According to the latest NHS England overview, 16 of the 42 Integrated Care Boards (ICBs) failed to achieve their financial plan in last financial year, most of them failing by less than 1 per cent of total allocations. Of course a number of them had planned from the outset to run a deficit, or been obliged to admit during the year that they were not going to be able to balance the books.
NHSE Finance chief Julian Kelly explained away the issues, arguing:
“This variance is largely caused by operational pressures, in particular higher levels of COVID and sickness absence, and also the ongoing impact of inflation.”
However he also admits that a third of the ICBs (14/42) are projecting deficits totalling £650m for this financial year, despite the immense top-down pressure on Boards to reduce the shortfall from an initial £6 billion in March, and £3bn at the end of April.
NHS bosses have known that the financial pressures are growing ever-tighter: England’s NHS is expected to deliver £12 billion in “efficiency savings” over the next two years, while reducing waiting times and waiting lists.
Previous Lowdown articles have explored the situation in 32 of the ICBs in London, East of England, and the North East, North West, South East and South West, underlining the main challenges facing the Boards as they seek to both balance the finances and expand the services.
This round-up completes the picture by looking at the latest information on the ten east and west Midlands ICBs.
Birmingham and Solihull ICB admits funding is reduced in real terms in 2023/24, and warns of “disinvestment decisions to make”. Five reveal extensive (£100m-plus) underlying deficits or risks.
Staffordshire and Stoke on Trent ICB reveals a massive and almost certainly impossible 7.4% target for efficiency savings. Leicester Leicestershire and Rutland ICB warns its underlying deficit could reach £272m by 2027.
Yet none of the plans for the new financial year reveal any concrete details on how they aim to balance the books: what will be cut, what plans will be scrapped, how many jobs might be lost.
Underlying all of these local financial pressures are a number of common problems seen in almost all ICBs:
- overspending above the arbitrary NHS England “cap” on use of agency staff (costing £46 per hour compared with £16.85 agenda for change rate. Herefordshire & Worcestershire ICB trusts have overspent the cap by 38%, 60% and 79%, Northamptonshire system exceeded the cap by 58%; Nottingham & Nottinghamshire by 60%
- some are attempting to get around this problem by increasing numbers of staff directly employed; Black Country trusts have recruited 1,270 international nurses and midwives; Derby & Derbyshire ICB has expanded the workforce by 4.3%, with an 8% growth in primary care and 6% in nursing; and Shrewsbury Telford and Wrekin ICB are planning to increase budgeted establishment by almost 400 WTE by March 2024;
- pressure on acute beds – especially given continued burden of Covid patients (703 in Midlands beds on May 17) and Medically Fit For Discharge patients who cannot be discharged for lack of community health services or social care.
- inflation running far above the official forecasts, and showing little signs of falling as predicted, leaving providers carrying much higher than funded costs.
- under-funding of pay awards, leaving providers stuck with the extra cost.
- failure of NHS providers to meet tough targets for “efficiency savings” in 2022/23, (or sometimes imaginary assumptions or unassigned savings)
- and almost universal over-reliance on one-off “non-recurrent” measures and budgetary fiddles, which leave an underlying deficit rolling in to an even tougher 2023/24.
To see the summary for each area, please click on the appropriate link below:
Herefordshire and Worcestershire ICB
Leicester, Leicestershire and Rutland ICB
Nottingham and Nottinghamshire ICB
Shropshire, Telford and Wrekin ICB
Staffordshire and Stoke-on-Trent ICB
Birmingham and Solihull ICB, which faces some of the most desperate problems in terms of trust management culture in the giant University Hospitals Birmingham trust, appears to have fewer financial problems than many ICBs, having somehow devised a balanced budget for 2023/24.
But it is also one of the most forthright in admitting the “significant risk” in achieving the financial target, given the underlying deficit of £120m, and the need to make “savings” of £15m per month. (pages 13 and 52). More bluntly still, in rating the achievement of the 23/24 Operational Draft Plan as an amber risk, the Board notes:
“Funding in 2023/24 is significantly lower in full year effect than received previously.
“Significant disinvestment decisions to make.
“Particular challenges in relation to UEC [Urgent and Emergency Care]; Mental Health; and virtual wards” (page 59, emphasis added.)
