Analysis: Overall CCG surplus plan masks regional disparity

Twenty-two CCGs have planned for deficits this year, compared to 18 at the start of 2014-15.

The quarter one financial plans, published by NHS England, again suggest the Midlands and East is the most troubled region financially, with a combined deficit plan of £39m (see map below).

The North is in the strongest position, with a surplus plan of £279m. CCGs in London are planning a joint surplus of £118m, while the South plans a small deficit of £0.2m.

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The plans provide further evidence of the huge financial challenge facing the NHS, and the risk that the Department of Health could breach its revenue spending limit this year.

In 2014-15 the combined CCG surpluses of £731m largely compensated for the £822bn deficit in the provider sector. But the DH only avoided breaching its overall revenue budget after securing a £250m bailout from the Treasury, as well as the transfer of £640m from capital budgets.

This year, providers have forecast a combined deficit of more than £2bn, which would be more than five times larger than the combined CCG surpluses. Monitor and the NHS Trust Development Authority have told providers to revise their plans, and will hope to reduce the sector’s overall deficit.

Anita Charlesworth, chief economist of the Health Foundation, told HSJ: “The quarter one figures confirm the scale of the financial challenge facing the NHS.

“While commissioners are forecasting an underspend on the budget, it is worrying that one in 10 CCGs is expecting to end the year in deficit and there are some CCGs with some very deep financial problems.

“Ten CCGs are expecting a deficit of over 10 per cent of their budget [and] in many cases these CCGs are served by providers which are also in deep financial difficulty.”

She said it was clear that commissioners, as well as providers, are struggling to make efficiency savings and it is “almost impossible” to see how another in-year injection of cash can be avoided, either through extra treasury funding or transfers from capital budgets.

Beneath the four regions used by NHS England, the sub-region with the most difficulty is the South West, where CCGs forecast a combined deficit of £77m. This is largely due to the troubled Northern, Eastern and Western Devon CCG, which has been placed in a “success regime” to drive improvement.

Other CCGs contributing to significant deficits within their sub-regions include Bedfordshire CCG in Central Midlands; Mid Essex CCG in the East; and South East Staffordshire and Seisdon Peninsula CCG in the North Midlands.

The sub-region with the healthiest position is Yorkshire and Humber, which has set a surplus plan of £117m.

CCGs’ financial plans include historic surpluses, so are largely non-recurrent. This is in contrast to the provider sector, where large recurrent deficits have built up within many trusts.

An NHS finance director in the East of England told HSJ that some of the variance and problems in particular regions are caused partly by “very low” levels of per capita funding, as well as variations in emergency activity.

A finance director at a northern acute trust said commissioners in the North have been “good at meeting national priorities and their bottom line”, while those in the Midlands have invested more in patient services.

He added: “Part of the position of the government has been to rebalance the way funds are distributed, and yes, there is concern [in the North] that money will be shifted south.”

NHS England’s financial plan for 2015-16 includes the “draw down” of £579m of historic surpluses to support revenue spending, of which £394m is from CCGs.

Specialised commissioning budgets had been expected to breakeven this year, but are now forecast to finish with a deficit of £70m.

NHS England declined to comment. The DH had not responded in time for publication.