North West

December 2024

NHS Cheshire and Merseyside ICB

Month 6

The ICS has a deficit of £183.5m (excluding deficit support), and has already exceeded the full year’s £150m deficit plan within the first half of the year.

This reflects the challenging profile of the plan, where cost improvement measures have been assumed to be delivered towards the end of the year, as well as a number of planned transactions in Month 12.

In this highly challenged NHS region, Cheshire and Merseyside ICS has the lowest agreed target deficit at £150m (with ICB to deliver £62m surplus, and providers’ deficit limited to £212m).

Even hitting this target depends upon achieving “efficiency savings” of £440m (6.1% of allocation/provider expenditure) during 2024/25, (with £72m to be saved by ICB itself in addition to £368m provider savings) – and it appears the ICS is well off the pace required.

The £92.3m efficiencies delivered by the end of July (Month 4) represent just 3.7% of provider and ICS expenditure/allocation so far, indicating a much higher level of savings required in the remaining 8 months. More than half the target savings (54%) are rated medium or high risk. Worse still, only 57.3% of efficiencies delivered so far are recurrent.

By the end of July (Month 4) the system as a whole was already reporting a YTD deficit of £138m £39m adrift from the plan, “an adverse movement of £37m in-month.” The ICB was warned:

“It should be noted that at £138m YTD deficit, the system has incurred 92.3% of its £150m deficit plan in the first 3 months of the year.”

The deficit is driven by common factors: unachieved efficiencies of £20m, £9m cost of Industrial action, pressures on Continuing Healthcare and Mental Health Packages of care (£14.4m), and Prescribing costs (£7m).

Many of the “efficiencies” involve reducing the workforce and pay budget. Month 4 provider workforce data indicates that WTE had reduced by 1,113 (1.4%) compared to Month 12 (23/24) but had not fallen to the levels planned, with an adverse 1,110 WTE position vs plan (-1.4%).

A total vacancy freeze for all nonclinical posts remains in place until at least January 2025, and the ICB predicts confidently: “we are confident that the 20% required savings for 2024/25 will be delivered.”

Another major area for savings is All Age Continuing Health Care/Complex Care – Target is £53.3m … to meet the England average expenditure for AACC.

More savings are also required in Mental Health – A&E/Out of Area Placements – but “plans are not yet sufficiently developed to provide confidence that this target will be delivered.” The current forecast adverse variance to plan for Continuing Care is £26.3m and £24.6m for Mental Health Complex Care packages.

There is another warning:

“Even with the level of mitigations currently identified, the most likely scenario at this stage is that the ICB will be £25m away from its board approved plan and therefore further urgent work is needed to address this gap. …

“Given the profile of our cost base, the only areas where we will be able to reasonably reduce in year spend are:-

• further management of the costs of CHC and MH packages.
• further reductions in prescribing spending, including passing through high-cost drugs.

“Until this gap is fully mitigated, the ICB will need to review every item of expenditure which is not currently committed.” (p55)

The first phase of the external review by PwC is drawing to an end. The report (cost not revealed) will make recommendations for individual providers, the ICB and the ICS as a whole.

Key points – ICS financial update

1. Due to the number of Integrated Care Systems 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?

NHS Greater Manchester ICB

The ICS is probably the first to contemplate a multi-year £1 billion target for cost improvement plans. It had to be persuaded by NHS England to reduce its projected deficit from £218m to £175m in 2024/25, dependent upon delivering efficiency savings of £490m (£103m ICB; £387m providers).

By Month 2 causes of the emerging deficit were identified as “increased cost of Mental Health OAPs, Mental Health packages and Continuing Healthcare packages, and emerging pressures in Neuro Rehab,” plus “the Cost Improvement programme hadn’t yet taken effect.”

By Month 4 the system had a deficit of £115m, £24m adrift from -£91m target. This included £6.9m was said to be due to the impact of the on-going industrial action for providers: £20.2m of operational pressures including mental Health (MH) Out of Area Placements, Continuing Health Care, prescribing costs and safer staffing costs – offset by underspends in other areas.

