HFMA 2020: Kelly outlines plans for next year

by Seamus Ward

10 December 2020

The NHS will continue the move back towards ‘something that looks like normal’ over 2021/22 and 2022/23, building on the financial regime introduced in the second half of the current financial year, Julian Kelly told the HFMA annual conference.

The NHS England and NHS Improvement chief financial officer said that guidance would be published either just before, or just after Christmas, with an indication of what the ‘normal’ rate of spending should be.Julian Kelly portrait

‘I think we are going to continue a programme where we are moving to back to something that looks like normal. I suspect this will run for the next two years as I think the financial framework for 2021/22 will look at how we can continue to live with Covid, but also look to restore back to the financial agenda set as part of the long-term plan.’

The centre wanted to build on the system working of the last 18 months, with system envelopes for capital and greater system responsibility for living within revenue envelopes. ‘We want to continue to build on that as we set financial envelopes and restore in 2021/22.’

‘It’s likely we will set out an underlying budget, which says to the system – commissioners and providers – “Here’s the amount of money you need to think of as the run rate you need to get back to.”

‘As the vaccination programme takes hold, we will have another conversation with the Treasury about how much extra cost we have to put in to manage Covid.’

There would then be further adjustments to the run rate for 2022/23 as the NHS goes through the vaccination phase.

He added that the planning guidance for 2021/22 would be published in the new year. And he encouraged the NHS to build on the work of programmes such as Getting it Right First Time to reduce unwarranted variation and improve efficiency and performance.

Mr Kelly (pictured) said the NHS was spending around £1.25bn more each month than had been anticipated in the NHS mandate at the beginning of the year. He wanted to have a focus on costing whole pathways, and he asked whether the NHS could produce more timely costing data.

He said the NHS had a lot of costing data, but by the time it is processed it is 18 months’ old. ‘We ran an emergency cost collection in the second or third quarter as we were trying to get our heads around the impact of Covid. Can we not do some sort of quarterly cost collection? The data would be useful for local, system, regional, and national organisations, commissioners and providers to see where the productivity opportunities lie. It’s about getting a balance between good costing data and timeliness.’

Mr Kelly also added a word of thanks to finance staff ‘for all the work you are doing for the NHS, for the people of this country. You are keeping the money flowing with sensible financial discipline – it’s been extraordinary.’