NHSE ‘ignoring trusts’ pleas for fair funding’

CEOs at mental health and community trusts across the country said this year’s pay award has not been fully funded, forcing them to make extra savings to fill the gap. Toby Lewis, CEO of a Yorkshire mental health trust, called on NHS England to “follow through” on its pledge to fund the pay rise.

Several sources said they believed the total pressure could be up to £100m across the sector, based on extrapolating the costs at their trust. NHSE did not dispute the figure.

Funding for pay deals is distributed to trusts by a formula based on the proportion of income spent on staffing at the average trust. As this share is higher for community and mental health trusts, and they have a different mix of staff, they can lose out.

This has been a problem in previous years but is understood to be more significant this year given wider financial pressures.

It comes ahead of the government unveiling how it plans to shift care out of hospitals and focus on prevention.

One trust boss said: “It’s a real problem… mental health is meant to be a priority for government and NHSE.” They said they were looking to see what services they “need to reduce or not offer”.

Another said: “Difficult decisions are going to have to be made [including] considering having to stop some services.” They said their requests to NHSE to resolve the issue had “fallen on deaf ears” and that “one size fits all” doesn’t work. 

Call for funding formula review

In 2024-25, Agenda for Change staff were awarded a 5.5 per cent rise, consultants 6 per cent and junior doctors more than 20 per cent. Although the government and NHSE has said this is fully funded, in practice mental health, community and ambulance trusts have not received enough to cover all of the costs.

Rotherham, Doncaster and South Humber NHS Foundation Trust faces a shortfall of just over £2m as a result, around half of which is down to a similar shortfall for staff pay in public health and local authority-commissioned services.

A report from CEO Toby Lewis, dated November, said the trust had received “repeated national assurances that the 2024-25 pay award will be fully funded”.

It said: “Whilst in October staff were back-paid their due, and mid-point band 8-9 payments were made in November, no credible reconciliation of the assurances has yet been achieved.”

Mr Lewis told HSJ: “The trust’s board is very clear that the money is the money. This makes transparency critical and promises of full funding for pay awards volunteered by outgoing NHSE leaders need to be followed through, as we reset.”

He said mental health and community trusts faced a “double whammy” of higher wage bills as a proportion of their income and no ability to earn extra income through the payment-by-results model used for elective care. He added: “Local government commissioned public health-led contracts must take account of pay awards and not make working in health inequalities services uneconomic for staff or service providers.”

The NHS Confederation and the Healthcare Financial Management Association both called for the funding formula to be reviewed.

Emma Knowles, director of policy and communications at the HFMA, said: “Our analysis of NHS providers’ accounts shows that community, mental health and ambulance employee costs have equated to around 70 per cent of their operating income in each of the last three years, for acute trusts the proportion is around 65 per cent. They also have a higher proportion of staff covered by Agenda for Change pay scales.

“The impact of the funding for pay increases has been a concern for our members working in these sectors for some time now – it would be helpful if the current approach was reviewed, particularly in the light of the government’s three shifts.”

Layla McCay, director of policy at the NHS Confederation, said: “It is worrying to hear that mental health and community services may have to cut staff numbers because they have not been allocated sufficient funds to cover the uplift. Trusts should be allocated the amount of funding that reflects their costs rather than a one-size-fits-all formula.”

HSJ asked NHSE if there were any plans to review the method for pay funding. A spokeswoman highlighted that overall commissioner funding for mental health services was growing. She admitted that price uplifts, which are used to cover pay awards, were based on “the average NHS provider cost mix” rather than the cost structure of individual providers.

A Department of Health and Social Care spokesman said that commissioners have the flexibility to adjust contract values where there are pressures for individual providers. He said: “Funding decisions for individual services are a matter for ICBs, which can deviate from NHS funding formulas in recognition of individual pressures faced by trusts.”