As a new year of cash restraints takes shape, John Lister reviews the most recent board papers from a third of England’s 42 Integrated Care Boards, which took over as the leading “local” bodies of the NHS just over a year ago in July 2022. Covered in this survey are ICBs in East of England, North West, North East and Yorkshire and London.
Even as this initial survey is written it is clear that trusts (and therefore local health systems) in other areas are already deep in financial woes. East Kent Hospitals FT is already headed towards a further £50m overspend above a projected £72m deficit, and Shrewsbury and Telford Hospital Trust reports that it carried over a £47.2million deficit for the financial year 2022/23 – much more than double the planned deficit of £19 million
What is immediately obvious is that with few exceptions ICBs, and especially acute hospital trusts, are facing huge financial problems, forcing consideration of ever-larger scale “efficiency savings”, outright cuts and “unpalatable measures” as they struggle to stretch inadequate budgets to meet tough targets at the same time as coping with continuing high levels of cost inflation.
NHS England earlier this year rejected many realistic local plans which warned of substantial deficits in 2023/24, and demanded that Integrated Care Systems (which include the local NHS providers of acute services, mental health and primary care, as well as social care commissioned by local authority social services) submit plans that promise to break-even.
Nevertheless FIFTEEN of the 42 ICBs submitted deficit plans – and it’s already clear that many of those who submitted break-even plans based on wings and prayers are already facing serious problems. Cost inflation is running way above the ridiculous 2.9% assumption by NHS England, especially for prescribing, Continuing Health Care (CHC) packages and energy as well as the knock-on consequences of continuing industrial action (loss of trust income and increased costs for agency staff).
NHS England pressure resulted in local plans becoming less and less realistic, with local health bosses included projections which assume historically unprecedented levels of “savings,” with several projecting 4%-5.7%, but some aiming as high as 8.1% of turnover in South Yorkshire, 8% in South West London, 7% in West Yorkshire and 6.8% in Lancashire and South Cumbria.
Many of these plans include savings which have not been identified, and for which no plans have even been drawn up. Subsequent even tougher NHSE pressure has been applied not only to trusts that forecast substantial deficits, but even to some who had revised plans to project break even, triggering complaints from the normally docile NHS Confederation.
NHS England has specifically warned that it has no central reserves to cover any local deficits (p246).
It appears that – despite top-level government pressure – the financial constraints are having the unexpected consequence of reducing ICB and trusts’ plans to make use of private sector providers as part of the effort to reduce waiting lists and deliver increased volumes of elective treatment.
The HSJ reported in May that the private sector’s own annual survey had revealed ICB plans proposing to rely less on private providers. Several ICB Board papers have revealed efforts to squeeze down “cost pressures” from the private sector, not least because of the limited scope of private hospitals to handle more complex cases that have been delayed on waiting lists.
However the pressure exerted by the Elective Recovery Taskforce, studded with advocates of the private sector, can be seen in NHS England’s decision to restore of the “payment by results” (cost per case) system. This was introduced by the New Labour government in the 2000s to facilitate easy contracting of elective work (and funnelling of potential NHS trust revenue) to the private sector. The system was suspended during the peak of the Covid pandemic to stabilise trust income.
Meanwhile urgent and emergency care – which the private sector has no interest in providing – remains covered by the ‘block payment’ system that returned during the pandemic. This is spelled out by Cambridgeshire & Peterborough ICB (p24):
“The national approach to financial planning for 2023/24 has seen a return to more familiar methodology using a hybrid of payment for activity for planned care and continued block payments for urgent and emergency care.”
One noteworthy variant in North West London has been the decision to substantially cut back provision of virtual wards “from 1,100 to 300-400 beds, based on the expected requirement for these beds and current occupancy.” This takes place as NHS England’s chief operating officer Sir David Sloman – an eager advocate of virtual wards – stepped down last week to join virtual ward firm Doccla, which has been expanding rapidly with the help of NHSE promoting the policy. It will be interesting to see if other ICS now feel more free follow suit.
Financial pressures during last financial year meant many ICBs have barely scraped by, and only appeared to present a break-even on their spending by one-off “non-recurrent” measures and financial juggling. In many areas this has left substantial underlying deficits, which carry through to this year and make the challenge of tackling the bloated waiting lists and coping with under-funded pay increases and price inflation even more difficult.
