Planning for 2016/17 and beyond: from survival to sustainability

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Since the 2015 Spending Review last November, a flurry of letters, guidance and other documentation has been unleashed on NHS leaders. Key among these is the NHS planning guidance 2016/17–2020/21 and a series of letters sent to trust chief executives in mid-January, outlining new measures that aim to curb spending and ensure the provider sector breaks even by the end of next year.

Our latest briefing summarises some of the fundamental changes that this will bring, and offers a commentary on what it might mean for the NHS over the next five years.

As we reviewed the new material, two things really struck us: the first was the sheer enormity of the task facing the NHS and the speed at which it is expected to deliver; and second was that, set against the continuing squeeze on funding and increasing demand, it represents a watershed moment for the NHS and the way in which it is run. To some degree these changes have, so far, gone largely unremarked and unannounced, with a number of key developments included in an unpublished letter from Monitor and the NHS Trust Development Authority.

Some of the changes – for example, the introduction of multi-year clinical commissioning group funding allocations and the decision to move under-funded areas closer to their target allocation more quickly – are welcome. As is the shift, introduced in the planning guidance, towards working in place-based systems of care and the accompanying acknowledgement that leaders will need to collaborate closely if this approach is to be a success. The recognition that transformation requires additional funding is also welcome. Together these elements – if implemented well – offer the opportunity of securing strong foundations for achieving sustainability in the long term.

However, this year’s planning process also heralds a number of more deep-seated changes. The first of these is the demise of the Health and Social Care Act 2012. Key elements of the Act – notably the emphasis on competition and choice, and the principle of autonomy – that prompted such heated and controversial debate when initially proposed, have now seemingly been left behind. In their wake we see the re-assertion of central control, particularly over finances. This is demonstrated through the introduction of financial control totals for all providers in 2016/17, and the requirement that provider plans for financial support will need sign-off by Treasury and the Department of Health, as well as NHS England and NHS Improvement. These controls increasingly apply to the operational matters of providers too – with measures attempting to contain this year’s deficit extending to the management of annual leave carry-over, short-term sick leave cover for non-medical staff and ‘removing prudence’ from a number of balance sheet estimates.

These documents also signal that the ‘post-Francis era’ – during which quality has to some extent become synonymous with staffing levels – has had its moment; the central bodies have made it clear that finance and quality cannot trump one another, with success in the new world framed around delivering ‘the right quality outcomes within the resources available’. The planning guidance reinforces this message, stating that ‘Deficit reduction in providers will require a forensic examination of every pound spent… and embedding a culture of relentless cost containment’. It is clear that priorities have shifted and that leaders of NHS organisations can no longer regard failure to ensure safe staffing as more serious than failure to balance budgets.

Overall, this signifies a radical shift in some key building blocks of NHS policy, with the loss of Foundation Trusts’ autonomy perhaps the most prominent. In 2016/17, it will be ‘all hands on deck’ to ensure financial balance is restored and core standards are met – with the purse strings firmly in the hands of the centre. Transformation and longer-term sustainability will follow on from this, but are earmarked for another day. The focus for now is on ensuring that the NHS gets there as soon as it can.

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Mike Tremblay

Cassis Ltd
Comment date
11 February 2016
The King's Fund report and this post identify a significant retrograde step in the NHS as mandated by the Department of Health [DH]. This should not be surprising though. My research (for another government) showed that governments will do this as a response to financial pressures, operationalising an interpretation of market failure. Of course, this simply reinstates the conditions for government failure which justified past reforms in the first place. It builds on a dated belief that state control in some form is a more reliable safeguard than a freer approach. This will limit innovation and set budgets even more in stone. Given that the future will require more, not less organisational and clinical flexibility, the DH is running back to the past as contemplates the future.

There is a profound disconnect between what the PM Cameron has recently said about prisons with what passes for policy from the DH. One must wonder what freedoms to innovate prison governors need that should be denied those running hospitals for instance.

The policy logic looks desperate, while the implementation instruments not fit for purpose. Perhaps the lights are out?

Tom MacFarlane

Comment date
07 February 2016
No mention is made of the fact that individual hospitals have to pay PFI rents.
This very expensive means of building hospitals should be (a) avoided in future, and (b) outstanding debts should be transferred to the National Debt.

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