The planning guidance and recent funding pledges turn the NHS’s task in 2016-17 from one that looked impossible into something that is just about deliverable, writes Chris Hopson

There was a sigh of relief from providers when they heard the good news about the NHS’s 2016-17 financial framework: the tariff contains a net 1.1 per cent uplift, not the usual “bloody stupid” (to quote Jim Mackey) 2 per cent net reduction.

We need to see the frontloaded 2016-17 funding for what it really is: a year’s breathing space

Plus, providers will have access to a £1.8bn “sustainibility fund” to enable a rapid, widespread, return to surplus. And sensible, pragmatic, decisions have been taken on issues like specialised commissioning pricing and tariff currencies to prioritise stability and enable a laser like focus on eliminating provider deficits.

This is the Hunt-Stevens-Mackey team delivering for the NHS. The health secretary and NHS England chief executive landing an above expectations 2016-17 spending review settlement, and the NHS Improvement chief executive using his real world experience and pragmatism to deliver a sensible 2016-17 task for providers and the wider service.

But before we run out the bunting, the 2016-17 task needs to be properly calibrated. Wherever you look, financial pressures abound for next year.

There’s the £1bn extra cost of National Insurance pension changes, which has, at least, been fully recognised in the tariff inflation uplift. Up to £750m of extra specialised commissioning costs coming via new NICE guidelines are in the pipeline. The need to eliminate the £2bn provider deficit we are likely to have run up by the end of 2015-16. The further £750m pressure this deficit will create, if any 2015-16 deficit over £1.8bn does have to come out of 2016-17’s funding settlement. And that’s before we consider the usual demand increases that show no sign of abating; and the rapidly worsening problems in social care that will significantly outpace the government’s backloaded extra funding plans.

So the extra £5.4bn for NHS England in 2016-17 - £3.8bn in real terms - will not go as far as it might seem. It turns the 2016-17 task from one that looked impossible into one that looks very challenging but just about deliverable.

Think local

Perhaps more importantly, we also need to see the frontloaded 2016-17 funding for what it really is: a year’s breathing space, acknowledging the challenges, to plan how to deliver unprecedented levels of efficiency savings and ensure every local health and care system is sustainable.

Providers and local systems will need honesty and realism from the NHS’s political leaders

Failure to consistently create and deliver either plan will mean we just lose any 2016-17 progress in later years when the frontloaded funding disappears. In other words, we need to not just fix the NHS roof very quickly while the sun is still shining from 2016-17, but remodel significant parts of the whole house.

Both plans look simpler and easier from the centre than from the frontline.

The planning guidance, expected to be released imminently, will set out the NHS system leadership’s assumptions on how £22bn of savings should be realised over the lifetime of the parliament. But it will be up to local systems, and mostly providers, to turn these into reality, at a point when all the evidence shows that the easier to realise savings opportunities have now been used up.

The guidance should also outline how the NHS system leadership wants local systems to move to multi-year, strategic, place based plans. But it will be local leaders who will have to identify and agree the often significant and far reaching changes needed to deliver long term sustainability in each system. Changes that we know many systems have been unable to agree or deliver so far.

New modes of behaviour

Providers and local systems will need an unprecedented level of space and support to create and deliver both sets of plans. NHS England and NHS Improvement will need to structure and resource themselves differently and behave very differently if they are to provide this.

Providers and local systems will also need honesty and realism from the NHS’s political leaders about how much extra the NHS can take on and when, given the budget constraints; how long such major transformation actually takes and the political support it needs; and acknowledgement that we cannot afford to continue the current growth trajectory in staff numbers.

So, while the 2016-17 planning guidance offers welcome news, on the back of a frontloaded spending review settlement, no one should underestimate the size and complexity of the task ahead. It can only be delivered by a step-change in how effectively local leaders work with each other and their national counterparts.

Chris Hopson is Chief Executive of NHS Providers