Trust admits it will miss financial plan by £20m

South Tees Hospitals Foundation Trust has now forecast a year-end underlying deficit of £28m, against its control total deficit of £7m.

The trust’s February board papers suggest income levels have been around £9m higher than expected, with only a small increase on pay costs.

Non-pay costs are expected to be £29m overspent, which includes a failure to deliver £22m of “system savings”. The trust described these as “greater synergies through closer working with the wider NHS system which were not fully realised”, but did not provide further detail.

In their November board papers, South Tees Clinical Commissioning Group and Hartlepool and Stockton-on-Tees CCG said they were planning to deliver total efficiency savings targets of £22m as part of their 2019-20 financial plans. It is not clear whether these expected savings relate directly to the system savings described by the trust.

A failure to meet the control total means the trust will miss out on around £8m of central funding, largely from the provider sustainability fund.

In an email to staff last year, the outgoing chief executive of the trust, Siobhan McArdle, said STHFT was financially unsustainable without a long-term financial plan that addressed both “the shortcomings of our PFI contract” and “the burden of long-term debt that has built up over many years”. The trust had total borrowings of around £230m at the end of 2018-19.

A trust spokeswoman cited the private finance initiative cost pressures and added: “The trust has delivered almost £10m in savings during 2019-20 through a number of measures, including smarter procurement and a better use of our buildings.”

Julian Kelly, chief financial officer for NHS England and NHS Improvement, revealed at a board meeting in January the aggregate financial position across commissioners and providers was around £400m for quarter three. Full performance figures have yet to be released.

NHSE/I were approached for comment regarding financial performance data for the third quarter.