Regulators push for headcount cuts in last ditch drive to curb deficits

The plan was revealed in a joint letter sent by Monitor and the NHS Trust Development Authority to all providers, to inform them of financial targets and indicative allocations from the £1.8bn “sustainability and transformation fund” for 2016-17.

The letter emphasised that plans to pull the sector back into the black next year were dependent on it delivering a deficit of no more than £1.8bn in the current financial year. It warned that “collective urgent action” was now required to contain this year’s deficit to that level.

The two regulators then asked all providers to consider a range of additional actions they could take to improve their 2015-16 positions, including imposing a ban on non-medical agency cover for sickness absences of less than three days; delaying capital investments with the support of Department of Health approved capital to revenue transfers; full compliance with the agency staffing cap; and managing the “carry forward of annual leave” to “the maximum extent allowed under NHS contracts”.

The letter adds: “In addition, we will be meeting a number of challenged providers this month to agree a set of actions, including headcount reduction, additional to the current plan, with the clear intention of improving the financial position of those individual providers.

“We cannot over emphasise that the 2016-17 spending review settlement that we have outlined above depends on every NHS organisation delivering the best possible financial outturn for 2015-16.”

The letter also sets out a number of accounting measures that trusts could use to improve their year-end positions, including the removal of “prudence” from bad debt provisions.

The letter was signed by TDA chief executive Bob Alexander and Monitor deputy chief executive Stephen Hay.