The Greater Manchester Sustainability Plan warns that the real situation could be even worse:

“the current deficit may be compounded by approximately £600m of additional demand but can be addressed over time through a combination of population health measures, system collaboration and provider efficiencies.”

The ICB claims the projected remaining financial deficit could be eliminated over three years, although the proposals to make this happen are far from clearly explained:

• “Consistent and complete” implementation of existing Cost Improvement Plans (CIPs)
• Complete implementation of system-wide plans already developed across GM …
• Assumptions on reconfiguration of parts of the system which have not yet been planned in detail, and
• Assumptions on reducing the number and scope of procedures of limited clinical value (PLCV), although this is not yet detailed.

The Sustainability Plan identifies a number of supporting pillars, including “Cost Improvement Plans (CIPs) leading to financial sustainability through Financial Sustainability Plans (FSPs): Combined contribution to overall plan leaves an underlying deficit after three years (~£160m) Financial savings through FSPs/CIPS: £1,046m”. (p198)

Two other equally concerning pillars are “Reducing prevalence” (Maintaining the population in good health and avoiding future costs through prevention) and “Proactive care” (Catching ill health early, managing risk factors, and delivering evidence-based, cost-effective interventions to reduce the level of harm).

There is of course, nothing inherently wrong in these aspirations, but they are relied upon to deliver a very significant “Contribution to addressing non-demographic growth (NDG) of £360m over 3 years” – at a combined cost of £260 million and again over the two following years,” with budgets of £300m (reducing prevalence), £200m (proactive care). This funding is apparently to come from additional investment (“to be detailed”): but it is not clear what evidence base exists for this level of spending by health services delivering rapid and tangible results on the level required by the plan.

Greater Manchester is one of the systems ordered by NHSE to bring in management consultants (in this case, PwC) to assess its financial situation and suggest ways to improve. We are told that “Red lines” are being determined. That doesn’t sound too good.

NHS Lancashire and South Cumbria ICB

Initially, a £175m deficit was agreed upon as a ‘control total’ with NHS England. The November Board reports that money has now been received from NHS England, so the ICS will be reporting against a “break-even” target.

As at 30 September (month 6) the system is £15m behind plan with a reported £42m deficit. The ICB itself is reporting a year-to-date breakeven: the variance from the plan is largely associated with a number of provider Trusts.

The target for efficiency savings is a massive £530.8m (8.4%) – of which £270m needs to be delivered by the ICB itself and £260.8m by providers. The level of risk is increased by the fact that 76% of savings are planned for delivery in the last half of the year, and almost £160m of schemes are classified as high-risk or unidentified.

The ICB has been told that finance staff were looking at the scope of holding discretionary spend and other areas in the event that the plan cannot be achieved. The Chief Finance Officer commented that it was not an unachievable plan but would require tension and manpower to achieve.” There has also been discussion of delivering capacity reductions, stressing the importance of a “collaborative approach.”

No details of efficiency savings proposals are given, but the “System Recovery and Transformation Programme Board” meets twice each month.… enabling the system to achieve its aims to:

• Reduce waste and duplication;
• Improve quality and
• Transform services to ensure long-term clinical, operational, and financial sustainability.

Month 2 report that whole time equivalent posts (wte) were being monitored with 1700 wte reductions expected largely through agency and bank; … The largest areas of high-risk focus in plans were 70% CIPs being in the last half of the year, QIPP for the ICB and independent sector contracts.

OCTOBER 2023

Cheshire & Merseyside ICB (C&M)

Local campaigners are challenging the ICB Chair’s announcement at the July Integrated Care Board (ICB) meeting of a move from meeting in public every month to every two months, with unspecified “other Board meetings” in private.

The campaigners note that:

“It’s unclear if this means there will be no public access to Board papers, agendas, reports or minutes for any Board meetings in between the public meetings. A member of the public asked the Chair to clarify this as the Chair was closing the meeting, but the Chair and CEO stood up to pack their bags. The Chief Executive of Warrington Council spoke to us to say this was the first he’d heard of it.”

