• STPs with deeper financial deficits more likely to receive higher funding growth
  • But there are significant outliers against this trend, including Lancashire and South Cumbria, and Milton Keynes, Bedfordshire and Luton
  • Explore the interactive chart

Health economies with deeper financial deficits are more likely to receive higher funding growth from new commissioning allocations, although there are several significant outliers against this trend.

Analysis by HSJ suggests there is a slight correlation between poor underlying financial performance in 2018-19 and higher than average funding growth.

Current financial performance is not considered when determining the clinical commissioning group allocations, which are instead driven by the characteristics of the local population. How far areas are below – or above – their determined “target” allocations is also used to determine growth.

But the analysis suggests that, on average, the new five-year allocations offer slightly more help to areas with deeper deficits. This may mean that previous allocations were among the drivers of poor financial performance.

The 21 sustainability and transformation partnerships with a net deficit across providers and commissioners greater than 4.7 per cent of income are due to receive average cash growth of 17 per cent by 2023-24. The 20 STPs with a smaller deficit than this (including one in surplus) are set to receive average growth of 16.5 per cent.

However, there are a number of STPs which significantly buck that trend, including the financially troubled Lancashire and South Cumbria, Cheshire and Merseyside, and Sussex and East Surrey, which are receiving relatively low growth (see interactive chart below).

Meanwhile, some areas, including the Black Country, Milton Keynes, Bedfordshire and Luton, are receiving higher than average growth while also enjoying a relatively healthy current financial position.

Current financial health vs future funding growth

(Hover over points to show STP)

When looking at the financial positions, HSJ used the mid-year forecasts for 2018-19, and excluded all provider and commissioner “sustainability funding”, which is non-recurrent and not available to organisations which reject or miss their control totals. The trend in previous years suggests some of these forecasts will worsen by year end.

The analysis used CCGs’ “core allocations”, so excluded budget growth for specialised commissioning and primary care.

An NHS England spokesman said the allocations are “based on the longstanding principle that the allocation of resources supports equal opportunity of access for equal need and contributes to reductions in avoidable health inequalities”.

The NHS long-term plan has also introduced a new £1bn “financial recovery fund” which sits outside the allocations and will be available to providers in deficit (whose improved performance will feed into the STP’s financial position).

As a result of the new measures, including the FRF, national leaders expect there to be no NHS trusts reporting a deficit by 2023-24.

The fund will be used to maintain “essential services” and will only be allocated where agreement has been reached with regulators over financial recovery plans. These plans must deliver at least 0.5 per cent extra efficiency savings on top of the sector’s 1.1 per cent minimum requirement.