10 quick reflections on the Q4 financial and performance figures

David Williams profile picture

31 May 2018

David Williams
Policy Advisor - Finances

NHS Improvement has published the 2017/18 year end financial and performance results for the trust sector. The big picture is that NHS trusts and foundation trusts have worked extremely hard to meet an unplanned for rise in demand for emergency care, and that the service is now at the limits of what it can reasonably be expected to deliver in terms savings without restricting patient access or reducing quality.


  1. The overall provider side deficit of £960m - £464m worse than planned – obscures some important details. Three quarters of the 212 trusts that agreed a control total either hit it or beat it – and less than ten trusts in the ambulance, mental health and community sectors combined finished the year in the red. However two thirds of acute trusts finished the year in deficit. Rising emergency activity was the main cause, as it squeezed down elective admissions which trusts rely on to generate surplus.

  2. Prioritising emergency and urgent care has left us with a waiting list just over 4 million, while the number of patients waiting over a year for treatment by March 2018 increased by 75% to over 2,600. And this is only for acute hospital services. Once you factor in long waiters in other services, particularly in children and adolescent mental health services, the number of patients waiting over a year would look even more troubling.

  3. There was no recovery in emergency performance in March this year. Usually, you would expect to see an improvement against the four-hour accident and emergency performance target as winter pressures recede, but that did not happen this year. Instead, performance for all types dropped from 85% in February to 84.6% in March – the lowest figure on record though we shouldn’t mistake that for a poor showing from trusts, which actually managed to admit, treat or discharge more emergency patients within four hours than last year. Emergency admissions were up 3.5% year on year, but there were fewer general and acute beds in the system than 2016/17 – meaning trusts dealt with people faster. NHS Improvement notes that overall NHS productivity continues to outstrip the wider economy.

  4. While the winter performance story will always focus on the long-established four-hour A&E target, new ambulance performance standards are also not being hit. Only one of the six new Category 1/1T/2/3/4 response targets was hit in March: that the 90th centile of Category 1 calls should be responded to in under 15 minutes.

  5. The sustainability and transformation fund continues to penalise trusts which are struggling with endemic pressures that they have little ability to influence. It continues to reward one-off in-year savings rather than incentivise a more strategic approach to savings and investment. Twenty-two trusts received not a penny of sustainability and transformation fund (STF) because they could not sign up to control totals that they felt could not be safely delivered. Good news: a higher proportion of STF went to mental health, community and ambulance trusts this year, and it is positive that the vast majority of it stayed within the provider sector. While it’s a good thing that there is now a "general distribution" for all trusts that signed up to their control totals, in recognition that so many would have missed out on their share this year due to financial and operational pressures, these sums only come through at the end of the year, which makes sensible planning difficult. Meanwhile £7.3m of the STF was diverted to fund the Getting it right first time programme – not quite what the fund was set up to do. Bottom line: the whole approach of the STF and its successor, the provider sustainability fund, is due a rethink.

  6. An extra £337m was announced in the November Budget to ease winter pressures, but it is not clear how much of that winter funding actually reached trusts. The Q4 report states that £288m went to trusts, with £50m held back by NHS England. The Q4 report is also very explicit that the money came too late: "This funding helped offset some of the costs of winter already incurred by providers. However, static bed supply and the marked increase in postponed elective activity suggests that this extra funding would have had a greater impact if it were received earlier in the year." There is no indication that there will be extra winter funding for this year. If there is, it must come earlier in the autumn if it is to be spent on anything better than propping up deficit positions.

  7. Trusts impressively matched last year’s cost improvement plan (CIP) performance, making savings worth 3.7% of turnover. But the rising reliance on one-off savings (26% of all CIPs in 2017-18, up from 19% four years previously) suggests there are not enough recurrent savings available to trusts for CIPs to be realistic. In 2017-18 trusts under-delivered on recurrent CIPs by £1bn, and fell short overall by £477m – roughly the variance on the planned deficit (see point 1).

  8. Agency spend fell more than £500m on 2016-17, slightly better than target. However bank spend was £976m more than planned. Overall, spend on temporary staff is around £5.6bn and has fallen slightly year on year – an impressive performance given the rate of emergency admissions and workforce supply shortages. NHS Improvement will want to continue to screw down on temporary staff costs with focus shifting to bank spending.

  9. The overall vacancy rate is around 100,000 nationally – or about 8% of the funded whole time equivalent establishment. That this knocks through into temporary staffing costs shows how short sighted the Home Office is being in refusing visas for clinical staff from overseas. While the draft workforce strategy rightly draws attention to the long-term staffing gaps that will open up of the next decade, we must remember that we are starting from far less than zero.

  10. The overall deficit of £960m is far from where anyone in the service wants to be but the reality is worse, and has been masked by those non recurrent CIPs, capital to revenue transfers, and other short term measures. Finance, capacity and workforce pressures will increase during 2018/19. This year, the government will reveal details of its long term spending plan for the NHS, but the Q4 figures show us a big part of any new money will be spent on fixing shortfalls that have built up in recent years.

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David Williams profile picture

David Williams
Policy Advisor - Finances

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