Following the Money: Flickers in a pitch black tunnel

Throwing a carrot

Sticks might work for a while in getting people to do what you want, but eventually some carrots have to be offered.

Many trust leaders will feel it’s about time for the latter, and NHS Improvement will be desperate to put something on the table.

But the new regulator must not only persuade the Department of Health that carrots are in order, it must also convince the Treasury.

It appears that additional revenue is well and truly out of the question, so the regulator’s efforts have focused on capital funding.

NHS investment funding is being cut in real terms (and then raided for revenue) during this parliament, so has become scarce just as 44 health economies cobble together plans that require huge capital projects.

So what can NHSI offer? Well Jim Mackey revealed last month that one option being explored is the creation of an “NHSI bond” – which could be a mechanism for providers that want to sell assets to realise some of the capital before the sale goes through. Sales can often take years to complete, so the bond would help accelerate investment.

For some providers, especially those with valuable assets in the South East, this could provide a flicker of light in a pitch black tunnel.

But at the NHS Providers conference last week, Mr Mackey reminded us of the new world order in which the bond and other measures will have to fight to get support.

He said the NHS must up its game in making the case for investment, because nearly all of what’s been put forward by the STP process so far is “unaffordable and undeliverable”.

There also seemed to be a view that local leaders had put forward plans that simply cemented the primacy of hospital services, which would lumber the NHS with big overhead costs and prevent money being released for primary, community or mental healthcare.

While this may be true in some cases, there are likely to be others where major estates work is required in order for acute services to be consolidated, and revenue to be released for the other priorities.

Meanwhile, the need to convince the Treasury sounds rather urgent, with Mr Mackey saying the NHS has “months” to get its case together.

Strengthening the argument

New guidance has been issued to trusts requesting capital funds, which NHSI hopes will strengthen their business cases.

It also standardises the process by treating trusts and FTs in financial distress in the same way. This means trusts will have a higher delegated limit of £15m, up from £5m, while FTs in distress will be subject to greater control.

Hardball

The Treasury also seems to be playing hardball on revenue bailout support for trusts, including payments from the sustainability and transformation fund.

Trusts now face tighter controls when requesting their monthly cash bailouts from the government, in an apparent attempt to encourage cost reductions to be fully explored first.

Then the November (quarter two) STF payments, for those trusts that met their targets, were delayed by a week due to the Treasury led assurance process taking longer than expected.

The delay meant a number of providers had to ask for short term revenue support from the DH to pay staff and creditors, which seems a very roundabout way of doing things. The reason for the delays in the assurance process are not clear.

Misjudgement?

The increasingly clear and high-volume calls for additional NHS funding – repeated by NHS Providers last week – brought a pointed riposte from health secretary Jeremy Hunt.

Mr Hunt instead described the calls as a “misjudgement”, because they come just a year on from a funding settlement which “[NHS Providers] described as a good settlement”. Worse still, he said it risks vexing a government that will simply dig in its heels.

This may well be true, but what are trust leaders and NHS Providers to do?

Last year’s settlement might have delivered the best the NHS could hope for, and was therefore welcomed, but I’m not sure anyone in the service believed it was enough to deliver all that’s expected.

While the calls for additional funding might vex ministers, Treasury officials and other government departments, they may still represent the best way to keep the issue live in the public’s mind, and therefore keep the pressure on the government.