Black Country ICB is one of the 14 that are projecting a system deficit for 2023/24, and is also carrying forward an underlying deficit: its May Board papers set out the dilemma:
“It is positive news that the system has been able to submit a broadly compliant operational plan which enables the system to meet the majority of targets but significant challenges remain in the financial plan with the ICB submitting a £69m deficit plan. These plans were approved by Board and submitted for the national deadline of May 4th.” (page 21)
The ICB warns that:
““Whilst mostly compliant in terms of operational performance there were some specific areas that the ICS (Integrated Care System) was not able to commit to delivery against the national expectations including reducing bed occupancy to 92%, outpatients, talking therapies, Out of Area placements and Category 2 response times for Ambulances. Delivery of all planning requirements will be extremely challenging given the financial situation of the system.” (p156)
Black Country makes clear it is bringing in private sector accountants and “a system improvement partner” in an effort to spur on performance. (p227)
Coventry & Warwickshire ICB is concerned that while the system has somehow delivered £84m of savings to produce a break-even for last year, £54m of that (almost two thirds) was from one-off “non-recurrent” measures, leaving an underlying problem. The pay bill was also running £61m above plan by Month 10. (page 24)
The Board is told of a £48m “overall system deficit” in addition to “risks regarding inflation and funding streams.” (p150, 156)
Derby and Derbyshire ICB had battled in 2022/23 to reduce its initial projected £65m deficit to £19m and then (with the assistance of “additional allocations” of cash) to £13m.
But like Birmingham & Solihull the ICB notes that it faces a real terms cut in funding “The uplift for 2023/24 compared to the current financial year is only £15m more, on a £3b allocation [0.5%], with a 4.3% growth in workforce.” (page 22)
The board papers appear to be somewhat garbled in places, but underline the scale of the problem:
“Significant operational challenges are being dealt with to improve access, workforce, and cost of living increases, as well as dealing with the underlying financial legacy from 2022/23. Planning for 2023/24 has been undertaken differently with resources being disproportionately allocated to the deficits in a constructive manner.
“This will result in a compromise by provider originations [presumably organisations?] to support out of hospital provision. (p22)
There is another attempt to explain what is going on, without any of the concrete details that might make the position clearer:
“We also start the new financial year with a refreshed financial position, and finance reports to board reflect the significant deficit position of the NHS community in Derby and Derbyshire. However, we are hopeful that our transformation programme, coupled with our strategic shift from secondary care treatment to community collaboration and strengths-based prevention can help resolve a significant proportion of this deficit at the same time as improving outcomes for local people, and increasing health equity. We will need to have deep and detailed conversations with local people during the summer and autumn on how this will work in practice. (page 29)
It’s not until page 75, by when many will have lost the will to go on, that there is any real clarity: the ICB has signed up for a truly massive savings target:
“The Derby and Derbyshire system had a 2023/24 planned deficit of £149.5m at the initial planning submission date of the 23rd February 2023. …
“As at the 30th March 2023 submission, the system financial gap has moved from £149.5m to £61.3m, however, there is an acknowledgement that more work is required to improve this position further. There are a number of key risks within the plan …
“There is another plan submission (final) on the 4th May 2023 where the expectation is that the system moves to a £22m deficit to reflect the excess inflation only.” (page 75)
A “balanced capital plan” has apparently been produced – by junking planned investments (p77).
The acute sector faces a brutal drive for productivity: “From an acute perspective we are planning to spend 1.2% less (after adjusting for inflation) in 2023/24 relative to 2022/23 and deliver 6.5% more activity output.” (p77)
It becomes clear that the reduction in deficit from £61.3m to £22m is based on reviewing all options to cut spending, including any plans for spending above 2022/23 levels, and a hefty £80m of “independent sector expenditure.”
Interestingly the ICB itself is projected to run a surplus in 2023/24, while lumbering the acute trusts (Chesterfield and Derby & Burton with deficits of £12m and £18.4m (p106) But having submitted an “unbalanced plan” the ICB is braced to face “additional regulatory scrutiny on delivery (p30).
