What NHS England isn’t telling you, and more indispensable weekly insight for commissioners, by Dave West

Newsflash - there’s still no money

This week’s important policy developments have been financial.

We’ve had noteworthy contributions to the funding debate from Jeremy Hunt, David Williams (the Department of Health finance supremo, not the HSJ new care models supremo), Simon Stevens and Alastair McLellan (in this case, yes, the HSJ editor).

Here’s a summary and some observations with commissioners in mind:

1. Jeremy Hunt admitted the government did not, in its November spending review plans running to 2020-21, “protect the entire health budget”. His decision to concede to reality, rather than repeating the standard insistence they have protected the NHS, may give some readers a little encouragement. 

2. The admission came in a Commons health committee session, which is well worth watching. In the same session, David Williams, DH director general for finance and the NHS, said he couldn’t yet say whether the Department of Health breached its overall revenue departmental expenditure limit (DEL) for 2015-16. Accounts are still being aggregated, presumably accompanied by a fair bit of nail biting. If the DEL is breached, things could seem substantially worse than they already do. The Treasury would be expected to force the DH to pay back the overspend in this financial year. How would this be covered? It might force a rewriting of budgets in year, further sapping confidence and potentially draining the meagre remaining transformation fund.

3. NHS England, in a document submitted alongside Simon Stevens’ appearance before the heath committee, set out details of how it estimated the efficiency savings required of the NHS between 2015-16 and 2020-21, and how it believes these can be achieved. The all-important figure, referred to in the submission and by Mr Stevens as “the so-called ‘£22bn efficiency requirement’”, was sprung on an unsuspecting health service in October 2014, 19 months ago, you might recall.

Perhaps a reading of the technical briefing will, at least, assuage those who have been anguishing over how the number was reached by confirming that it is essentially an informed guess.

For some, it might make the savings challenge feel more achievable, by breaking it down. It says £6.7bn can be saved through national interventions like continuing to cap pay; and that £1bn has already been found. Another £8.6bn is to be saved by maintaining the 2 per cent annual efficiency requirement on providers.

Taking the document at face value, around £4.3bn of the total lands most directly on commissioners’ doorstep, as it is attributed to “moderating the level of activity growth through care redesign, and interventions such as RightCare and Self Care”. (Albeit there is a further chunk of the savings that will come out of CCG running costs.) The activity growth savings presumably includes all efficiencies attached to vanguards, new models of care and other preventative interventions. Given the intermittent direction from above on for CCGs to up their planned activity levels, this raises the interesting question of when in the next five years we should expect demand growth to start being moderated.

On a worrying note, and as the Health Foundation has pointed out, the document also makes clear that going into 2016-17 the NHS is already behind on the savings trajectory. Meanwhile, our finance expert Crispin Dowler has explained why the substantial chunk of savings attached to capping pay may be very over-optimistic.

4. HSJ editor Alastair McLellan has written a leader article highlighting that work to deliver the Carter efficiency savings drive is worryingly off track, and calling for urgent action to correct this. Meanwhile, NHS Improvement chief executive Jim Mackey has warned that some trusts are not doing their bit to help drive down agency rates for clinical staff.

The overall impression is that - in contrast to the spin of recent months surrounding the spending review announcement, “sustainability and transformation fund”, and big spending promises for mental health and general practice – there is still no money, and no persuasive reason to think the NHS can balance its finances over the next five years.

This week’s: Sparks flying over reconfiguration

As national system leaders have been at pains to stress in the last few months, we are at the best point in the electoral cycle for attempting controversial service change. It’s difficult to chart whether a surge in reconfiguration - and associated noise - is beginning, but the past few days have seen a lot of sparks flying:

Dave West, senior bureau chief

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