, when finances were bolstered by Covid-related funding that has all been slashed back or ended since April 1.

NHSE’s chief financial officer Julian Kelly has now admitted inflation – nudging close to 10 per cent – is “much higher” than the 2.8 per cent that had been assumed when plans were drawn up. He has claimed these extra costs will be handled centrally – “but, setting that aside, we need balanced plans.”

Among the excess costs identified by Kelly’s team, working with commissioners and providers, are an extra £485m in energy costs, £350m in care costs related to the increase in local authority-funded prices, additional costs of £150m to ambulance trusts including fuel and the financial impact of the settlement in the Flowers case on overtime and holiday pay, other pressures adding up to £405m – and a hefty £110m on Private Finance Initiative deals where payments were inflation-linked. 

But to judge from The Lowdown’s recent survey of finances these totals are still too low, and now the HSJ is also warning that the extra money is not enough to balance the books. 

Local health chiefs have already tried every accounting trick in their efforts to reduce forecast deficits from a widely-rumoured initial £4bn total.  But the Healthcare Financial Management Association reports the extra money will only be available to trusts which pledge to deliver even greater ‘savings’ above those already planned.

This will mean several ICBs will have little or no hope of any additional hand-out. 

Worse, the funding crisis is certain to worsen the staffing crisis across the NHS.

None of the extra funding allows for increased pay to NHS staff, who are facing huge increases in the cost of living. This despite hospitals increasingly opening food banks for their staff, while charities for nurses, midwives and healthcare assistants report claims for cash help have more than doubled of numbers this year. 

Ministers are still insisting this year’s NHS pay increase must be no more than 3%. But with 106,000 NHS vacancies in England, including 10% of nursing posts vacant, and staff leaving for less stressful and higher paid work elsewhere, the NHS Confederation has highlighted the “knock-on effect on workforce costs,” as more expensive agency staff are used.

Nonetheless Mr Kelly is adamant that no such extra spending is allowed: “Systems will be required to agree to a number of conditions in return for the additional funding, including re-asserting controls over agency and bank spending, and consultancy costs.”

Rishi Sunak’s tight-fisted spending review has plunged the NHS into a new decade of austerity after the brutal decade from 2010. 

And while NHS England seems determined to live in denial of the scale of the crisis this has created, NHS trusts and the new ICBs will not have that luxury – and face more grim years of penny-pinching and cutbacks while ministers boast of “record levels of spending”.

The fact that there is such money in NHS England’s coffers – that they were hoping to withhold, makes it quite clear that the squeeze on front-line spending is a deliberate policy choice by NHS managers – as well as ministers.

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