NHS England has warned of an “even more challenging” financial year than 2013-14 in an overview of the sector’s finances that revealed only one in four clinical commissioning groups have balanced plans.
Papers due to be seen by the body’s board tomorrow also pointed to “significant weaknesses” in its specialised commissioning budget. These were described as a risk to the organisation’s finances this year.
NHS England’s efforts to achieve financial balance for specialised services in 2014-15 are predicted to involve a “significant stretch” despite a £400m “drawdown” from its surpluses, the papers revealed.
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This drawdown will push up its budget for specialised services in 2014-15 to almost £14bn, an increase of more than 16 per cent on its budget at the beginning of 2013-14.
A board report by NHS England chief financial officer Paul Baumann said a further risk to its finances was the “very variable” financial strength of CCGs.
According to his report, the financial strength of CCGs’ end of year positions ranged from surpluses in excess of 8 per cent to deficits of over 5 per cent.
The report added that CCGs with agreed balanced plans had “for the most part” signed contracts with providers, but that many CCGs still had “considerable further work to do”.
Of the 393 provider contracts held by CCGs, just 168 have been signed for 2014-15 so far (see table, above). Activity levels and financial values had not been agreed in 107 cases.
Meanwhile, the papers reported that in 2013-14 19 CCGs finished the year in deficit, 10 more than had planned a negative position at the beginning of the financial year. Just four primary care trusts formally ended the year in deficit in 2011-12 and 2012-13 combined. PCTs often received financial support from other parts of the system.
Mr Baumann’s report warned that 2014-15 and the “years to come” would be “even more challenging” than the previous financial year.
Means of easing the financial position of 2013-14 would also not be available this year, it added.
Such “mitigations” included the significant vacancies at NHS England during the first few months of last year and the higher level of available surpluses from which it could drawdown.
Commissioners realised just 85 per cent of their planned £2bn quality, innovation, productivity and prevention savings. The largest shortfall was traced to its “transformational schemes” category.
NHS England finished the year with an overall surplus of £790m, mostly made up of a £712m underspend by CCGs. This is equivalent to just over 1 per cent of CCGs’ £64bn combined budgets.
While specialised commissioning was overspent by £376.9m, primary care – also part of NHS England’s direct commissioning budget – was underspent by £28.2m.
In his report to the board NHS England chief executive Simon Stevens admitted that overspends in specialised commissioning meant primary care and mental health had lost out on investment during 2013-14.
Health Foundation chief economist Anita Charlesworth, told HSJ that 2014-15 was going to be “incredibly difficult” for commissioners.
“I think they have relied on a lot of one-offs,” she added. “They have struggled to move forward the transformation agenda and… time is really running out to make these changes.”
Andy McKeon, senior policy fellow at the Nuffield Trust, said 2014-15 was likely to be a time of greater “financial stress” for the NHS provider sector than for commissioners overall.