Department meets key financial targets

The confirmation of a nearly £650 underspend against its revenue departmental expenditure limit (RDEL) takes into account spending against both non-ringfenced and ringfenced controls.

Typically NHS finances are reported compared to non-ringfenced RDEL. As revealed in June’s joint NHS England and NHS Improvement board meeting, NHS England reported an underspend of £916m for 2018/19. This counterbalanced providers’ combined deficit of £827m (or £826m after provision and other technical adjustments), giving an NHS underspend of nearly £90m.

The Department’s accounts reveal there was also a £55m overspend on arm’s length bodies’ (ALBs) and central Department budgets counting against the non-ringfenced RDEL limit. This gives an overall underspend of around £35m against the non-ringfenced RDEL limit.

The overall RDEL underspend of £646m takes into account further underspends of £34m by commissioners and £578m by ALBs against ringfenced elements of RDEL, which cover funding for depreciation costs. Ringfenced funding for depreciation cannot be used to fund other non-ringfenced spending.

There was also a small £42m underspend on the capital departmental expenditure limit (CDEL), which was £5.98bn for the year. Within this providers’ capital spending of £3.93bn was £377m above their target funding of £3.56bn – although this overspend was offset by underspends in the non-NHS sectors. Providers’ capital spending was also significantly up on the £3.06bn spent in 2017/18.

The accounts said the increased investment was driven by the transfer of assets into public ownership following the collapse of Carillion and NHS providers using increased available internally generated cash resources.

With providers initially planning further increased in capital spending in 2019/20, NHS England and NHS Improvement chief financial officer Julian Kelly (pictured) has this year called for reductions in capital spending programmes. Without these reductions in planned programmes, there are concerns that the Department could breach its key capital spending limit.

NHS England’s annual report and accounts also provided extra detail on the commissioning underspend. At the start of the year, NHS England had planned to deliver a £265m underspend to offset anticipated provider deficits. But as provider deficits grew, it found further savings and actually delivered a £651m underspend against this plan. Within this overall underspend of £916m, clinical commissioning groups overspent by £150m, with underspends of £310m and £756m on direct commissioning and central budgets.

NHS Improvement’s consolidated provider accounts provide extra detail on the financial performance of NHS trusts and foundation trusts including the report on the operation of the Provider Sustainability Fund. Access to the fund depended on accepting and achieving a financial control total, 92 of which were set below breakeven.

Some 149 providers met or exceeded their full year control total and received their full entitlement of PSF income. A further 43 providers received part of their initial PSF allocation and eight providers did not meet their control total at any point in the year, but benefited from a general distribution of the fund. Three providers received PSF funding where the integrated care system had exceed the system plan, although these providers did not accept an individual control total.