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Risky business

“Urgent steps” have been taken to hold back funding intended for clinical commissioning groups, to help the Department of Health deliver financial balance this year.

In a letter seen by HSJ, NHS England said it has not been able to create a large enough risk reserve to offset potential overspends in 2017-18, so will hold back a further £120m that would normally have been paid to CCGs.

It said the intention is to release the funds later this year, or in subsequent years, depending on the overall position of the sector and the performance of individual CCGs.

The £120m relates to reductions in the nationally set prices commissioners pay for generic drugs, which NHS England said would normally accrue to CCGs as a “windfall benefit”.

The letter, from chief financial officer Paul Baumann, said: “We fully recognise the challenges CCGs are facing in 2017-18, and we want to assure you that the decision to utilise a windfall benefit which would have made these challenges easier to manage has not been taken lightly.

“However, ignoring the need to secure the required commissioner contribution to the system risk reserve in a year when this may well again prove vital is simply not an option.”

A risk reserve was adopted by NHS England last year, when an £800m fund was created by withholding 1 per cent of CCG budgets, which helped the DH report a small underspend despite significant overspending by local providers and commissioners.

Meanwhile, NHS England and CCGs underspent on their primary care budgets by almost £200m in 2016-17, which helped offset the £791m deficit in the provider sector, new figures reveal.

Accounts published by NHS England show an underspend of £190.6m for care the primary care and secondary dental care budget last financial year.

The news follows HSJ reporting that spending on NHS trusts grew faster than on general practice in 2016-17. The accounts covering NHS England and CCGs said spending on general practice grew by 2 per cent over the last financial year, which is the largest cash terms increase in several years, but in real terms was almost flat.