Commissioner finances giving more cause for concern

He said around 25% (49) of clinical commissioning groups were showing adverse variance to plan at month 4. Around a third of providers are showing an adverse variance to plan, though the variance per trust was much smaller than that for commissioners, he said.

‘Looking at the forecasts, it’s worth not too much money, but we are trying to assess the risk we are sitting on,’ he said.

Bringing together the two national bodies means commissioner and provider financial positions can be examined in the round, he said. There was evidence of much better system conversations to solve financial and performance problems.

Mr Kelly said the overall year-to-date position for providers and commissioners was £75m off plan against expenditure of £39.5bn, while forecasting was broadly on plan.

But he added: ‘We think we are sitting on a material risk of £500m to £600m, which in the scheme of about £120bn spend might not sound a lot but it would be hugely problematic.

‘Different this year compared to maybe last, we have put the money out into the system, through the increase in prices and allocations and additional support through the provider sustainability fund and financial recovery fund. We absolutely do need systems, commissioners and providers to deliver against the plans they have agreed through the planning process.’

Mr Kelly continued: ‘The risk is split about equally between trusts and commissioners, but probably this year, compared with last, we are more materially worried about the commissioner position. We have seen certain groups of commissioners in the North West and Midlands, in particular, showing material adverse positions.’

He reiterated his plea for trusts to improve their capital forecasting. ‘We have a real requirement for taut capital forecasts from the provider sector as we are now at the mid-year point – in large part to work out whether we have the capacity to release some more funding to begin to do some catch-up work around critical maintenance backlog. We can only do that if we have taut forecasts.’

The meeting also heard that plans to allow NHS Improvement to set foundation trusts’ annual capital spending limits have been rolled back. The government invited NHS England and NHS Improvement to make recommendations for new legislation following publication of the NHS long-term plan.

The board meeting heard that power to set foundations’ annual capital limit should be a narrow ‘reserve power’ only. Each use of the power should be applicable to a single, named foundation trust and should automatically cease at the end of each financial year.

A paper on legislation tabled at the meeting said NHS England and NHS Improvement should be merged in full. The new body would be required to explain why the use of the capital limit power was necessary, describe steps taken to avoid its use and include the foundation trust’s response. The information should be published to ensure the process is transparent.

NHS England’s and NHS Improvement’s proposals to have greater flexibilities in the tariff  have been set out in the recommendations. These include the ability to set a blended tariff using a national formula, instead of a fixed national price.