North Cumbria finances remain ‘very fragile’ with £7m shortfall in savings plan

“To date, an annualised £3.0m of CIP has been recognised against an annual requirement of £15.2m,” its August finance report states.

The office managing the savings programme’s latest assessment forecasts that the full-year savings achieved from its existing plans will amount to just £8.2m, leaving “a further £7m to be identified and delivered in year”.

“The trust has agreed a financial plan to deliver a surplus of £1m at the end of March 2012 predicated on delivering the CIP target of £15.2m,” the report continues. “This does contain a significant element of risk based on the current CIP performance.

“The trust has received some strategic support funding from NHS North West which has helped to boost the liquidity position in the short term, although the cash position remains weak due to the CIP position.”

It adds that it is possible the trust will receive extra income this year from the Department of Health, as a result of the department’s investigation of 22 trusts with private finance initiative schemes.

The investigation, which includes North Cumbria’s Cumberland Infirmary, is “to establish if additional income is justified to these organisations based on the affordability of the PFI schemes under the national tariff payment mechanism”, the report explains. But it adds that the trust “cannot rely on a positive outcome of this investigation and must continue to pursue its strategy of reducing its overall cost base”.

Overall, North Cumbria recorded a £47,000 surplus to the end of August, against a planned surplus of £223,000 to that point in the financial year.

The report concludes: “The financial position has improved in August but remains very fragile overall with costs still exceeding the income generated. Whilst activity remains above the plan it is leading to higher than budgeted costs and the pace of the delivery of CIP needs to improve.

“The CIP target continues to represent a significant risk with individual workstreams needing to deliver against their plans to help ensure that the trust achieves its statutory financial duties.”