In the context of wider public sector spending, the new funding settlement for the NHS is generous and welcome. More providers feel positive about their control totals than not, and the likelihood is that the new money will lead to a significant improvement in financial health for many trusts, and for the provider sector as a whole.
Providers are keen to ensure 2019/20 is a success and that the decisive shift towards financial recovery takes place. However, these survey results demonstrate that the year ahead will not be easy.
The provider sector’s financial position is being improved largely through the tariff. The intention is that increases to core funding, particularly for acute trusts where the bulk of the deficits lie, will support the vast majority of provider trusts to maintain a sustainable financial position. Those trusts which need further financial support will have access to the FRF. This will help the large number of providers that are financially viable, but have been tipped into deficit by the unrealistic expectations of the last few years, return to balance by 2022/23.
However, this depends on another year of CIPs of 3-4%, which recent years have taught us trusts can only deliver by relying one-off savings. For many trusts this will be extremely challenging, particularly since they have been told the proceeds of land sales, which have been a useful recent source of savings, can no longer count towards efficiency targets.
More providers feel positive about their control totals than not, and the likelihood is that the new money will lead to a significant improvement in financial health for many trusts, and for the provider sector as a whole.
The strategy is largely focused on restoring finances among acute trusts, and assumes there will be no deterioration in other sectors. However, the results of this survey demonstrate that there are some other groups of providers that will need attention: those with contracts for council-commissioned public health services, particularly standalone community trusts, and specialist trusts.
Due to rising activity across all sectors, the health system will remain under major strain. For a significant minority of providers, there is a risk that the numbers still do not add up. For some, the extra money available is simply not enough to put them into run rate surplus or to pay back bailout loans owed to the Department of Health and Social Care.
System control totals have the potential to change how local partners work together over the long term, but they remain in their infancy. In 2019/20, the last year of single-organisation control totals, there is less confidence in the achievability of system control totals than in trusts’ own targets.
Finances will remain tight in 2019/20. Funding constraints, which result in capacity and workforce pressures, are the underlying cause of the decline in operational performance in recent years. It is likely therefore that, in the months and years ahead, the NHS will continue to struggle with rising demand. Without dedicated funding and solid progress on addressing current workforce challenges, reversing the decline on key waiting time indicators will be slow. It is therefore vital to acknowledge the scale of the recovery task facing the NHS, and to set realistic expectations for trusts.