Planning guidance to support service delivery and financial sustainability

Chief financial officer Julian Kelly (pictured) said there would be a focus on helping recapitalise the system. NHS England and NHS Improvement were hoping to address historical deficits through a debt for equity swap, but agreement on the details had yet to be reached.

‘The planning guidance is not yet in a position to set out the detail, but we are in ongoing conversations with the Department and the rest of government about the process of recapitalising and creating a financially sustainable platform for the whole of the NHS.’

However, he told the meeting that the planning guidance – due to be published shortly – would confirm that the national organisations will continue to provide in-year revenue support.

‘We are flagging some changes to the financial architecture. In particular, where systems and organisations agree financial trajectories with us, we will provide the income to cover all of any agreed deficits. That means that if organisations hit their plans they will be in financial balance.’

He said this would replace the current system where some of the shortfall is covered by interest-bearing loans. The need to pay off the capital and the interest had led trusts into further financial difficulties, he added.

Crucially, the financial support will be dependent not only on organisational performance, but also system financial performance – the receipt of 50% of the support will be dependent on achievement of trajectories at system level, Mr Kelly said.

Commissioners and providers will be encouraged and incentivised to work together to deliver financially and operationally sustainable plans. Financial support will be paid at the beginning of each quarter to help organisations manage their cash flow.

He added there would be a focus on ‘seeing through the delivery of the long-term plan goals that systems have signed up to as they develop their medium-term plans. This is now year two and we will continue to insist on the delivery of the mental health investment standard and seeing through investment in primary and community care.’

NHS Improvement chief operating officer Amanda Pritchard said the planning guidance marked a further shift to system working – a ‘system by default’ model – as well as a renewed focus on improving operational performance. The latter would be supported by increased bed and nursing capacity.

‘All the evidence suggests you cannot run efficiently if you are running much above 92% bed occupancy in hospitals. We are going to have to do something to recognise that pressure today and really focus on keeping additional beds in the system that are now open.’

The service must also concentrate on boosting community care, avoiding admissions and reducing lengths of stay – actions that she hoped will allow the NHS to find a sustainable way of delivering occupancy of 92% or less.

The national bodies also published the additional recurrent clinical commissioning group allocations for 2020/21 to 2023/24. These reflect the impact of the 2020/21 national tariff and includes changes to tariff inflation (for pay growth, clinical negligence costs and the GDP deflator) and movements in the tariff – primarily funding for genetic testing, top ups and complex knees. Some 74 CCGs are due to close or merge to form 18 new CCGs in April. This takes the total number of CCGs from 191 to 135.