NHS England is considering a ‘fundamental reset’ of its financial regime and accountability to ‘get a grip’ on the situation, its chief executive has said in a letter to ICBs.
The letter called for ICB and trust chief executives to attend an event on 13 March to discuss ‘how this reset needs to work’, with the aim of leaving with ‘clarity of expectation and confidence in delivery’.
It said that first cut submissions had a ‘significant financial deficit’, similar to previous years, of £6.6bn for this coming year when deficit support was stripped out. It added there was ‘limited confidence of delivery of operational expectations’.
It said: ‘We cannot allow this to continue and drift into the financial year, so we have been considering a fundamental reset of the financial regime and accountability so that we can all, quickly, get a grip of this situation and give us the best chance of delivering what our population and our staff need from us.’
The letter, signed by chief executive Amanda Pritchard and Sir James Mackey, national director of elective recovery and incoming transition CEO, also called on leaders to ‘accelerate your planning and commissioning discussions locally to maintain progress ahead of the event’.
In response to the letter, NHS Confederation chief executive Matthew Taylor, said: ‘Local NHS leaders will not be surprised by NHS England’s letter – we are facing an unprecedented financial challenge this year. Our members are having to deliver very high levels of non-recurrent savings that risks carrying over more financial risk into next year. They are gearing up to make extremely difficult decisions about which services to cut to balance their books.
‘They know the role they have to play in this turbulent financial position, but what the government cannot do is to push the risk inherent in this situation onto local NHS leaders and expect them to manage the fallout. That requires the government and NHS England to do all they can to reduce the risks, which includes moving as much earmarked central funding to local systems and trusts as soon as they can to help plug the gap.’
He added that local financial plans need to be credible and achievable, as well as stretching.
‘The danger, if we are not careful, is that our members will face a scenario where they are operating at the outer limits of what is achievable,’ he said.
‘To avoid this, the government and NHS England will need to take actions that help make this extremely difficult situation more manageable and that avoid local NHS organisations having to make cuts that contradict the government’s three shifts. The short-term financial imperative cannot derail the long-term transformation that is needed to place the NHS on a sustainable footing. The extra £22 billion announced in the October 2024 Budget will help to stabilise the system, but the reality is that over half of that is going on new pay awards for staff, higher pension contributions and other cost pressures. We need to be realistic about what it can provide.’
He added that the government should consider options including raising more private capital investment in the NHS.
Saffron Cordery, interim chief executive, NHS Providers, added: ‘NHS trusts have been through their toughest ever financial year as budgets and services are stretched to the limit in the face of mounting demand and pressure. This latest request from NHS England could mean trusts needing to tighten belts even more by scaling back or stopping services and shedding staff.
‘With the new financial year just weeks away, trusts need certainty and realistic plans confirmed as soon as possible. They are working extremely hard already to improve productivity and on track to find more savings in the year ahead but times are tough after years of underfunding and severe staff shortages right across hospital, mental health, community and ambulance services.
‘Government and NHS England will need to back any trade-offs needed to be made locally if these extra savings are to be found. Despite a very welcome Budget boost for the NHS from the government trusts are still feeling the pinch, having to find unprecedented efficiency savings with very few resources in reserve to meet more demands.’
It comes after system development funds (SDF) were used to prop up ICB finances in the last financial year, according to an exclusive Healthcare Leader investigation.
NHS England has announced that ‘most’ funding ringfences will be removed, including some SDF budgets.
