NHS England this afternoon approved plans to use more than half of the extra £2bn that has been freed up for health service spending in 2015-16 to bring underfunded clinical commissioning groups closer to their “fair share” of allocations.

In total £1.1bn of the new money will go to CCG allocations next year. At a board meeting today, NHS England agreed to direct £1.058bn of that sum to underfunded CCGs, bringing them closer to their “target” shares of the NHS budget.

The national body also increased its own budget for specialised commissioning by £304m above the amount originally planned for the coming financial year. This gives specialised commissioning a recurrent budget of £14.6bn in 2015-16, a cash terms increase of 8.4 per cent on its baseline budget for the current year.

George Osborne

NHS England had to revist their commissioning budgets following George Osborne’s autumn statement

NHS England originally set commissioning budgets for 2015-16 in December last year. However, it had to revisit that plan at today’s board meeting, after chancellor George Osborne’s autumn statement confirmed that “£2bn of additional funding” would be made available “for the frontline NHS in England in 2015-16”.

The extra £2bn is in fact comprised of:

  • a £1bn increase in the baseline health budget;
  • £550m reallocated to commissioners from centrally held Department of Health funds;
  • £150m reallocated from NHS England central funds; and
  • £250m from fines paid by banks that will be invested in improving out of hospital services.

A paper that went to the NHS England board today explained that £350m of the £1.1bn going to CCGs would have to be used to cover winter pressures, as there would now be no “separate provision of seasonal resilience funding” in 2015-16. In the current year, extra money to deal with winter pressures was made available from centrally held DH contingency funds.

The paper said the new allocations for CCGs should be made on the principles that no CCG should get less in cash terms than was previously agreed, that everyone should get their fair share of the £350m winter pressures funding that had been moved into their baseline budgets, and that all the remaining money should be used to bring underfunded CCGs closer to their target allocations.

It has been clear since 2013 that there is a very high correlation between CCGs that are in deficit and those that are underfunded, according to NHS England’s allocations formula. However, tight finances meant that NHS England had little scope in December 2013 to move these CCGs closer to target without imposing real terms cuts on other areas.

The system agreed today for distributing the extra funding will ensure no CCG receives a cash terms increase of less than 1.94 per cent this year. This is the minimum necessary to ensure that every CCG receives real terms growth plus its share of winter pressures funding.

The remaining funding will be used for additional increases to below target CCGs. The paper said this would mean that only 17 of England’s 211 CCGs would still be significantly underfunded at the end of 2015-16. Under the originally planned allocations, that figure would have been 34 CCGs.

In total, £1.058bn will go to underfunded CCGs, and of that figure £645m will go to underfunded CCGs in what NHS England describes as “challenged health economies”, where both the commissioner and provider are forecasting deficits this year.

The allocations are due to be published on Friday.

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