The government’s plan to see all NHS providers attain foundation trust status remains “at significant risk”, foundation trust regulator Monitor has warned.

The regulator is calling for a 20 per cent increase in its budget in 2012-13, to help it cope with a surge in FT applicants and increased strain on existing FTs, while implementing the changes required by government health reforms.

Monitor’s business plan for the new financial year shows it is negotiating with the Department of Health for a budget of £19.5m, up from £16.2m in 2011-12. The figure only covers the money it thinks it will need for its current regulatory responsibilities, and not the wider “sector regulator” role it takes on under the Health and Social Care Act.

The plan states that the DH’s drive for an all-FT sector should see an “order-of-magnitude” increase in applicants this year, and “potentially” an increase in merger applications from trusts unable to make it to FT status alone.

It anticipates that Monitor’s 40-strong “compliance” team will come under pressure from the need to respond to the Mid Staffordshire Foundation Trust public inquiry, and to cope with the consequences of the unprecedented financial strain on the NHS.

“As NHS funding becomes more constrained, there may well be an increasing number of complex regulatory issues and potentially more foundation trusts in significant breach [of their terms of authorisation],” it warns. “This number has already risen from nine to 17 in the past 12 months.”

Monitor is asking for a 15 per cent increase in its compliance budget, to £8.8m, a 24 per cent increase in its assessment budget, to £6.7m, and a 27 per cent increase in its regulatory policy development budget, to £2.8m. It is also asking for an extra £294,000 for corporate overheads – a 30 per cent increase – for extra accommodation “to address the organic expansion of our foundation trust regulatory activities”.

However, despite the anticipated increase in FT applicants, the plan warns that delivery of the DH’s “objective that all NHS trusts should achieve foundation trust status, or [become] part of one, remains at significant risk”.

At the end of December 2011, there were still 112 non-foundation trusts and it remained the DH’s “strong expectation” that all NHS trusts would achieve FT status by April 2014, according to the department’s latest quarterly report.

But the Monitor plan notes that in the past year just five applicants came forward. “The continuing slow pace of applicants in 2012-13 demonstrates the difficulty in delivering a pipeline of applicants of the right quality and quantity to meet our authorisation criteria,” it states.

The plan also warns that:

  • Finding the efficiencies needed to deliver the NHS’s £20bn savings target “will likely require service reconfiguration” for some FTs, and “some operating models of healthcare provision may need to be revised”. This in turn will require “the engagement of local commissioners, who may be distracted by reforms to the commissioning architecture”.
  • Given the extent of savings needed, some boards may struggle “to plan and deliver simultaneous improvements in both care quality and efficiency”. In addition, “not all governors fully understand their statutory responsibilities, have the ability to identify material issues or the confidence to take action”.
  • “Despite the government’s recommitment to a devolved healthcare system, operating pressures may hinder the achievement of this goal.” Some commissioners “may be unable to manage demand effectively and pay appropriately for activity, transferring financial risk to providers”. Pressures arising from using the fixed payment-by-results prices may lead more commissioners to seek “local flexibilities”.