As we reported at the end of last month, many ICBs have been unable to manoeuvre or cut their way out of deficits for last year. Our report looked at board papers for 21 ICBs in North East and Yorkshire, North West, South East and South West.
This report looks at 11 ICBs in Eastern England and London – and finds a similar tale of financial woe, denial and wishful thinking, with even ICBs that have somehow delivered a break-even for their local system (ICS) in 2022/23 warning that this has been heavily dependent on one-off “non-recurrent” savings, and that therefore the challenge is even tougher for 2023/24.
What is also common is for the ICB, as the commissioning body holding the purse strings, to be breaking even or in surplus itself, while the system (ICS) as a whole is deep in deficit, with providers carrying the pressure of delivering front line care, but unable to balance the books. The 2022 Health and Care Act, far from “integrating” the NHS has simply re-divided it, with just 42 commissioners attempting to control local trusts.
East of England
According to Cambridgeshire & Peterborough (C&P) board papers the whole of England’s NHS is facing serious financial pressure:
“At draft plan stage the collective NHS deficit submissions were over £6 billion with 4 regions over £1 billion deficit. The East of England region had a cumulative deficit of approx. £440m with deficits ranging from £57m to £107m.
“[Cambridgeshire & Peterborough] submitted a draft plan of £99.8m. Since then colleagues across the system have worked to reduce the prudence bias, manage risks through balance sheet flexibilities and manage capacity to 22/23 levels. This has resulted in a reduction of the deficit to £38m. (Cambridge University Hospitals deficit £20m and North West Anglia FT (Peterborough, Stamford and Hinchingbrooke) deficit £18m).” (p21)
While C&P has a special incentive to seek to balance the books for a further year (“there is the additional benefit of historic NHS Cambridgeshire and Peterborough CCG deficits being written off,”) (p6) it’s by no means certain that they can achieve it.
Indeed it seems to be a minority of ICBs in Eastern England that even claim to have come out of last year without an obvious or underlying deficit.
Bedford, Luton and Milton Keynes (BLMK) joins C&P in that position, despite a forecast £11m deficit for providers, driven by high costs of filling vacant posts with agency staff, and numbers of mental health patients being placed in out of area beds for lack of adequate local capacity.
BLMK warns that its draft plan has also been rejected by NHSE: “the System is not yet able to demonstrate a fully compliant plan”, and major concerns include:
“• Bridging a funding shortfall that currently necessitates identifying efficiency cost reductions across the system;
- Capacity to deliver the levels of recovery activity needed to achieve the BLMK target of 109% of 2019/20 activity (i.e., pre-COVID level);
- The plans, activity and funding necessary to manage hospital flow and discharge and meet targets for urgent elective care and winter planning;” (p318)
To make matters worse BLMK’s emergency services have been under pressure:
“A&E attendances in December have increased by 11.73% on the same time in 2019, with all Trusts seeing record numbers of attendances over the last two months. Hospitals have been operating with high levels of bed occupancy 95.9% (December to 10th January).” (p23).
Similar pressures in C&P led to the opening of 240 extra beds (165 general and acute, 75 community beds), and additional home care hours provided.
Herts and West Essex (H&WE) also claims to have broken even for 2022/23, with the ICB itself underspending by enough to balance the deficits in Princess Alexandra Hospital Trust (Harlow) and East and North Herts Hospitals (p68). But it admits this means that the Integrated Care System as a whole is carrying an underlying deficit forward into 2023/24.
Indeed their initial plan indicated a deficit of £107m (3.7% of income) – the largest in the region – despite assuming very substantial “efficiency savings” equivalent to 2.8% of budget (above NHS England’s target of 2.2%). (p 68)
H&WE explain that the deficit is caused by:
“the underlying deficit carried by the ICS organisations in 2022/23, the non-achievement of Elective Service Recovery in 2022/23, which has resulted in productivity improvements being behind where they were expected to be and the aggregate loss of COVID funding since 2021/22 of £76m, but without being able to recurrently reduce the spend. (p87-88)
On top of this the ICB itself is showing a deficit of £16.093m for 2023/24, along with deficits in all of its main providers – East and North Herts Hospitals (deficit projected at £29m) Hertfordshire Community Trust (£4m), Hertfordshire Partnership FT (£25m); Princes Alexandra Hospital (£20m), and West Hertfordshire Hospitals (£12.4m).(p96)
The ICB emphasises the range of issues that need to be considered to generate another £100m of “savings,” several of which pose the real danger of service cutbacks and delays in much-needed improvements:
- Funding added to budgets for COVID needs to be identified and costs taken back out
- Productivity losses since 2019/20 need to be reversed so we can deliver increased elective activity at lower cost
- Greater joint working across Places and Providers to maximise utilisation of our most costly capacity or reduce the capacity required
- Push for greater cash releasing efficiency savings
- Slow down the pace of service developments to meet Long Term Plan requirements
- Make choices and decommission services that add least value to the population (p69)
H&WE is one of a number of ICBs and trusts to be explicitly seeking to increase their workforce as a means to reduce dependence on use of more expensive agency staff – despite recent pressure from NHS England to drop such plans. The HSJ reports many trusts have been told by NHSE that they were not permitted to increased their total number of planned posts, known as staffing “establishment”, for 2023-24. NHS England are clearly focused only on short term cash savings rather than any genuine integration of the NHS.