Even the ICBs that appear to face relatively modest savings targets for this financial year (such as Bedfordshire, Luton and Milton Keynes ICB (BLMK) warn of the huge challenges ahead (BLMK’s medium term financial planning model warns of a “do nothing scenario” that could result in a deficit of “around £580 million by end 2026-27.” (p56)
To make matters worse, BLMK notes: “All four of our unitary councils are under substantial and sustained financial pressures. If they are not addressed, these pressures will total many millions over the next five years.” (p57)
The BLMK ICB Board warns that not only will it “need to work in partnership to improve performance and productivity,” but “It will also need to explore alternative and innovative funding mechanisms.”
No explanation is offered on what “alternative” funding sources might be on the BLMK agenda, but it’s hard to avoid suspicions that some form of private sector involvement or charges for users of NHS services may be being considered behind closed doors of the private section of the ICB Board meetings.
Elsewhere so-called efficiency savings targets for 2023/24 range up to £388m (Cheshire and Merseyside), £457m (Lancashire and South Cumbria) and a huge £606m (Greater Manchester).
Board papers also reflect the pressures on ICBs and their local trusts from the £10 billion-plus backlog of maintenance, notably in Mid and South Essex, as well as the ongoing much larger problem of hospitals built using reinforced autoclaved aerated concrete (RAAC), which of course has just triggered a major scare in school buildings. RAAC has for years been causing havoc in a number of hospital buildings around the country, with no indication of any such dramatic intervention.
One other worrying trend, as “efficiencies” often totalling hundreds of millions are being discussed, is towards ICBs avoiding any local scrutiny or discussion of the plans. This is especially the case in the North West where two of the three ICBs (Cheshire and Merseyside and Lancashire and South Cumbria) have opted to conduct detailed discussions behind closed doors in private Board meetings (C&M) or in the closed “Part 2” sessions (LSC).
This ensures that the local communities whose services will be affected will know nothing about the proposals – and be unable to mount any advance campaigns to challenge unacceptable cutbacks, closures, restrictions and downgrades.
Coming soon in part 2…
East of England
Bedfordshire, Luton and Milton Keynes ICB – BLMK
Despite the large apparent long-term gap between needs and resources, referred to above, BLMK ICB claims that the underlying deficit in 2023/24 is as little as £22m, and the efficiency savings required are as low as £18.5m, with just one third of this yet to be identified. (p227)
The July Board papers report that BLMK’s deficit has grown by just £6m, “predominantly due to prescribing pressure”. Many ICBs would be delighted to report such a comparatively healthy situation, but BLMK insists even this scale of deficit is “unsustainable,” and it leaves “no contingency in place to fund redundancies” of ICB staff “following the planned staff consultation” on how to reduce ICB running costs by 30%.” (p232)
NHS England has said there is no additional funding to cover the costs of “restructuring.” (p232)
It seems BLMK is especially concerned to make its financial position look neat and tidy since Milton Keynes University Hospital has “been included in the national New Hospitals Programme, and is awaiting a decision on funding approval from the national team.” (p97-98)
Let’s hope the Board don’t hold their breath waiting for that funding, or hang too many of their hopes and plans on the new hospital, which they are already fearing may not give enough additional capacity unless demand can some how be “mitigated” by diverting some care to community-based services.
Cambridgeshire & Peterborough (C&P)
The July Integrated Performance report reveals C&P ICB is troubled by inadequate capacity both for mental health services (resulting in a rising number of “inappropriate out of area placements”(p5) and a growing waiting list, especially for Dermatology, Ophthalmology, Orthopaedics and Urology. Apparently 86% of the near 147,000 waiting list is for outpatient activity, which is running below plan. (p10)
Cancer waiting times are also worse than target, with skin cancer services at Cambridge University (Addenbrookes) and at North West Anglia (Peterborough) hospitals. An outsourcing contract at Peterborough has come to an end, but the ICB are working with a new private sector day hospital in Peterborough (The Hamptons Hospital) “to develop a tele-dermatology service.” (p15)
Staffing pressures on the mental health trust have forced the temporary closure of a ward, and in addition to out of area placements there has also been an increase in longer lengths of stay, which is not explained but represents a significant cost pressure for the Trust and for the ICS.
