In view of the 2017-18 plan already coming under pressure, the upcoming 2018-19 planning guidance must set out a clear and realistic set of objectives, say Amber Jabbal and Phillipa Hentsch

Signing paper

The next big policy announcement on the horizon is the planning guidance for 2018-19. Already much later than usual, and with the next financial year starting to loom large, this document will be key to understanding what the NHS will be asked to deliver next financial year. 

The additional challenge is that the planning guidance is being finalised at a time when the 2017-18 plan is coming under real pressure and we still don’t know what year end will look like. Even before winter started, provider finances were starting to slip and accident and emergency performance was under pressure.

The guidance, therefore, needs to take account of the likely year end position, rather than the performance we had hoped to see at this point, or we will simply be left with a gap.

What you might get for £1.6bn?

The Budget in 2017 gave the NHS more than was expected, but less than needed for the next financial year. The Department of Health and Social Care will no doubt have made its budget case to the Treasury on the basis that performance in the NHS could be improved for the £1.6bn of additional revenue put in. But trusts tell us that, at this stage, holding the current position on finances and performance looks the best case scenario. 

The provider sector will, therefore, need a realistic set of priorities and target performance levels, recognising that the extra £1.6bn can only go so far and that, even with the extra £1.6bn, funding is growing nowhere near as fast as cost and demand. Trusts also need sensible assumptions about demand growth and efficiency savings. Too often in the past, that has not happened. 

At the same time, we must not lose any further ground when it comes to prioritising mental health and community services, if we are to meet the Five Year Forward View ambition of moving care into the community and the mental health standards set out in the mandate.

There are clearly difficult decisions to be made about how the extra £1.6bn funding will reach the frontline, in particular what conditions will be attached

This will mean that the planning guidance has to strike a balance between focussing on the main acute targets – A&E, ambulances, referral to treatment and cancer treatment – with the need for growth in community services and ensuring the mental health investment standard is met, with that funding actually reaching frontline services.

There are clearly difficult decisions to be made about how the extra £1.6bn funding will reach the frontline, in particular what conditions will be attached, how much will be needed to mop up underlying provider deficits, and what the implications are for control totals and sustainability and transformation funding. Trusts tell us that the control totals originally set for 2018-19 are too ambitious and need revisiting.

We shouldn’t kid ourselves that the STF and control totals are a sustainable way of managing provider sector finances, but they remain key for 2018-19. So, we will also need to review how much is available in the STF pot, recognising the continued financial pressures mean that £1.6bn is no longer enough. 

Filling in the unknowns 

One of the biggest uncertainties for next year is how any pay rise might be funded, given that the government has signalled the NHS pay cap will be lifted. A 2 per cent pay award would cost the NHS around £1bn so the government’s commitment to “fully fund” the main pay uplift is crucial.

Clarity will be needed about how additional funding will reach the sector, what the associated timings might be, and confirmation of whether it will just apply to agenda for change contracts, as the budget announcement implied, or doctors and dentists as well. If the latter is not funded, appropriate adjustments would need to be made to control totals.  

The relative financial balance and risk allocation between clinical commissiong groups and trusts remains of fundamental importance

The shift to accountable care and sutainability and transformation partnerships means we are moving away from the traditional provider/commissioner split to local systems with broader financial management.

However, the majority of trusts tell us that provider/commissioner financial flows, contract terms and negotiations remain key to their financial health. So, the relative financial balance and risk allocation between clinical commissiong groups and trusts remains of fundamental importance. 

Give trusts time to do their work too!

The planning guidance must set out a clear and realistic set of objectives. Taking the time to ensure it is accurate and achievable is the right thing to do.

However, it is important to recognise that the guidance is coming out very late in the day. Just as NHS England and NHS Improvement have taken time to get things right, they need to ensure providers and commissioners are given the right time to do their planning too.

A longer version of this blog is on the NHS Providers’ website.