The H&WE plans propose a 12- month growth of 3.76% in the establishment, including a near 5% increase in Allied Health Professionals, “confirming the system’s ongoing commitment to move staff from agency/bank to substantive,” while plans for the next 5 years indicate a growth in establishment of 4.35% and an increase of 17.37% AHP staff-in-post. (p70)
The situation is worse at Mid & South Essex ICB (M&SE) where the March Board papers admit there is no hope of balancing the books because the major acute trust (Mid and South Essex FT, MSEFT) deficit had risen to £63.2m:
“the Month 8 deficit position made it increasingly difficult to assert breakeven by the year end. The report confirmed that regional and national escalation discussions had concluded, and the system was planning to adjust its forecast outturn position during Month 9. A negotiated stretch forecast outturn position of £46.4m deficit was reported at Month 9, (£16.8m surplus ICB, £63.2m deficit MSEFT and EPUT breakeven)” (p133)
By Month 10 MSEFT was forecasting to deliver just over half of its savings target, and declaring that the deficit was “mainly reflective of a considerable amount of escalation capacity and significant agency costs.” (p186)
This was despite recruitment of additional staff: “MSEFT’s total substantive workforce had increased by circa 3,000 since 2018/19, both in terms of head count and whole time equivalents, [but] circa 2,000 vacancies remained.” (p208)
But MSEFT was not the only trust in trouble: the Essex Partnership Trust had a 23% vacancy rate for nursing posts, and overall the M&SE system was using twice as many bank and agency staff as allowed by the NHS England “cap” on spending. (p208-9)
Patricia Hewitt’s Norfolk & Waveney ICB had been forecasting break-even back in month 8, but by month 11 was admitting that it would end up with a £20m deficit, but an even worse underlying deficit of £71m, with “no plan at present to bring to a break even position in the short term.” (p343)
The Finance Committee warned that: “It should be noted that (nearly) all NHS organisations in the ICS require significant use of so-called non-recurrent measures, which show the underlying strain on the finances.” (p377)
The Committee went on gloomily to discuss the coming financial year, for which the ICB’s emerging financial plan “had already undergone challenge internally and by NHS England:”. It warned:
“The foreseen deficit at system level for 23/24 … was £55.7m. It also assumes significant risks are absorbed by each organisation.” After the first plan was thrown out by NHS England another attempt has been made to bridge the gaps, but it’s all very tenuous, dependent on vague “mitigations” of substantial risk and know pressures:
“… The ICB will leave the 22/23 financial year with a forecast underlying deficit of £59m. A paper explained the reasons for that. The current 23/24 plan is a break even position but £72m of mitigations have been used to achieve that position.”
Suffolk and North East Essex (SNEE) is another ICB which appears to have balanced the books but only by extensive use of one-off measures, and is sitting on a time bomb of underlying deficits. System providers had continued to forecast a barely credible £8,000 surplus for 2022/23.
But its March Board papers note:
“Unmitigated risk reported by SNEE hosted NHS organisations remains £nil, with organisations confident that … financial plans will be achieved. However, financial performance is being supported by non-recurrent resources/use of balance sheet flexibility.” (p142
Worse, “All organisations are providing a narrative that the underlying position is deteriorating caused by the increasing impact of non-pay inflation and winter pressures, and the inability to discharge medically fit patients.” (p148)
The chickens come home to roost in the draft plan for 2023/24, which warns of a deficit of £59m. “System partners are working towards the delivery of a challenging but credible break-even plan.” (p173). This was after a £30m improvement in the ICS’s finances (p394)
But an obscurely worded Financial Planning Update in the Finance Committee meeting from February 14 notes that
“The Committee was in receipt of a report,” which apparently mentions an even higher deficit of £82m. The report (which we can assume is the work of management consultants, since it is not attributed to any ICB source) is not published with the Board papers, but it is said also to include much relevant information:
“information on the planning timetable, governance, work that was outstanding, allocations, national notifications re inflation and growth, risks, draft ICB position, cost improvements and next steps.”
It also included news that:
“Based on feedback from NHS England, East Suffolk and North East Essex FT and West Suffolk FT there might be some pressure to increase Cost Improvement Plan percentages and develop detailed plans. (p399-400)
Committee comments on this report included a warning that the problem could be even bigger: “The £82m deficit mentioned in the report did not include risk associated to the Elective Recovery Fund and further information from the national team was awaited.” (p400)
The Committee also heard warnings that the East of England Ambulance Service faced a £5-6m risk, but an even bigger looming threat of an underlying £17m deficit (p394), and the crisis-ridden Norfolk and Suffolk Foundation Trust, which delivers mental health services to the two counties, is facing a £20-£25m deficit (p399) while still in special measures since 2017.
The ICB itself faces a hefty cut in its running costs, from £18.8m to £14.2m by 2025/26, effectively a 30% cut after allowing for pay inflation. (p168)
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