• Mackey admits trust plans for 2016-17 will not bring the provider sector back into the black
  • Warning comes despite national planning guidance saying sector would be required to break even this year
  • Also warns that plans to balance NHS budget overall will be “tight” 
  • Admits that there are still dozens of trusts that have not agreed “control total” targets, despite February deadline

The regulator of the NHS provider sector has admitted it will not be brought into the black this year, in conflict with national requirements agreed six months ago.

Speaking exclusively to HSJ late last week, NHS Improvement chief executive Jim Mackey said the plans agreed by trusts for 2016-17 would not show the sector overall returning to breakeven, and would be “very stretching”. He also acknowledged there were still dozens of providers that had not agreed their “control total” financial targets for the year – more than three months after the February deadline for agreement.

And he warned that plans to get the NHS overall to breakeven in 2016-17 were going to be “tight”. He suggested there might be a need – after financial plans for the year had been tested – to “go further” in the search for savings to offset the risk of things going wrong.

Mr Mackey’s comments will be controversial because 2016-17 was supposed to be the NHS’s best financial year in the current parliament. NHS England has received £5.4bn cash terms growth this year, including a £1.8bn fund earmarked for reducing or eliminating acute trust deficits.

National planning guidance in December said the NHS trust and foundation sector would be required to return to aggregate financial balance in 2016-17 after application of the bailout fund.

But speaking to HSJ last Thursday, Mr Mackey said: “The provider number in aggregate won’t be nil from plans when they’re finally signed off, and control totals are signed off.”

He added: “It’s a hell of an improvement over where we were last year, but it’s still very stretching. So what I’m saying is, if I was a provider and I looked at that plan, it still looks a bit tight. So we probably need to go further to create a bit more headroom and cover the risk of things going wrong.”

Mr Mackey explained that that the £1.8bn fund for deficits this year was agreed on the assumption that the provider sector would exit 2015-16 with an underlying deficit of £1.8bn. In the event, providers reported a deficit of £2.45bn, but the underlying position – discounting one-off moves that only reduce the in-year deficit – was even worse. He would not be drawn on a number, but when asked if it was close to £3.2bn Mr Mackey said it was “around that sort of ballpark”.

He continued: “So to get from there to nil – with a more realistic efficiency ask [in the tariff], which everybody accepts, and £1.8bn – it was always going to be really hard.”

A work in progress

When asked if NHS England, the Department of Health and the Treasury had accepted the view that the provider sector was not going to get back in the black this year, he replied: “It’s a work in progress. Everyone would want it to be nil. I would want it to be nil, but I’d like it to be nil and a number I would believe.

“So I think we’re all in a place where we’re all trying to piece the thing together and assess the risk in the round. There’s been dozens of meetings over the last couple of weeks to try and do that. And that’ll continue - we haven’t finished it yet. Nobody wants to do a load of damage with the service by pushing too hard, nobody wants to make assumptions that aren’t going to be delivered, so at the end of this it all has to be reasonable and deliverable.”

Mr Mackey said that over the next couple of weeks national bodies needed to put together emergent plans for the provider sector, commissioners, and the wider DH group, to establish whether they were confident they could balance the overall departmental budget this year.

He said: “I think in aggregate overall we can put together a plan at the minute that, if you put everything together, we can balance, the NHS can balance this year. And what I’m saying is, we have to test over the next couple of weeks the extent to which it’s reasonable to start the year on that basis, or whether we need to go further.”

He added: “Overall, it’s going to be tight. And there isn’t any more money. As [NHS England chief executive] Simon [Stevens] said last week, there’s nobody going to give us any more money this year. Initial plans are, overall we can probably do it, but it probably needs to be turned into a definitely.”

Conscientious objectors

The NHS Improvement chief executive said the number of providers signed up to their control totals was a “moving feast”. The last time he had been given a fixed number, around two weeks previously, there were still around 100 that had not signed up, but this was “changing every day”. However, he accepted that late last week there were still dozens that had not agreed, and which NHS Improvement was trying to “get landed” in the near future.

Asked if he thought a significant number of those who had not agreed were not pulling their weight, he replied: “I think there’s a very small number that look like that at the minute.”

He explained that in many cases providers that had not yet agreed had complex things going on in their finances that did not fit easily in the model NHS Improvement used to calculate control totals. There were also a number of mental health and community providers, which did not benefit from the £1.8bn fund.

He added: “I think we’ll be left with less than five proper conscientious objectors. And on that I would say they don’t need to worry about me – they need to worry about how they look their colleagues in the face who are trying really hard next door.”

Exclusive: Mackey abandons plan for NHS providers to balance this year