Financial position ‘broadly on plan’ but risks still remain

Figures for month 6 show a year-to-date combined position of a £130m overspend against plan. At month 4, the year-to-date adverse variance against plan was £75m.

Halfway through the year, the overall forecast year-end position is a £69m deficit – NHS England and NHS Improvement have planned for a balanced position at year-end.

The figures were tabled in a financial performance report to the November NHS England and NHS Improvement joint board.

At month 4, around 25% (49) of clinical commissioning groups (CCGs) were showing adverse variances. At the time, NHS chief financial officer Julian Kelly commented that the commissioner financial position was causing more concern than providers.

However, it is anticipated this will improve. And in the latest report, Mr Kelly said it was expected that all but two clinical commissioning groups would breakeven by year-end.

Though CCGs had an aggregate overspend of £366m at month 6 – £152m more than planned – this was offset somewhat by underspends in direct commissioning and central programme and running costs, which brought the overall year-to-date overspend figure down to £59m.

The forecast year-end position for the whole commissioning sector is an overspend of £31m against a planned surplus of almost £282m, but this includes an adverse variance of £83m in technical and ring-fenced adjustments.

The report said this adverse variance reflected greater pressure than expected from the movement against provisions. If the established pattern of previous years is repeated, this pressure will reduce by the end of the financial year, it said.

Providers overspent on their planned £1bn year-to-date deficit by £70m after taking account of uncommitted funds from the provider sustainability fund, financial recovery fund and MRET (marginal rate emergency tariff).

According to the NHS bodies’ report, the provider sector ‘is forecasting to finish the year essentially on plan’ – predicting a year-end overspend of £38m against a planned deficit of just under £282m. At the end of 2018/19, the provider overspend was £571m.

Mr Kelly told the board meeting: ‘Year-to-date, the financial plan is holding. We have an adverse variance in provider and commissioner spend of £130m at the halfway point. In context, we have spent £60bn, so it’s a 0.2% variance.’

The forecast coming back from providers and commissioners is also broadly holding to plan.

He added: ‘There is clearly a significant amount of risk and we are working with a number of individual organisations and systems where we have got material risk to make sure
we are bringing them in on plan or as close to plan as we can.

‘This is not just so that we balance this year’s budget, but critically so that we head into next year and the medium-term position in a good state of health.’

Detailed figures show the acute sector once again incurring the bulk of the deficits, with a year-to-date variance of £89m over acutes’ planned £1bn deficit and a forecast £103m overspend against the year-end plan of £569m.

Mr Kelly pointed out that, at month 6, the NHS had spent £1.5bn in capital, £300m more than at the same point in 2018/19.

‘This means that trusts with their own cash resources can deliver as fast as they can the plans they have,’ he said.

‘We are managing to release more capital to trusts that don’t have their own cash resources to deal with some of the critical backlog issues, as well as progressing the transformation projects already agreed.’