Certainly the ICB is likely to have a number of things it would like to keep from the local public as it wrestles with cash pressures in one of the largest ICBs.

The May Board received the financial plan for 2023/24, which plans for a £51.2m deficit, made up of provider deficits totalling £120m combined with an ICB surplus of £69m. (p145)

The Finance and Resources Committee noted the proposed cost improvements and non-recurrent savings required to deliver this result were “high to medium risk”.

Indeed by Month 3 (end of June) the system was already reporting the plan failing, with a deficit of £75.4m against a planned deficit of £54.9m – an “adverse year to date variance of £20.5m.”

The challenge facing C&M is especially severe as a result of the reduced level of growth year by year as part of the “convergence” to bring previously better-funded ICBs into line with those that were previously funded below target:

“The total convergence adjustment for an ICB depends on their distance from the target allocation. Systems consuming more than their fair share will have a greater convergence ask and, therefore, a lower level of growth than the national average.

“For 2023/24, C&M ICB has received a convergence adjustment … which equates to a reduction in its recurrent allocation of £36.5m. It should be noted that our system convergence adjustment increases to £72.1m in 2024/25.” (p137) Local campaigners point to ICB figures warning that the total loss of revenue could add up to £350m over the next few years.

This year’s projected £51.2m deficit target can only be achieved by means of massive packages of “efficiency savings” totalling £58m for the ICB (including a hefty £23m unexplained saving from commissioning and procurement of “all-age continuing care” and £19m of cuts in spending on primary care subscribing, as well as £2m from “demand management” – i.e. reducing numbers of referrals). (p141)

However, the bigger problem is the huge £331m target for efficiency savings by providers, of which £264m is supposed to be recurrent savings. Unlike many other areas the targets for savings don’t just fall on the main acute providers, but also mental health trusts (Mersey Care FT £37.2m and Cheshire and Wirral Partnership FT £12.8m (p294).

No details have been given on how such large sums can be “saved” without cutting services, and holding alternate meetings in secret seems designed to keep any details closely under wraps.

Greater Manchester ICB (GM)

GM’s method of minimising scrutiny and public awareness of their plans include making the Board papers extremely hard to find on a website with a poor search facility that keeps steering towards the Integrated Care Partnership, the largely toothless body that creates an impression of taking local government involvement seriously.

Minutes from the March Board revealed that the Month 10 position for the system was a deficit of £32.9m against a planned deficit of £4.9m, representing a year to date overspend of £28.0m. The Board was told this equated to a “£34.8m improvement within the year to date (YTD) position,”, from the position reported at month 9, and that this improvement  was predominantly driven by increased delivery of efficiencies in both NHS GM and providers. (p8)

Based on this underlying problem the plan submitted to NHS England in March projected a 2023/24 deficit of £240m. This was revised sharply downwards the following month, which outlined plans for a £159m deficit, which “received significant challenge by NHSE,” and resulted in the ICB revising the figures yet again – to “a breakeven position, with support from NHS England.”

However, this was only achieved by including “unidentified system savings of £115m.” (p53)

And by month 2, things were already going predictably wrong. The system was £62.7m in deficit against the plan of £14.5m – a variance of £48.1m against the plan. This was a combination of providers falling £23.5m short on planned savings “relating to CIP/QIPP delivery, pay award and industrial action,” while the ICB itself (“NHS GM”) was £24.6m adrift, “of which £20m relates to system-wide efficiency target hosted by NHS GM.” (p81)

This is scarcely surprising given the full-year combined target for efficiency savings is a staggering £606.2m.

According to the July Board papers, the ‘gross risk’ to delivery of this total savings target is £258.8m, while “potential mitigations” may reduce the risk to £140.8m.