C&P is clearly facing a far more demanding situation than BLMK, with its projection of break even in 2023/24 based on £120m of ‘efficiency savings’ – for which there were still no details available for the Board in July to consider. The plan also assumes inflation (including the hefty PFI payments for Peterborough Hospital) at no more than 5%, and acute trusts achieving the elective recovery target of 114% of the activity delivered in 2019/20. (p24)
C&P admits (p26) that “In agreeing a break even position the system is carrying significant risk of £125m,” but exactly how much of that risk has been covered by mitigation will only be revealed at a subsequent ICB meeting.
Hertfordshire & West Essex (HWE) ICB
The July HWE Board meeting was told that the ICS is forecasting an exact break-even for 2023/24, with a surplus of £9.4m to be generated by the ICB, to precisely balance a projected £9.4m deficit by the five NHS providers within its area. (p59-60).
However it’s not quite as simple as that. The system has to deliver “efficiencies” totalling £51.8m during the year, and although one paragraph claims these have been built in to budgets, the next paragraph admits that £8.4m has not yet been built into “individual budgets” – 3 months in to the financial year.
The chances of hitting the financial targets look slim. The ICB documents reveal for example that the numbers and costs of Fast Track packages for Continuing Health Care patients have gone up sharply, with the average monthly cost now 30% above budgeted costs at £4,641 per patient, with two patients alone forecast to cost £780,000 over the year. Costs of jointly-funded patients are also up 24% to an average of £6,432 per month with a maximum of £9,500 per week. There has also been an increase in numbers of fully funded care packages costing over £200,000 each per year, increasing costs by almost £9m in 2023/24. (p189)
The HWE Board are frank enough to admit that some apparent “savings” have been delivered by happy coincidence (unplanned staff vacancies which have reduced running costs, “even though we do not have a fully developed plan to reduce our running costs”. (p192)
Mid and South Essex (MSE) ICB
The July Board papers underline the much more serious financial problems besetting this ICB, which is one of the minority which admitted to NHS England that they could not promise to balance the books and got agreement for a plan expected to deliver a £40m deficit (“a £6m improvement on the outturn position for 2022/23”!).
The Board is warned that their summer will not be an easy one:
“The plan position represents a significant challenge with increasing risks in all parts of our system. MSE Chief Finance Officers will be meeting with the regional team monthly with national escalation meetings scheduled for early August.” (p91)
Already by Month 2 the plan is running at double the planned deficit (£16m rather than the planned £8m), and leading to panic measures:
“Non recurrent measures have been utilised to support the in-year position and a full reconciliation of the underlying position will be reported for month 3. The year-to-date position largely reflects the current shortfall in efficiency programme delivery …” (p93)
Even to deliver a £40m deficit required the MSE System to deliver target efficiencies of £119m.
The Joint Forward Plan included in the ICB’s May Board papers included a frank list of the problems faced by local health chiefs.
“• We are not well resourced in terms of workforce – with particular shortfalls in primary care, and significant nurse, support worker, allied health professionals and in some clinical specialities, medicine vacancy rates. Both recruiting and retaining staff has been problematic in recent years.
- We are challenged operationally – struggling to maintain standards in some areas whilst escalation capacity usually reserved for winter is often required year-round. Length of stay in our services has increased significantly.
- We have a substantial historical structural deficit and we have failed to deliver our financial improvement plans. We have posted a system financial deficit for 2022/23, driven largely by a failure to deliver efficiencies and an over-reliance on bank and agency staffing – underpinned by rising demand in certain areas of care, more complex treatment regimes in some specialities and a failure to prevent chronic disease exacerbation.”
- Our patients have not received the highest quality care in some cases – we have quality and safety challenges across many services.
- We are failing to meet many of the statutory requirements set out in the NHS Constitution.” (p30)
The ICB has been one of those that have been penalised by NHS England for their poor financial performance and as a result: “A key consequence of our deficit is that we have been limited in the investment we have been able to make in transforming health and care.”
As a result of the chronic lack of investment “constrained capital is now creating pressures and limiting our ability to transform due to irretrievable equipment/infrastructure breakdown.”
The ICB fears that another year of failure could lead to intervention by NHS England: “We do not wish to cede control over our operations that is a likely consequence of not resolving our deficit. We wish to retain our autonomy within the agreed NHS framework.”
