North East and Yorkshire

Humber and North Yorkshire ICB

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
£50m deficit	1.35	6	18.5	235

 

Achieving their financial targets requires £235m of “efficiency savings

Month 6

The month 6 position for the system is showing a variance of £1.35m against a year-to-date plan deficit of £18.5m. This overspending relates mainly to slippage against efficiency plans to date. The situation has improved from the receipt of an extra £50m funding to cover their agreed deficit position (Control total)

The system has highlighted the risk to delivery of the overall financial position at circa £34m

Month 5

The system has agreed a planned deficit of £50 million for 2024/25, but by Month 5 was £60.9m in deficit, slightly above a planned level of £58.9m.

The ICB has hired Accountants Grant Thornton to help produce a medium-term “sustainable financial strategy including all system partners.”

Of the efficiency savings, only 70% of efficiency schemes are fully developed, and 13% are in progress; 17% are still classed as “Opportunity,” and just 58% of the overall efficiency is forecast to be delivered on a recurrent basis, leaving another problem for next year.

This being one of the more secretive ICBs, much of the financial situation detail is kept for the closed session of the Board: “[Finance] report was taken as read… with a further update to be given on the emerging Month 5 position to be given in private.”

Workforce: They attempt to control the use of agency and bank staff but are still over-plan. Similarly, spending on continuing healthcare packages has increased despite attempts to control it.

4 areas targeted for savings: Continuing Healthcare £15.7m, Technical – £14.5m, Prescribing £8.1m, and Mental health portfolio £7.2m – total efficiencies £62.6m

The main savings by ICS providers are expected to come from ‘Establishment reviews’ (£37.5m), reduced use of Agency staff (£13.5m), ‘Service re-design’ (£14.6m), and Corporate Services (£5.5m). The total projected savings from pay are up to £77.8m.

The main areas of variance to year-to-date plans are:

• Continuing Healthcare – overspend of £1.7m mainly due to high-cost packages of care and price increase

• Mental Health Services – underspend of £1.6m mainly due to impact of changes in S117 high-cost packages of care.

• Primary medical services costs to date are higher than planned by £1.2m, offset fully by pharmacy underspends to date of £1.9m.

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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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NHS North East and North Cumbria ICB

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
£50m	3.6m ahead	6	17.58	520

 

Month 6

After receiving £50m extra funding to cover their agreed deficit for the financial year 2024/25, the ICS is reporting a year-to-date deficit of £17.58m, ahead of the plan by £3.58m. Its savings target, though, is the second highest of the 42 ICSs in England.

Month 4

This giant ICB is aiming to achieve an enormous efficiency saving of £521m, of which £301m needs to be recurrent. By the end of month 4, savings of £132m had been made, £3m short of the target of £135m.

The financial plan for 2024/25 included total financial risks of £417m across the ICS, and by Month 4, it is estimated the ‘unmitigated risk’ was still £98m “which continues to present a significant potential risk.”

No real details of the planned “efficiencies” are given, but it is conspicuous that almost all of the savings to come from non-acute service providers: Community Healthcare, Mental Health, Primary Care (including Primary Co-Commissioning); Continuing Healthcare,” plus the vague headings of “Running Costs; Other Programme Services;” and “Unidentified”: another £117m is to be ‘saved’ (or cut) by the ICB itself.

The ICB admits it can’t generate this scale of change internally, so its savings will involve “system-level efficiencies ” in addition to the savings plans of the provider organisation.

The ICB has implemented “grip and control” mechanisms to produce savings, but an ‘independent review’ was also initiated in September 2024 as they don’t seem to be producing the required results.

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NHS South Yorkshire ICB

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
£49m	28.8	6	49	256

This ICS agreed a control total of £49m deficit (broadly equal to 2023/24): this money has now been received from NHS England, meaning that the target for the rest of the year is now break even. However, this seems unlikely to be achieved:

by Month 6, the system deficit was £47m, £28.8m adverse to plan, with the ICB £41m in deficit plus the £6m from local NHS providers.

The 24/25 target efficiency savings target is £255.5m (£115.3m for the ICB and £140.2m for providers.) Part of the ICB efficiency is a further £49m, “stretch Cost Improvement Plan”, which is currently under review, but of which only £4m has so far been identified.

The other main drivers of the ICB shortfall are: £35.9m on Continuing Health Care and prescribing (blamed on the ICB’s “failure to mitigate local cost pressures and in year cost pressures”

The main drivers of the provider shortfall against the plan are £23.8m of urgent care demand above the plan, which is unfunded, and under-performance on elective work, resulting in a loss of £7.7m from the Elective Recovery Fund.

