Each spring NHS Providers assesses the task facing trusts in the year ahead, drawing on the results of a major annual survey of members. This report therefore follows on from Tough Task in 2018 and Mission Impossible in 2017. It focuses on the deliverability of control totals, the efficiency challenge, and the likely impact on performance across the provider sector.
NHS funding
In June 2018, ministers announced a new and more generous five-year funding settlement for the NHS. An extra £5bn has been added to the NHS budget for 2019/20 above its previously-agreed level, meaning the NHS frontline budget will rise by 3.6% in real terms. The planned annual average increase across the full five year period is 3.4%.
The new funding settlement was, in part, a recognition that the NHS could not provide the level of service the public expect with the money available. It came with increased expectations of what the NHS will deliver, and on the condition that the service produced a long term plan setting out an improved service offer.
An extra £5bn has been added to the NHS budget for 2019/20 above its previously-agreed level, meaning the NHS frontline budget will rise by 3.6% in real terms.
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Part of this plan is a renewed expectation that the NHS becomes financially sustainable. The service is shaping up to finish 2018/19 with a deficit close to £1bn, once one-off factors are accounted for, and with around 100 trusts in the red – a position similar to a year earlier.
The NHS long term plan, which was published in January, set out a recovery timetable beginning with 2019/20. The aspiration is to halve the number of trusts in deficit in 2019/20, for the provider sector as a whole to be in financial balance by the end of 2020/21 and for every NHS organisation to be in the black by 2022/23.
This financial recovery is seen to be a key test of whether the sector is 'delivering' for the extra NHS investment. Current NHS financial performance is likely to be an important factor in decision making on the spending review later this year when important decisions on NHS capital and workforce funding and social care will be made
The aspiration is to halve the number of trusts in deficit in 2019/20, for the provider sector as a whole to be in financial balance by the end of 2020/21, and for every NHS organisation to be in the black by 2022/23.
2019/20 financial architecture
To enable a decisive shift towards financial recovery in 2019/20, national leaders have made a set of changes to the financial architecture of the NHS:
- Core funding for providers will be increased by removing centrally-held risk reserves, which in recent years have totalled around £1bn annually.
- The marginal rate emergency tariff (MRET), which reduces the rate paid to trusts if emergency admissions exceed a set threshold, will be abolished. Central funding will be available to trusts to fully cover the cost of each admission – but this can only be accessed if they agree their control totals. In 2018/19 trusts were on track to lose around £350m via MRET.
- The provider sustainability fund (PSF), which is given to trusts that agree their control totals and deliver on operational and financial performance, will be reduced from £2.45bn to £1.25bn.
- £1bn will be taken out of PSF and put into core funding for urgent and emergency care.
- Commissioning for quality and innovation (CQUIN) incentives will be reduced and simplified. The total available via CQUIN will be halved from 2.5% of contract values to 1.25% – meaning less money being held back from core funding.
- The mental health investment standard (MHiS) will be strengthened, with more checks on commissioners to ensure mental health budgets increase as a proportion of overall spend.
- A new FRF, worth £1bn, will be available to all trusts that agree to deficit control totals.
- The new rules also put trusts under more pressure to agree to their control totals, as providers will not be able to access MRET, PSF and FRF funding if they refuse.
This is designed to support the provider sector to make rapid progress in reducing provider deficits in 2019/20. National leaders believed that the new funding settlement, combined with these changes, would result in a significantly more realistic task for trusts in 2019/20. They expected the vast majority of providers would agree their control totals and ensure they were delivered with less in-year slippage compared to previous years.
National leaders believed that the new funding settlement, combined with these changes, would result in a significantly more realistic task for trusts in 2019/20.
Trust reaction to their proposed 2019/20 control totals is therefore the first indication of whether this approach is likely to be delivered. NHS Providers has, for the last three years, conducted a member survey of initial trust reaction to their proposed control totals, giving us a valuable snapshot of attitudes to control totals over a three year time series. The 2019/20 data was gathered from 99 trusts (43% of the provider sector) in February 2019. The process of agreeing control totals is, inevitably, a moving picture as trusts agree contracts with commissioners and also undertake a detailed dialogue with NHS Improvement as part of the annual planning process. This report therefore combines that February survey data with informal feedback on the progress that has been made since.
2019/20 performance
There is no clear trajectory for improving performance beyond a requirement to reduce 52 week waits for elective surgery and to hit cancer waiting time targets. A clinical review of performance standards is currently underway, with an interim report containing initial proposals published in March 2019.