Exclusive: Region ordered to hold back ‘risk reserve’ of almost £100m

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East of England’s regional board creating four-year risk reserve to mitigate risks of overspending
Expected to result in contingency fund of up to £93m

Providers and commissioners in the East of England will be required to hold back a financial “risk reserve” of almost £100m for the next four years, to combat the risk of overspending.

The regional directorate for NHS England and NHS Improvement wants to create the contingency fund from its £11bn allocation, in case of overspending against local financial plans.

It effectively means funding that might have been committed for patient services will instead be held back.

In a letter sent to leaders of 45 organisations in the region, seen by HSJ, regional director Ann Radmore said they would have to build in an “additional stretch” to their financial plans over the next four years. This equates to 0.5 per cent of allocations for commissioners, and 0.5 per cent of income for providers.

It is expected to ensure an annual reserve of £85m to £93m. She said the steps had to be taken as 21 organisations in the region are running deficits.

She added: “In line with best practice and considering the scale of the challenge we have within a number of systems and individual organisations, the East of England is planning to hold a contingency reserve for the next four years to be used to mitigate risk as it arises and to ensure the long term plan financial commitments can be met…

“The decision to commit the reserve will be determined regionally and will be discussed through the newly established financial oversight mechanisms and the decisions shared transparently with systems.”

The requirement echoes a national policy that was deployed by NHSE in recent years to ensure provider deficits could be offset. The national requirement has now been dropped.

HSJ has asked NHSE/I if other regions have been told to do the same, but has not had a reply.

In May, Ms Radmore asked five of the six health systems within the region to prop up Cambridge and Peterborough Sustainability and Transformation Partnership. The five systems agreed to chip in around £5m apiece, to be paid back within three years. At that time, the region was forecasting a £76m deficit for 2019-20.

The long-term plan made a national commitment for the provider sector overall to be in financial balance by 2020-21, and that all NHS organisations are in balance by 2023-24.