Herefordshire and Worcestershire ICB is another one that has submitted a deficit plan for 2023/24, although it too has been badgered by NHS England into cutting its projected deficit from £55.5m in February to £19.2m. (page 4)
The ICB is another example of the ICB itself as commissioner running a hefty surplus last year, while leaving three of its providers deep in deficit:
“Prior to the distribution of ICB’s surplus (to support provider cashflows) had the ICB at £55.9m surplus, … Worcestershire Acute Hospitals NHS Trust (WAHT) at £42m deficit and Wye Valley NHS Trust (WVT) at £36m deficit. (pages 1-2)
To achieve the £19.2m deficit target requires “efficiencies of £73.1m (4.6%)” (page 5)
Leicester, Leicestershire and Rutland ICB (LLR) was one of those that negotiated a deficit control total of £20m with NHS England in 2022/23, but faces much more severe problems in 2023/24, worsening going forward:
“There is currently an underlying deficit across the system of £104m and this is set to increase each year as the allocation for growth and inflation will not be enough to close the gap between income and expenditure. If the system does not take action to address the deficit by becoming more efficient and productive for every pound spent, the underlying deficit is estimated to increase to £272m in 2027/28. (pages 52-3)
The ICB appears to be living in denial. Having been warned at the beginning of this year of the underlying system deficit of £159m for 2023/24 (page 261), the draft Operational Plan projected a deficit of £100m, but was to be “revised” to cut this to £50m (page 264) .
This was acknowledged to create a risk of “interventions and restrictions being placed on the ICB if national requirements for the Operational Plan 2023/24 are not met.” (p264)
So the financial plan submitted in March proposed a deficit of £50m, only to be met by the predictable bullying and pressure from NHS England – resulting in a magical elimination of the projected deficit: “Following discussions with the regional and national NHSE colleagues and the LLR Quarterly System Review Meeting, the LLR system is expected to meet its statutory duty to submit a break-even plan.” (p 247)
At no point are any clear proposals to wipe away the initial £159m deficit explained. We are told only that: “The LLR ICB have identified five workstreams to close the deficit gap to reach break-even:
- Improvement across emergency care pathway;
- Management of planned care (Patient Initiated Follow Up and Outpatient follow-ups);
- Access to Care thresholds;
- Workforce growth constraints; and
- ICB internal opportunities (including running costs). (p247)
Such contortions might convince NHS England bosses eager to be persuaded that huge deficits have been made to disappear, but they are unlikely to produce a genuine balance without real and painful cuts that have yet to be discussed.
Lincolnshire ICB
All that could be deduced from the remarkably cryptic March board papers of Lincolnshire ICB was that the system had reduced its forecast deficit for 2022/23 from £35.4m to £27.2m – but were under pressure to cut further, to £20m. (page 17)
The Board was given a positive report that
“the Lincolnshire system started with a very considerable unidentified cost improvement and also had challenges in delivery of that through the year, so to have improved on that position is very positive. [However] This is currently being met through non-recurrent benefits, rather than recurrent, which will have implications for the 2023/24 financial year, and which contributes to the underlying deficit.” (page 17)
The Finance Committee had apparently questioned the NHS England deficit reduction target, and tried to negotiate a ‘meet you in the middle’ figure:
“the risk adjusted forecast [deficit] is £27.2 million for 2022/23 and NHSE require the ICB to deliver £20 million. The Committee agreed that a deficit of around £25 million was more realistic and deliverable. [ … ] From the Committee perspective, and the recommendation to the Board, duty of candour must be applied and the ICB should not be accepting of a figure unless it was felt achievable.” (p22)
In the event there was an extra allocation of cash, which resulted in a reduced forecast deficit of just £16.8m for 2022/23. (p71)
However of 23/24 no details were revealed until the May Board papers, finally released on May 26.