The Finance Report warns: “There are also significant assumptions within plans around the delivery of remaining £463.5m of efficiency savings forecast to be achieved.” (p84)

The May Board made clear that increased activity within the non-NHS (private) sector in mental health and ophthalmology was a factor driving overspending (p68). Nevertheless, one independent provider of mental health services, which closed in April, had been replaced by another (p97), and GM was continuing to work to tackle elective waits over 65 weeks through mutual aid “and the use of the Independent Sector.” (p103/4)

Lancashire & South Cumbria ICB (LSC)

The ICB chief executive Kevin Lavery, has published an honest assessment of the state of the health and care system in the region, which begins:

“I want to be upfront with you. We are a system approaching a cliff edge and will need to make fundamental changes to avoid falling off.”

Mr Lavery, who wants to make the case for reconfiguration (and reduction) of acute services across the geographically large ICB, is keen to stress the scale of the financial challenges ahead. He explains:

“Prior to the COVID-19 pandemic, the Lancashire and South Cumbria health and care system was consuming more financial resources than it was allocated.

“In the financial year 2019/20, the hospital trusts were overspending by a total of £171 million.

“During the pandemic, funding was provided to cover all the costs in the system, but this masked the true underlying position that has not been addressed. The underlying financial risk at the beginning of 2022/23 was more than £300 million and the additional funding we are receiving is being tapered out over the next three years.” (p12)

He also has shocking figures on the level of dependence on agency staff: “As a system, we are currently spending more than £300million on expensive agency staff rather than employing people.” (p16)

Only one of the ICB’s five main providers has not been rated by the CQC as requiring improvement, and three of the four are rated by NHS England as requiring “significant support”, while the fourth is rated as “in actual or suspected breach of licence.” (p17)

Mr Lavery warns, “The health and care system has never been more fragile. The workforce is tired, morale is low, and the threat of even more challenging months ahead is growing.” (p27)

This is also underlined by minutes of the March Board which showed the system was not working. With 124 extra escalation beds open, there was still an increase in 12 hour waits in A&E. 351 beds (one in eight of all occupied beds) held patients who were reported as ‘not meeting medical criteria to reside’ on March 24. 50% of beds were occupied by people who had been in hospital for over 7 days and 17% had been in for over 21 days.

At the end of 2022/23 savings of £153.1m had been delivered across the system, leaving a shortfall of £33.7m against plan: but only 43% of the savings delivered were recurrent.

May’s CEO report warned that things were going to get worse:

“The ICB had the largest financial risk out of the six NHS organisations within Lancashire and South Cumbria at the start of the 23/24 financial year. … the challenge is significant and there are going to be some difficult decisions we need to make as part of our recovery stance that will impact services.”

However, the frankness ends there: the CEO goes on to state that the outcome of discussions between ICB leaders and NHS England on the financial and non-financial challenges would be reported behind closed doors in part 2 of the May meeting.

By July the ICB papers were noting that LSC is “one of 14 systems in England that has confirmed that we will end the year with a budget deficit, having been one of the original five ICBs that had forecasted this outcome,” with the CEO explicitly arguing for reconfiguration to reduce to just two or three elective sites, and major non-clinical reconfiguration with a single platform for shared services and the collaboration bank – with yet another warning of the need for “strong leadership and making difficult decisions.” (p6)

Nor is there any relief in sight through the promise that the ICB was in line to have two new hospitals as part of the “40 new hospitals” promise: the latest information suggests these will be delayed “from 2030 to 2035” – and in any case the ICB is expecting the new buildings to have fewer beds. (p10)

The Finance report reveals that the final ICB plan is for a deficit of £80m, agreed with NHS England, “but with an expectation that we continue to strive for a breakeven position given this is a statutory duty.”

The catch is the “high level of savings” (£457 million) that are required even to deliver a deficit of £80m:

“a high level of savings totalling £287m to be delivered through each organisation’s operations,

“a stretch on top of this of £168m which remain high risk and requires a system approach though the recovery work being developed;

• £76m stretch for the ICB
• £72m across the provider acute trust and
• £20m for out of area placements .

£287m represents 6.8% of the total allocation for the system. (p5)

Once again, however the discussion on exactly what tough decisions are proposed and what will be decided was to take place behind closed doors in part 2 of the meeting, leaving the local public and health staff completely in the dark on the implications.

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