Comment / Difficult decisions ahead

No doubt the Treasury was influenced by the quarter two positions reported by trusts and clinical commissioning groups. They don’t make for happy reading. We summarise the financial position of NHS organisations and set out finance directors’ views on the financial challenges facing the NHS in England in the latest HFMA NHS financial temperature check, published today.

NHS trusts reported a combined £1.15bn deficit for the first six months of 2017/18 (including £630m from the sustainability and transformation fund (STF)) and CCGs reported a £186m overspend against plan for the same period. The year-end forecast position is looking more positive, with the trust position being a forecast deficit of £623m (after the receipt of £1.8bn STF). According to NHS England figures, CCGs are currently forecasting an overspend at the year-end of £96m against plan.These figures were produced before the additional funds of £335m for winter pressures announced in the Budget were known about.

These year-end forecasts look ambitious. During the second half of 2016/17, many organisations were able to undertake legitimate one-off measures to improve their financial positions. The scope for the same approach to be taken during 2017/18 is much less. The scale of the challenge to turn around the reported mid-year position and deliver the year-end forecasts should not be underestimated.

Finance directors are working within a health and social care system that has less funding than most of them think is needed. Finance directors are most concerned about the ability of their organisation to deliver the agreed financial position and at the same time continue to provide high quality services to patients. Allied to this are concerns about their organisation’s ability to recruit sufficient clinical staff and to deliver planned savings programmes.

There is also concern about the likely impact of winter pressures on already very stretched clinical services and the service’s ability to respond to unforeseen events, such as a major cyber-attack.

Our survey shows that 79% of CCG chief finance officers and 83% of trust finance directors believe there is a medium or high risk of non-delivery of their 2017/18 financial plans. Unsurprisingly, the top risk for both CCGs (70%) and trusts (69%) is the slippage of savings programmes. The main areas of risk are agency staff costs, anticipated winter pressures, increased demand and delayed transfers of care. CCGs also cite key risks as prescribing costs and continuing healthcare.

The NHS is under significant financial strain. There is no doubt that the additional NHS funding announced in the autumn Budget is universally welcomed. There are some details that need to be clarified, for example whether the additional funds will be recurrent, which we will no doubt hear about shortly. However, the additional money will not be sufficient to resolve the financial pressures. Finance directors are calling for more openness about NHS resources and what is affordable. There is no doubt that difficult choices will need to be made about the use of NHS funds.