The Finance and Resources Committee had warned that the ICS Financial Plan 2023/24 contains “some challenging efficiency programmes …” (p20)
| Emergency services remain under pressure: “The number of patients waiting over 12 hours in department has increased slightly and at 665 is significantly higher than the national ambition of zero. The time to first assessment within 60 mins measure remains above the national average.” (p55)
The ICB notes that their planned £2.3m surplus for 2023/24 (p67), but admits: “The expenditure position excludes the impact of any pay settlement once finalised; the expectation is that financial impact across system partners will be met with additional ICS allocation, as has happened in previous years.” (p68) The surplus also requires a substantial £55m “expenditure reduction across the 4 NHS organisations,” of which almost £10m is yet to be identified. But while reducing spending, providers are also expected to increase performance: “There is also an assumption of additional contribution arising from over-performance of elective recovery.” (p69) Like other ICBs, Lincolnshire is vague in the extreme on how such cuts are to be made, with no estimate of their impact on services, offering only phrases like: “system stretch efficiency is reflected in its entirety in the ICB financial position, additional efficiency proposals to meet this are in train.” (p68) However a May 23 update from the Finance and Resource Committee revealed a much higher target for savings, and a bigger unidentified total: “the final version of the operating plan included total efficiency requirement, including elective productivity improvement of £78m, with £21m yet to be identified (27%).” (p104) “The Committee received an update report and noted performance and in particular: • The significant level of unidentified efficiency requirement (18%). • The large number of schemes without sufficient detail available to the ICB PMO to provide assurance.” “Further work is required to ensure initiative risk is interpreted in the same way by the originating organisation and the ICB FRP team by bringing forward all available cost improvement plans. “The second criteria to develop a pipeline of financial improvement that will meet the target of delivering a financially sustainable system by March 2025 now requires urgent focus.” (p104-5) A hint of the problems and pressures can be seen from the risks identified in mental health services for Children and Young People (CYP): “Key risks – Recruitment and retention of qualified MH Practitioners to meet demand – Increasing demand and acuity of CYP referred for specialist MH support – Difficulty accessing tier 4 inpatient provision in Lincolnshire – Capacity challenges to offer and deliver services across large, rural geography.” (p90) |
Northamptonshire ICB at the end of month 9 was projecting a significant £35.3m deficit, £19.5m worse than planned, assuming savings measures all delivered, with three provider organisations notching up substantial deficits totalling £37.2m by month 9. (page 13)
The ICB Board consoled themselves by reiterating that they weren’t the only Midland ICB in deficit, although they did seem to have the largest:
“It was noted that although there were seven other ICBs with deficit forecasts in our region, Northamptonshire were an outlier in year with the largest deficit and spend levels significantly out of kilter with the other ICBs. Accordingly, it was anticipated our position would be carried over to our planning position for 2023/24 which would require difficult conversations in year regarding the collective responsibility for the whole system to manage.” (page 14)
The ICB Board conspicuously shunted its April Financial report back to page 273 of the Board papers, and offers no detail on the prospects for the financial year that had just started.
It noted provider deficits topping £40m at month 11, while the ICB itself was £7m underspent.
The two acute trusts (Kettering General and Northampton General) each report “severe operational pressures” and that their planned reduction in cumulative deficit in the second half of the year had not materialised. (page 280).
Northamptonshire Healthcare FT points to “activity pressures across Mental Health, Children’s and Community,” and warns “There is a growing issue with timely discharge of medically fit patients resulting in placing patients in mental health beds out of area at an increased cost.” (page 281)
There is nothing in the Northamptonshire reports that suggest anything other than that they face another year of crisis and fending off the financial realities, but no details have yet been revealed.
