News / Baumann: targets met but finances still under pressure

‘We have reached a position where we have hit our financial targets, but a sense of the challenges going forward is visible to anyone
looking a little under the surface,’ Mr Baumann told the NHS England May board meeting.

He said that the 0.3% underspend in 2014/15 was ‘a response to a request made to us to defer spending that is discretionary so our overall contribution to the financial position of the health sector is as positive as possible’.

The 2014/15 underspend included a £151m aggregate surplus in clinical commissioning groups – 19 CCGs ended the year with a cumulative deficit. There was a further £151m in NHS England running and programme costs and a £16m underspend in the direct commissioning budget. Technical adjustments resulted in the £282m surplus.

However, Mr Baumann said it was important to consider the context of the underspend, including the fact that the sector benefited from a drawdown of £400m from accumulated surpluses in 2014/15. This funding was targeted at specialised services. The CCG year-end position, for example, also benefited from significant one-off items, without which they would have reported a small overspend.

‘The sector benefited from a number of factors that are unlikely to recur in the quantum they did in 2014/15,’ Mr Baumann said. These included £156m of the estimated 2014/15 legacy continuing healthcare liability moving to future years. Also, quality premium payments were £67m lower than expected and NHS England was able to make programme and running costs savings in anticipation of reductions required in 2015/16.

Financial grip on specialised commissioning had been increased. While direct commissioning as a whole reported a small underspend, specialised commissioning overspent by £214m – significantly less than 2013/14, he said. The cancer drugs fund accounted for a large proportion of the overspend (£136m), though the report points out that the fund has subsequently been scaled back.

Looking forward to 2015/16, Mr Baumann said £179m of the £282m underspend would be added to the previously planned £400m drawdown in 2015/16 to help pay for deferred spending and other challenges. Funding will be further boosted by £150m to help CCGs fund the enhanced tariff option.

He was confident most CCG commissioning plans would be signed off, with overall elective growth of just under 3% and non-elective of just over 2%. The risk around the plans included £160m of mitigation yet to be identified.

Mr Baumann also highlighted financial strains in the acute sector, which he said fell mostly on small and medium-sized providers. Earlier in the month, figures from Monitor and the NHS Trust Development Authority showed a combined provider deficit of £822m in 2014/15.

HFMA policy director Paul Briddock said provider financial pressures continued to mount but extra funding promised by the government would help. ‘The real challenge will be how to reform and change the way the NHS delivers services and to approach the future by shaking up the way we’ve always worked in the past.’