NHS England confident of financial balance despite CCG deterioration at month 10

NHS England was confident the year-end underspend, forecast to be £706m at month 10, would be enough to offset deficits in other parts of the health service. The forecast underspend was £441m more than the planned £265m, which was set in-year to help offset deficits in the provider sector.

Overall, CCGs planned for a £48m underspend but were forecasting an aggregate overspend of almost £112m.

A report on the month 10 position tabled at the recent NHS England and NHS Improvement board meeting in common said the deteriorations against plan became apparent following a deep dive into CCG financial positions after month 9. In the month 10 report, 28 CCGs forecast material deteriorations against plan, totalling £248m, with this likely to rise slightly to £250m at year-end.

NHS England interim chief financial officer Matthew Style said up to 35 CCGs could overspend against plan by year end. This was largely due to overperformance against acute contract and under-delivery against QIPP targets, he told the meeting.

While CCGs were forecasting a year-end overspend of £112m, direct commissioning and NHS England running and central programme budgets were forecast to underspend by £267m and £597m, respectively. This is £151m and £495m more than planned. The underspend in central budgets is largely due to vacancies, GP rates rebates and counter fraud receipts not included in the operating plan.

The central underspend also includes the release of contingencies and reserves that are no longer required and £60m in quality premium that is not expected to be earned.

A £45m overspend against plan for technical and other adjustments – due to provision movements and depreciation – completes the picture, producing a forecast year-end underspend of £706m.

‘On a risk-adjusted basis we are confident the overall surplus on the commissioner side will be sufficient to balance the NHS group as a whole for the year 2018/19,’ Mr Style told the joint board meeting. ‘We are also focusing on understanding the underlying causes of those CCG deteriorations in-year in financial performance to ensure we can set sustainable plans in those CCGs and indeed in all commissioners and providers for the year ahead, which is the first year of the long-term plan period.

‘Given the decisions we have taken to rebase control totals on a stretching but achievable basis and not hold very material reserves for 2019/20, that work to understand those underlying causes and ensure they are addressed in 2019/20 plans is absolutely crucial.’