Systems told to plan for full funding of pay deal

Earlier in the week health and social care secretary Steve Barclay repeated his promise that ‘there will be no impact to frontline services or quality of care’ as a result of the pay offer, currently being considered by staff. However, he said that ensuring the Department had sufficient money would include ‘additional funding and reprioritising existing budgets’ – raising concern about which other budgets could face cuts (see Barclay: front line services protected from pay deal costs).

Speaking to the NHS England board meeting on Thursday, chief financial officer Julian Kelly (pictured) said integrated care boards and systems faced stretching performance and efficiency targets and should plan on the basis that the costs of the pay deal will be covered.

‘The government and the Treasury have been clear that they are committed to providing new funding and that there will be no impact on frontline services and quality of care,’ he said. ‘So, while for the next few weeks we will be in discussion with the Department and the Treasury as to precisely how that is going to work, we are asking systems clearly to plan on the basis that the pay award will be fully funded on top of the allocations that we have given them.

‘We are just asking people to focus on the job, sort the plans – the pay will be appropriately funded,’ he added.

The latest draft of system plans for 2023/24 were due to be submitted by the end of the week. Mr Kelly said that ‘good steady progress’ was being made, but there was ‘still a lot of work’ to do with systems and providers to ensure the plans properly balanced money, performance and quality.

Reflecting on the first year of ICB operation, Mr Kelly said that the new boards had come into existence in a ‘really challenging context’ and the year had demonstrated the importance of having really good  integrated care boards, with the ability to see across all their providers, work out the right trade-offs, where the right capacity is, and where to make investment. ‘Where it is working well, we can see why we need them,’ he said.

Mr Kelly presented a finance paper showing that, with just a month of the current financial year to go, sixteen integrated care systems were forecasting to end the year in deficit compared to planned positions.

The paper showed the financial position at month 11, with an aggregate year-to-date overspend of £378m (0.3% of plan) across systems and NHS England budgets. The forecast position for the full year was for an underspend against plan of £125m on overall spending of £156bn.

Overall, systems are forecasting a combined overspend of £517m, with the majority of forecast deficits equating to less than 1% of total allocation. There are forecast underspends in other NHS England budgets including: specialised commissioning (£228m); other direct commissioning (£293m); central costs (£226m); and transformation and reserves (£270m). The underspend in central costs is due to the recruitment freeze as NHS England is downsized and as a result of increased expenditure controls.

At month 11, excluding the impact of leasing standard IFRS 16, providers had spent £4,532m of capital – 64% of the full year budget. This compares to 65% at the same stage in 2021/22. A further £100m had been spent across primary care. The current forecast is for full year expenditure to be £19m below the capital departmental expenditure limit allocation for the year. The paper said that NHS England was ‘engaged in active management across the capital budgets to ensure spend is maximised, but allocations are not exceeded by the year end’.