Budget balanced but NHS must retain finance focus

However, the report warned that the level of rigour needed to deliver this outturn would have to be maintained to support long-term financial sustainability.

The Department had underspent on its resource departmental expenditure limit (RDEL) – day-to-day spending and administration costs – by £646m, mostly due to an underspend in resource administration (£605m).

When an underspend in central capital budgets was taken into account, overall capital expenditure was £42m under budget at £5.94bn.

The report said the tighter financial controls on NHS bodies, introduced in 2016 to tackle financial problems, have been broadly successful. Provider finances had stabilised, with the majority ‘demonstrating strong, effective and sustainable financial management’.

In 2018/19, early action was taken on potential overspends in providers and clinical commissioning groups, helping to deliver financial balance across the NHS for the third consecutive year.

Though CCGs reported a cumulative overspend of £150m, this was balanced by underspends in other parts of the sector, principally central NHS England budgets (£756m) and direct commissioning (£310m).

The NHS England annual report said that, overall, the commissioning sector delivered a £916m underspend. 

The Department’s permanent secretary Chris Wormald said the health and care system had achieved financial balance due to the focus on financial rigour and efficiency. Most providers had met their control totals, which contributed to the Department achieving financial balance. He acknowledged 2018/19 had been a difficult year for the NHS, with the service failing to hit a range of targets.

The service continued to seek to strike the right balance between performance, quality and safety, transformation and living within its financial means, he said.

The report said the new financial framework would promote financial sustainability, but the level of rigour seen in 2018/19 ‘will need to continue in future years to support long-term financial sustainability’.