Core ICB allocations to rise 3.6%

A report to yesterday’s NHS England and NHS Improvement joint board meeting outlined the 2022/23 operational planning guidance and system financial allocations. It said the 3.6% growth against an adjusted 2021/22 baseline would fund inflation and activity growth, but is net of the 1.1% efficiency requirement and deficit reductions. But it insisted that further savings would be needed as the service recovers from Covid-19 and seeks to reduce the direct costs associated with the pandemic, particularly infection control.

NHS chief executive Amanda Pritchard (pictured) highlighted some of the additional funding in the 2022/23 operational planning guidance – for instance, £2.3bn for elective recovery and £1.5bn in capital. But she added: ‘Despite all of this, it will be necessary to take steps both now and over the coming years to achieve the maximum possible productivity in the context of the continuing challenges posed by the pandemic. It’s no easy task.’

Peter Ridley, NHS England and NHS Improvement deputy chief financial officer, operational finance, said: ‘There is an expectation we will increase the delivery of efficiency. We will take out some of those elements of Covid costs, we will restore productivity levels, and will continue to recover elective performance.’

Mr Ridley said planning for 2022/23 is under way, with draft plans due by the middle of March and final plans at the end of April. Development of detailed, technical guidance was ongoing and would be published in due course.

He highlighted a phased reduction in Covid funding. ‘There is an expectation of lower levels of Covid demands, so there will be lower additional Covid costs, tapering over a number of years.’

He said this tapering of non-recurrent costs ‘distorts somewhat the comparison between years’, with a real-terms decrease in overall funding in 2022/23 (-1.9%), before growth of 1.4% in both 2023/24 and 2024/25.

The paper also reiterated some of the commitments in the planning guidance, including the maintenance of the mental health investment standard, and service development funding for mental health, primary care, cancer, and diagnostics. In specialised services, there is growth funding to cover activity, inflation, and the expected faster growth of expenditure on new drugs recommended by the National Institute for Health and Care Excellence.

Service development funding rises to almost £4.87bn in 2022/23 (£3.8bn in 2021/22), while the allocation for specialised services increases from £21bn in the current year to nearly £22.3bn in 2022/23.

Allocations to integrated care boards (ICBs) will be based on the fair share target allocation. They will include a system’s share of sustainability funding that was previously allocated separately at provider level, but was included in system funding as part of the Covid temporary financial regime.

A number of changes have been made to the funding distribution model following recommendations by the Advisory Committee on Resource Allocation. These include a more accurate formula and data in the model for general and acute hospital services; improvements in the health inequalities and unmet need adjustment; an adjustment for the unavoidable costs due to remoteness (which uses patient-level costs and other data); and a new adjustment to recognise the unavoidable costs of some private finance initiative contracts.

The paper added: ‘The actual 2022/23 funding allocations for ICBs will be set to move each system towards a fair share of the affordable NHS budget, set using the formula. A convergence adjustment will move systems closer to their fair share over time in a measured way. For 2022/23, the average convergence factor will be set at -0.7% with variation at system level between -0.94% and +0.25%.’