The ICS is one of nine systems ordered by NHS England to participate in the ‘investigation and intervention’ programme following a greater than planned deficit at Month 2 (May).

This means all of the organisations are  now working with Deloittes “to establish if there are additional actions we can take to bring the system back to its overall plan by the year end.”

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NHS West Yorkshire ICB

Control Total (24/25)	Current variance from C Total	Month	YTD Deficit (£ million)	Savings Target
£50m deficit	12	4	64	434

Despite agreeing with NHS England to aim for a target deficit of £50m, by Month 4 West Yorkshire providers were in deficit of £70.5m, almost £12m worse than plan.  The Month 4 year to date position for the ICB was a £6.5m surplus, which was in line with plan.

The system as a whole was £64.0m in deficit against a planned £54.1m deficit, and the revised full year forecast has been adjusted to a £71.4m deficit.

The total variance broke down into three key elements: £4 million due to Industrial Action costs relating to June and July 2024, £4 million due to being behind target with elective activity and therefore earning less funding through the Elective Recovery Fund, and £3.9 million relating to other operational issues, principally where efficiencies were behind plan.

The plan hinges on achieving an ambitious £434m efficiency savings (£335m providers, £99m ICB), a “stretching efficiency target of 7.7%,” which is currently forecast to fall short by almost £13m.

Actions being taken to address the year-to-date position include:

• Reports from PricewaterhouseCoopers (PwC) on the West Yorkshire Association of Acute Trusts (WYAAT) lead to Chief Executive-led work programmes that deliver improved efficiencies.

• ICB/ ICS seeking to “commission external finance review that mirrors the NHS England national specification for systems with high financial risk

• Review of NHS England “grip and control” checklist via the West Yorkshire ICS Finance Forum.

 

 

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OCTOBER 2023

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Humber and North Yorkshire ICB

Minutes of the May Board meeting show the Board increasing the risk rating on the financial deficit for 2023/24 and the impact of the pause on recruitment flowing from the financial deficit from 15 to a maximum 25. (p3)

The ICB had agreed a plan with NHS England that would deliver a £30 million deficit for 2023/24, “albeit with a significant degree of risk, followed by a move to deliver financial balance by the end of 2024/25.” (p4)

By Month 2 the ICB July Finance Report shows providers and the ICB already falling short of their planned savings targets of £160m and £72m respectively (total £232m). However the published figures show more than half of the ICB “savings” and 42% of the provider savings (a total of £107m) are to be non-recurrent – leaving an underlying deficit going forward, regardless of the deal with NHS England. (p9)

To make matters worse the ICB has to look at affordable ways to tackle the neglect and dilapidation of hospital buildings:

“Our estate is ageing. Our accommodation does not meet modern clinical standards, a number of our theatres, ward areas have had to be closed. Across both HUTH [Hull University Teaching Hospitals] and NLaG [North Lincolnshire and Goole] we have a backlog maintenance issue in excess of £200m.

Within Scunthorpe Hospital we have in excess of a £69m critical infrastructure risk which means we cannot make any changes to clinical models of care without significant external capital investment.  (p5)

On this basis the ICB is proposing a “Preferred Option” of providing substantial in-patient services  [Trauma, medical specialty  over 72 hours, Acute surgery requiring stay over 24hrs, Paediatric inpatients over 24hrs] services at Diana Princess of Wales Hospital, Grimsby. This is because it is the only option that satisfies the NHSE financial requirement to fund capital investment internally,  with a capital cost of £25m, whereas the cost of consolidating services in Scunthorpe would be £89m, “which cannot be delivered from internal capital resources.” (p6-7)

North East & North Cumbria ICB (NENC)

The Minutes of the May Board show that this area, like Cheshire & Merseyside is another ICB set to lose substantial amounts of funding as a result of “convergence”:

“our growth in funding has been reduced by £19m this year and, as a result of a changing funding formula before Covid, it has been judged that the region has received too much funding in recent years.

“To rectify this position decisions have been made which see an overall reduction of the ICB’s funding allocation to pay back what is deemed as an overpayment in funding and enable this to be redistributed to other parts of the country who may be seeing a growth in an ageing population. Over the past two years this has reduced funding by £100m and next year it is anticipated that a further loss of £60m will be seen.” (p6)

A plan has been agreed with NHS England which will see a deficit of £49.9m in 2023/24, requiring efficiency savings ranging between 4% and 5.7%, and the development of a 3-year financial recovery plan. (p6)

However the July Board Financial report reveals the scale of the challenge, with a savings target of £408m for the year (p72):

“The final submitted financial plan for 2023/24 included overall net financial risks of £102.5m across the ICS. This included a large number of mitigations yet to be identified, excluding those, total unmitigated risk amounts to almost £252m. (p85)

“As at 31 May 2023 this position remains largely unchanged, with net unmitigated risk of £101.6m being reported across the ICS.” (p86)

The ICB is running in crisis mode:

“Additional spending controls (in-line with NHSE expectations) have been agreed in the Executive Committee which in essence have paused all “discretionary” spending until financial risk is mitigated.”

