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The Kings Fund: What the planning guidance means for the NHS 2016/17 and Beyond

Updated on 09 February 2016, 795 views

Original Document     Kings Fund:What the planning guidance means for the NHS 2016/17 and beyond

I was unusually glad to read this briefing from the King’s Fund as the original planning guidance documents from the DH were impenetrable to the average reader. The KF has therefore done us all a great service by considering these publications “in the round…to form a picture of what it all might add up for the NHS in 2016/17 and beyond.” NHS policy in these papers “marks a decisive break from the past.” Indeed the KF says that this guidance “signals an end to the post-Francis era… [When] quality, often synonymous with staffing levels, was paramount…finance must be given much greater priority.” The Treasury Spending Review in the autumn of 2015 confirmed that NHS spending will increase by much less than expected when the NHS settlement was announced: 0.9% in 2016/17 but much less in future years (v.i.).  The reason is that the Spending Review redefined “NHS” spending as NHSE’s budget and not that of the whole DH as in every previous year. Smoke and mirrors indeed. At the same time local authority public health budgets will reduce by nearly 4% in every year after £200m cuts in 2015/16.  The introduction of the National Living Wage will add further pressures although local authorities will be able to increase council tax by up to 2% which might just offset this. At the same time the core elements of the H&SCA 2012 – the emphasis on competitive tendering and local bodies being autonomous – are gone. The DH and Treasury are reasserting control on finances and performance. The “frontloading” of the Spending Review funding means that if the NHS ever does progress from deficit reduction to transformation it will be doing so with real term increases of 0.2% and 0.1% in 2017/18 and 2019/20 respectively. The KF says “it is inconceivable that the NHS will be able to achieve both financial sustainability and large scale transformation within these…constraints.” The KF argues that NHSE and the DH should therefore be explicit about what are the most important priorities and that “difficult choices must be made.” Locality leaders will have to work together to make the best use of a common pool of shared resources, engaging staff at all levels to focus on value for patients and not just crude cost cutting. The danger is, of course, that managers have become adept at portraying instances of the latter as the former. “We are improving services by making them harder to get at” as they do not admit, but which is witnessed, for example, in reconfigurations in health visitor and district nursing services.

The KF is pleased that CCGs will now have multiyear funding allocations (the first three years being binding and the next two indicative) allowing some stability for planning.  When taken with the end of competitive tendering it is important to include some good news in these summaries.

Most of the frontloaded funding is to take the form of a Sustainability & Transformation fund. NHSE will not be able to allocate this money until both the Treasury and the DH agree, stablishing more overt central control. In 2016/17 this will amount to £2.1b with £1.8b of this being allocated for sustainability – paying off the deficits of acute emergency care providers being the priority – and only £339m for transformation of services. Approval for allocations from the sustainability fund will be contingent on making progress towards seven day working by 2020, access standards and agreeing to break even by the end of 2016/17. NHSE and NHS Improvement (Monitor and the TDA) will step in to “help secure remedies” where agreement cannot be reached.  Advice is being given to acute trusts about how they can make balance sheet adjustments in the last quarter such as carrying over annual leave, managing sick leave and “removing prudence” from dealings with bad debts and deferred income. 

In conclusion, the KF says that the scale of ambition is vast but timescales are tight. The focus on improving things tomorrow will be hard to maintain against the pressures on today’s budget. In the UK,  whether talking about power stations, aircraft carriers or health services, it can seems that government is incapable of being able to invest in new services to take over from the old before it is too late. Dual funding is honoured more in the breach but it should be remembered these are deliberate political decisions.


Dr Barry Moyse

Deputy Medical Director

Somerset LMC