• NHS Improvement has doubled the incentive for trusts to agree tougher “control totals”
  • Regulator says this will help improve the financial position
  • But trust leaders have heavily criticised the move

A controversial incentive scheme for NHS trusts to improve their financial performance has been ramped up by regulators, HSJ has learned.

In a move which trust representatives have heavily criticised, NHS Improvement has doubled the incentive for trusts to agree tougher “control totals”, by offering £2 for every £1 of improvement.

Last year, NHSI matched any improvement with an equal payment from a pot of national sustainability funding.

Chris Hopson, chief executive of NHS Providers, said the increased incentive would further “widen the gulf” between trusts performing well and those needing the most support.

He added: “[While] we understand why NHSI is adopting this approach, it does not offer a long-term or viable solution to addressing the underlying problems causing the provider sector deficit.

“It also risks incentivising trusts to pursue short-term ‘fixes’ and would only benefit those providers which are in a strong enough position to meet already ambitious control totals.”

NHSI said the scheme was open to all trusts irrespective of their bottom line and would help improve the sector’s reported financial position. A spokesman added: “This scheme has already helped reduce our end of year planned forecast deficit from £519m to £439m.”

In one example, Surrey and Borders Partnership Foundation Trust is now expected to receive an additional £14m after agreeing to raise its control total by £7m. It plans to deliver this by completing a land sale that would boost its revenue position by £7m (see details below).

HSJ has previously highlighted other examples of already wealthy trusts receiving multimillion incentive payments after reporting non-recurrent boosts to their financial positions, and the distortive impact this has had on the sector.

The incentive payments come from the unallocated portion of the £2.4bn provider sustainability fund, which is expected to be worth about £1bn. In previous years, leftover funding has been distributed as “bonus” payments to trusts with the best financial performance, with a portion also reserved for general distribution last year.

Mr Hopson added: “Much of the funding allocated under this approach will sit in the cash balances of better performing trusts rather than being spent on more or better care, while providers who most need support will be forced to borrow more, to the detriment of their own financial position.”

He called for the long-term plan to offer a “realistic” approach to help trusts recover their finances.

At the mid year point of 2018-19, trusts reported a year to date deficit of £1.2bn and were forecasting that this would improve to £558m. However, performance in previous years suggests the outturn is likely to be worse than the mid year forecast.

Surrey and Borders Partnership FT has agreed to raise its control total by £7m, which it expects to deliver by selling land at the St Peter’s Hospital site. Runnymede Borough Council recently approved planning permission for the site, which will largely be used for housing.

SABP said profits from the sale could not be included in this year’s original financial plan because of uncertainty around the timing of any sale and the complexity of the planning process. However, it now expects to dispose of the land by the end of March 2019.

It is not clear how much the property is being sold for, but the trust’s expected “profit on disposal” has increased by £7m. Profit on disposal relates to the difference between the assets sale price and balance sheet valuation, and benefits the national revenue account as opposed to the capital account.

HSJ has previously revealed how the proportion of profit on disposal has been rising in recent years, which is effectively reducing the amount of funding available for capital investment.