A lot more ICSs will hit financial targets this year, says NHSE chief

Speaking to HSJ, Julian Kelly defended the results of this year’s planning round and said he had “more confidence in the aggregate plan we’ve got to than probably even at the start of last year”.

The finance boss also said efficiency levels could not be increased further – including if the government requires the NHS to meet extra pay costs – without damaging patient care, and that he was not holding back cash in case integrated care systems overspent again this year.

It comes after a protracted budget-setting process that saw one in three ICSs – combining their commissioning bodies and provider trusts –say they were unable to break even, instead submitting deficit plans against the instructions of NHS England. The 14 ICSs add to a combined deficit of £650m for 2023-24.

The number sounding the alarm on finances is far higher than the equivalent stage last year, when just five systems failed to set breakeven plans and warned of a £100m total deficit. This rose more than threefold to 16 ICSs, and a £500m deficit, by the end of 2022-23.

This year’s planning round saw an initial deficit of £3bn rejected by NHSE and whittled down over another month of savings, prompting complaints from some that providers were being pressured to push savings plans to unrealistic levels.

NHS providers and integrated care boards are facing an average efficiency rate of nearly 6 per cent in the current year, well above levels demanded in the years running up to the pandemic.

Mr Kelly suggested savings could not be increased further without affecting patients, warning the costs of any pay deal had to be met by the government.

He said: “We cannot ask systems [and] providers to do any more than we have already asked them to do, without it hitting performance and therefore patient care in some way.

“The government has been really clear, in relation to the pay discussions, that they won’t hit frontline services, they won’t hit patient care. And I don’t think you can ask people to do any more than we’re already asking them to do without that being true.”

He admitted plans would be very tough to deliver but said he was “not starting the year more concerned than I was last year” as there was more certainty over operating conditions and inflation was beginning to fall.

Asked whether he expected more ICSs to hit financial plans, he said: “My answer to that is yes… I would expect more ICSs, definitely, to meet their plans this year, because we’ve done a lot to work out where it’s going to take a bit of time to recover back to living within what would be the completely fair shares allocation… I absolutely expect a lot more ICSs to hit their plans.”

Mr Kelly insisted he was not holding back a central cash reserve to meet any further overspends and said further increases in the deficit that emerged would be managed during the year.

“I’ve agreed plans that I think are deliverable whilst… maintain[ing] the investment in cancer, mental health, technology, maternity, so I’m not holding specific risk provision,” he said.

“Look, you’re always having to forecast, there are some things which are not fixed, right… But we’ll do what we always do, which is you then work out how you manage it. I am not planning now, I’m not aiming off, for people not delivering on plan.”