The bulk of the financial problems, and the greatest challenge in delivering the required savings is the troubled acute provider Mid and South Essex Foundation Trust, which initially projected a £50m deficit. (p295)
Norfolk and Waveney (N&W)
This ICB, chaired by former New Labour health secretary Patricia Hewitt, (whose review of the working of ICBs, commissioned by Jeremy Hunt, has been largely booted into the long grass, with ever tightening control from NHS England rather than the proposed increase in local level decision making), is facing serious and worsening financial problems.
Minutes of the May meeting show the ICB carried forward a deficit of almost £20 million, and had submitted a break-even budget dependent upon delivering 5.1% of “efficiency” savings and carrying “a large amount of risk”. (p10)
And already by Month 2 the deficit of £11.7m is 60% higher than the planned figure, with Queen Elizabeth Hospital Kings Lynn (perhaps one of the more notorious RAAC hospitals, with over 2,400 props holding the roof up) accounting for £1.5m “slippage” in identifying Cost Improvement Programme savings “due to continued pressure on capacity and the impact of RAAC”. (p123)
The efficiency target of £36.7m required to break even is 5% of the ICBs “influenceable expenditure” (p123), whereas historically the target [which they have not achieved] has been 3-3.5% of influenceable spend (p131).
Measures to achieve over 40% of the efficiency target had not yet been identified by July.
N&W’s plan also assumes it can somehow cope with much of another £75m of risk using non-recurrent measures, although this seems much less than convincing when the ICB admits – in the second half of July – that:
“£52.2m of this risk is formed from mitigations which have been entered into the plan, which unless carefully managed will not be achieved. These include achievement of as yet unidentified efficiencies and slippage on investments. The other £22.8m is formed from cost pressures which are not included in the plan, such as non-achievement of identified efficiencies and unplanned inflation.” (p129)
Only if all these challenges are met will the ICS be able to hold down the underlying deficit to £57m carried forward to 2024/25.
It’s clear that the ICB and system leaders are struggling to find ways to cover more than £16m of the efficiency target. It lists possible answers:
Plans to identify the £16.2m gap include
- A close the gap session with all EMT leads
- Finance to meet EMT leads individually for detailed budget review
- Review deferred income on the balance sheet
- Review all contracts £250k and above
- Review PMO opportunities that haven’t moved to the project stage
- Review all discretionary spend
- Review the procurement pipeline
- True-up exercise
However it ends with a warning that if these don’t deliver, they will wind up
- “Exploring less palatable ideas such as restriction policies”. (p130)
Another dire warning is added:
“Despite having a draft breakeven plan, the ICB’s exit underlying position for 23/24 is currently a £57.3m deficit. This is due to the significant non-recurrent measures which have been put in place to achieve the break even plan, which are shown on the list below.
“ This underlying deficit assumes that none of the identified risks materialise and that the ICB delivers its £36.7m efficiency target recurrently. If recurrent risks materialise or any of the efficiency target is not delivered, or is delivered non-recurrently, then the underlying deficit will increase by that amount.” (p131).
N&W is one of the ICBs that includes use of the private (“independent”) sector as a cost pressure. (p192)
Suffolk & North East Essex ICB (SNEE)
This ICB is another with major problems from RAAC in the West Suffolk Hospital, which has been included in the original list of “40 new hospitals” but is nowhere near ready to start building.
SNEE initially projected a £59m system deficit in February, but revised this to break-even, despite an underlying deficit of £52m. (p196)
But the prospects of achieving break-even seem to be evaporating fast, and by Month 2 the ICB had noted a £20m worsening in the underlying deficit, largely because of an increased level of non-recurrent measures used to deliver the proposed savings. (p245)
The local system’s worsening financial problems centre on the West Suffolk Hospital, “which appear to be worsening and these will impact on this financial year and future years. This will require immediate action alongside the development of a multi year programme to address the financial sustainability of the organisation.” (p247)
The ICB is seeking to compensate for lack of capacity at West Suffolk by opening a multi-specialty Elective Surgical Unit at Newmarket Hospital, consisting of a 32-bed inpatient ward and two laminar flow theatres, although this will require additional capital. (p476-7)
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 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)
But 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 plan of £14.5m – a variance of £48.1m against 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 up front 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.
North East and Yorkshire
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)
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 17th. (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)
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