News / Cautious optimism over Q1 figures

NHS Improvement said that, though still at an early stage, there were encouraging signs that trusts and foundation trusts were getting to grips with their finances. This was the first quarter in more than three years where aggregate provider figures were ahead of the financial plan. The Q1 deficit was £5m lower than planned and the number of trusts reporting a year-to-date deficit fell from 190 in the first quarter of 2015/16 to 153. At the end of 2015/16 157 trusts reported a deficit.

Trusts spent almost £10m less on agency staff than planned and NHS Improvement said they were on course to cut £1bn from the overall agency staff bill. Overall, the provider sector is forecast to spend £2.5bn on agency workers this financial year.

However, not all the signs were positive and NHS Improvement voiced concerns about a number of areas, including the rise in demand, the financial position of a small number of trusts and the delivery of cost improvement plans.

In Q1 there was an additional 300,000 A&E attendances compared with the same period last year – a rise of 6.3%. The number of emergency patients that required admission also rose by more than 6%.

NHS Improvement said 214 trusts had accepted their control total, but 29 did not achieve their first quarter targets, which are required to access the STF. Across the provider sector there was a £45m shortfall in cost improvement plans and without further action the aggregate planned provider deficit would increase from £580m to £644m, it said. Measures announced over the summer to address pay bill growth, back office and pathology consolidation and the future of unsustainable services announced as part of the financial reset came too late to impact on the Q1 figures, but NHS Improvement expects these to help take the aggregate deficit to £250m by financial year-end.

It has also launched a series of measures to help trusts tackle variance to plan, including ensuring consistency of forecasting, which would improve under the new single oversight framework; engagement by regional finance teams to establish corrective actions; and exploring the potential for a small number of organisations to increase their potential surplus.

NHS Improvement chief executive Jim Mackey (pictured above) said this was a crucial year for the NHS in England. ‘The results have demonstrated that providers are up for the challenge and are starting to get a grip on their finances. It’s early days – and there is still much work to be done – but the figures demonstrate that providers are meeting some of the ambitious plans that trusts boards have signed up to and this is a promising start to the year.’ 

He added that the performance data was more disappointing. ‘While the majority of NHS trusts are meeting the extra demand from patients and still delivering a high quality service, a small group are letting the side down. We need to support them up their game so they provide the services patients rely on.’

King’s Fund director of policy Richard Murray said that while the investment and actions to address the deficit had worked in quarter one, it would be a mistake to assume the NHS financial pressures had eased.

‘Demand for services is rising rapidly, waiting times are continuing to worsen and NHS leaders have been charged with delivering significant changes to services. Extra investment and the hard work of staff mean that NHS organisations are still just about coping for the time being, but the service is reaching a critical point,’ he added.

‘The government must be honest with the public about what the NHS can achieve with the resources it has been given. It is not credible to argue that it can continue to meet rising demand for services, maintain standards of care and balance its books within its current budget.’

NHS Providers published a survey of 84 finance directors, which it said gave good reason to be cautious about the rest of the year. While almost half of those surveyed said their financial position was better than plan at Q1 and a third were on target, but it was worse than planned in the remaining fifth.

Around 40% were not confident of meeting their control totals, while a third were ‘unsure’. This was mostly due to not being able to reduce agency costs, lack of bed capacity, being unable to manage demand in A&E attendance and emergency admissions, plus the impact of social care cuts.

NHS Providers chief executive Chris Hopson (​left) said the Q1 financial position was good news, but this must be tempered by the results of its survey.

‘Nearly four in 10 finance directors are saying they will be unable to sustain this level of performance and expect their trust’s position to worsen over the rest of the year. They are not confident because of the sheer scale of the challenge they face but also because they do not want to miss their first quarter numbers and then lose access to the extra money,’ he said.

‘These findings show the strain NHS trusts are operating under. There is now a clear and widening gap between what the NHS is required to deliver and the funding available. This will only get worse as overall funding increases drop from next year. In reality, we have only just kept our heads above water because we have transferred the investment intended to fund long term transformation into reducing the deficit that the majority of NHS trusts face.’