A letter from NHS England spells out what it means for an ICB to be put on the naughty step:

“In addition, because your system did not submit a balanced plan, you will also be required to comply with the following conditions …:

• Review your current processes and arrangements around the pay controls described in the appendix to this letter.
• Ensure that you have a vacancy control panel in place for all recruitment.
• That you apply the agency staffing and additional payment controls stipulated in the appendix to this letter
• Ensure you have an investment oversight panel in place to oversee all non-pay expenditure, with papers shared with NHSE. Within this process we would not expect approval of any non-funded revenue or capital business cases.
• Where revenue or capital cash support is required the additional conditions described in the appendix to this letter will apply. (98-9)

 

NHS South Yorkshire ICB (SY)

 

South Yorkshire’s Operating Plan appears to give us a glimpse into the world of an ICB with relatively easy funding, that was able to submit a break-even plan for the system.

“This enabled the receipt of a further £17m of NHS England funding and meant we need to find further savings of £23m to deliver a break-even plan.” (p1)

However it then reveals the catch: even their break-even plan involves delivering a high level of efficiency savings (8.1% of overall system turnover):

“The move to a break even plan means we would need to generate an ICB planned surplus of £62m to compensate for the overall provider planned deficit of £62m.” (p2)

The Joint Forward Plan gives the real picture behind the “balanced plan”:

“The plan contains significant risks. There is a high level of efficiency of £241.2m. This represents 1.7% of allocation at place, 3.6% of allocation in total for the ICB and 4.1% of provider turnover. Total efficiency represents 8.1% of allocation. …

“The ability of the ICB and its hosted providers to deliver an 8.1% efficiency rate will be exceptionally challenging … . The current models of care are not affordable …”(p95)

The Joint Forward Plan also reveals SY is one of few that are actively pursuing a plan for an NHS Elective Orthopaedic Centre in Mexborough, having opened a £5.5m Sheffield EOC in April. (p72)

 

West Yorkshire ICB

 

Minutes of the June meeting reveal the decision to ratify the break-even financial plan which had been urgently submitted to NHS England (NHSE) involving “c.7% efficiency savings in year and an associated unmitigated risk of £25m”  (p4-5)

A report on the full year 2022/23 was given, noting “£315m of efficiencies had been delivered across the 11 organisations, which was £22m better than planned,” while giving no details of how such substantial savings had been made.  (p11)

Month 2 figures from the July meeting show plans already adrift with a deficit £9m higher than the planned £12.5m. (p85)

Only when we get to the Board Assurance Framework do we discover the scale of the challenge:

Balancing the books in 2023/24 requires another £350m of “efficiency” savings, with £175m of unmitigated risks, and depends upon the ICB to deliver a £25m surplus – but there are no actual plans in place to deliver this surplus. (p96-97)

Hence the maximum Black rating for the “risk that the ICS will not deliver the 2023/24 financial requirement of breakeven”, and the risk that “the ICS / ICB will not be able to agree a financial plan for 2023/24 that meets NHS England’s requirements not to exceed its revenue resource limit.”

Also black rated is the “risk of disruption of service provision at Airedale Hospital due to structural RAAC deficiencies resulting in widespread impact across WY as services and patients may need to be reallocated. A planned evacuation could occur due to issues at other RAAC sites across the country or safety concerns raised specifically at Airedale Hospital.

“There is also a risk of a collapse (which could cause injuries to patients and/or staff) and would result in an unplanned evacuation. Severe weather, such as extreme heat or heavy rain or snow, all increase the risk of a RAAC panel becoming unstable and so would result in the ICB having to manage concurrent incidents.” (p100)

Another worrying risk, also black rated, is driven by the financial constraints:

“There is a risk of loss of VCSE services across WY due to lack of long-term funding & investment, and cuts to existing funding, resulting in damage to the ICB mission, poorer health outcomes and increasing health inequalities, alongside ICS reputation for working with VCSE. For context we have an estimated 11,996 VCSE organisations in WY delivering services and support to local communities reducing pressure on GPs and other health services.” (p101)

Concerns over the state of the estate are not limited to Airedale. The Joint Forward Plan notes:

“We have been allocated £158m to invest in 2023/24 on operational capital schemes across our ten NHS providers, and plans have been developed to spend the allocation in full. This level of spend is in the context of backlog maintenance across ten NHS providers of £750m.” (p92)