Nottingham and Nottinghamshire ICB reported that despite a £36.4m deficit in month 10 the system was set to hit its target deficit of £16.9m – albeit on the basis of one-off measures that imply an underlying deficit going forward to 2023/24. (page 19)
Indeed the ICB had submitted an initial plan to NHS England that projected a £43.3m deficit in 23/24, only to be pressured once again into pretending these problems could all be smoothed away:
“The submitted plan had included a £43.3 million deficit …. The national NHS England Finance Director had subsequently written to all ICBs requesting that significant gaps in plans be closed. Intensive work has consequently been undertaken with NHS partners to improve the financial balance of the plans and as a result, the revised plans had been balanced….” (page 32)
Shropshire Telford and Wrekin ICB’s March meeting ratified an “emergency decision” to report a significantly worsened 2022/23 financial position to NHS England:
“the report reflected the change to the Forecast Outturn, with Month 10 reporting a £54.7m year to date deficit and a £65.8m forecast deficit for the year.” (page 16)
However the April meeting heard that the prospects for the future are even bleaker:
“Since the previous draft plan submission of the 23rd February, which described a system deficit of £106.4m, further work was undertaken to review all drivers of the planned expenditure to reduce the deficit. …
“Work continued to identify measures that would improve this position and at the point of submission on the 30th March the gap remained at £76.9m planned deficit.” (page 31)
However the “system chief executives” have decided to seek even more ambitious and less concrete savings, and now aim to match their failure to balance the books last year:
“their shared ambition remains to deliver a planned deficit in 23/24 equivalent to that in 22/23 and to that end they wished to submit a position of £65.5m deficit. National timescales do not allow the system to work up detailed plans through which to deliver this and so the CEOs agreed to each take a share of that ambition into their respective positions.” (page 31)
The lion’s share of the deficit lies with the acute trust, Shrewsbury & Telford, most recently reported as £50.7m in the red, with Shropshire Community trust £4.8m in deficit and the ICB itself £21m. (page 47)
The ICB warns that its 2023/24 plans include no provision at all for contingencies “which means that should there be equipment failure or urgent estates repairs required, a reprioritisation of the 2023/24 plan will be required to ensure that the system remains within its CDEL limits.” (page 52)
Staffordshire and Stoke on Trent ICB admits to a “recurrent deficit of c.£160m” and faces the risk that if this cannot be addressed in 2023/24 it will result in
“financial intervention from the NHSE including reduced local discretionary decisions, reduced opportunities to apply for additional funds, impact on services and waiting lists” (page 31)
Like so many other ICBs, they have had a tough time after reporting a projected £39.4m deficit in their 2023/24 plan, and been bullied into signing up for a plan and targets they clearly don’t believe in, and which are quite likely to prove impossible:
“We were then asked to make further improvements and to identify a pathway to breakeven. Following discussion with the national leadership team … the Chief Finance Officers recommended to the CEOs that we should move to a system plan to break-even.
“We have increased our efficiency plans in moving to a breakeven position. At the end of March, we had an efficiency target which equalled 5.5% of our RRL [Revenue Resource Limit], which has now increased to 7.4%. The detail around these efficiency plans is still being worked through.
“We consider this to be an upside plan and whilst we do not have confidence that we can deliver it in full we are committed to trying to achieve it.” (page 74)
The attitude of the finance chiefs is more understandable given the high stakes involved. The potential reward for delivering this enormous target saving is that “since this would be the second consecutive year of system breakeven since COVID, is that the system legacy debt of £300m would be written off.” (p114)
One other theme is worth mentioning: the extent to which reliance on the independent sector is a part of the financial pressure faced by ‘Integrated Care Systems,’ and poses questions over the quality and safety of care.
In Birmingham & Solihull ICB for example, which has been “asked to lead, with other parts of the system, a focus on how to maximise our independent sector,” and report to the Prime Minister, the ICB itself noted: “Reliance on independent sector with Mental Health Learning Disability and Autism remains major risk. Increasing effects from cost of living, regulatory pressures and workforce pressures on private / independent care sectors and provision of placements impacting ability to place citizens at risk.” (page 57)
Coventry and Warwickshire has privatised a large number of ophthalmology services, with contracts all due to expire at the end of June. It notes: “The ICB has incurred significant spend on IS provision for Ophthalmology in 2022/23 specifically cataract with £7.5million IS cost pressure which we believe we could influence through effective service relaunch via contract and commissioning reviews.” (p138-9)
Derby and Derbyshire ICB is including a review of “over £80m of Independent Sector expenditure” in its efforts to cut spending. Northamptonshire ICB sees reduced activity and associated costs at Independent Providers as a relief.
Herefordshire and Worcestershire ICB is seeking to “mitigate the additional expenditure pressures seen in-year for Continuing Health Care, Prescribing, Mental Health Placements and the Independent Sector.” (p4)
Staffordshire and Stoke on Trent ICB goes further and explicitly includes “Replace use of Independent Sector for electives, mental health placements with in-house capacity” as part of its financial plan.
However recovery plans for Worcestershire Acute Hospitals, Leicester, Leicestershire and Rutland ICB, Lincolnshire and Nottingham and Nottinghamshire ICBs all see the independent sector as part of the solution, while Shrewsbury Telford and Wrekin ICB relies upon the independent sector delivering 348% activity as part of the effort to exceed 2019 levels (although the actual private sector contribution is just 3% of the total delivery).
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