Conclusions and recommendations
1. The overall financial surplus of £2.1
billion reported by NHS bodies in England in 2011-12 disguises
the fact that there are a significant minority of organisations
in financial difficulties. On top of that, the NHS faces significant
challenges in making £20 billion of efficiency savings at
the same time as the system is reformed under the Health and Social
Care Act 2012. Many crucial details of the new system have not
yet been determined. The recommendations below highlight the actions
the Department and Monitor need to take to improve the financial
resilience of the NHS.
2. THE DEPARTMENT
AND MONITOR
WERE UNABLE
TO EXPLAIN
HOW THEY
EXPECT PROPOSED
"RISK POOLS"
TO WORK.
Currently PCTs and SHAs support some trusts through providing
funding over and above amounts in contracts, but neither the amount
of additional funding nor the reasons for it are transparent.
In future, contributions to "risk pools" (money which
might be levied on all NHS bodies to support failing trusts or
commissioners) will add to the already difficult challenges facing
trusts. This top-slicing of the NHS budgets risks destabilising
otherwise healthy organisations, and creating inequities between
those contributing and those in receipt of support. The Department
and Monitor should clarify how "risk pools" will work
from April 2013, and how they will manage the risk of creating
an uneven playing field.
3. THE DEPARTMENT
HAS NOT
CLEARLY EXPLAINED
THE CIRCUMSTANCES
IN WHICH
IT WOULD
APPLY THE
FAILURE REGIME
TO HOSPITAL
TRUSTS. The fundamental objective
when putting a trust into special administration is to secure
provision of essential services, with insolvency the final resort.
So far, South London Healthcare is the only trust to have been
put into a special administration regime. There are a growing
number of NHS trusts and NHS foundation trusts in financial difficulty,
but it is not clear what will trigger them being placed in special
administration, or exactly how the process will work including
the role of Ministers. At present it seems as if the Department
is inventing rules and processes on the hoof rather than anticipating
problems and establishing risk protocols. The Department, Monitor
and the NHS Commissioning Board must set out clear principles
for intervention that explain to trusts and the public the circumstances
in which they would implement the special administration regime,
and what the consequences would be— including whether an
insolvent trust would be allowed to fail and how Ministerial intervention
will work.
4. THERE IS
A RISK
THAT, AS
COMMISSIONING BECOMES
MORE DECENTRALISED,
LOCAL COMMISSIONERS
WILL MAKE
SHORT TERM
AND NARROWLY
FOCUSED DECISIONS
RATHER THAN
TAKING A
STRATEGIC AND
JOINED UP
APPROACH. The Department could
not explain what will ensure Clinical Commissioning Groups (CCGs)
work together to achieve financial and service sustainability
in local health economies. The NHS Commissioning Board should
set out how they will manage strategic commissioning from April
2013, and how they will promote commissioning decisions which
meets patient needs across a local health economy.
5. LIABILITIES
UNDER PFI CONTRACTS
CREATE ADDITIONAL
PROBLEMS AND
CAUSE SOME
TRUSTS TO
REMAIN IN
DEFICIT. A NUMBER
OF TRUSTS
IN FINANCIAL
DIFFICULTY HAVE
PFI CONTRACTS WITH
FIXED ANNUAL
CHARGES THAT
ARE SO
HIGH THEY
CANNOT BE
FINANCIALLY VIABLE.
PFI payments are one of the first calls on an NHS trust's resources.
Yet individual trusts are in a weak position when seeking to renegotiate
such contracts because PFI contractors have the security of a
Deed of Safeguard underwritten by the Department that guarantees
payments. So trusts are locked into paying unaffordably high PFI
payments whilst facing a very weak position on renegotiating the
contracts. The Department ultimately underwrites the payments
but it is unclear how the Department will have the money to meet
this commitment under the arrangements when most NHS monies will
be passed to the commissioning bodies. The Department should report
back to the Committee on whether it has achieved 5% savings on
annual unitary charges for PFI projects as the Treasury Pilot
concluded were achievable, and whether there has been any adverse
impact on services.
6. SOME SERVICE
RECONFIGURATION WITHIN
THE NHS TO
REDUCE COSTS
IS INEVITABLE
BUT THE
RELEVANT COST
AND OUTCOME
DATA TO
INFORM PUBLIC
DEBATE IS
NOT AVAILABLE
EITHER TO
CCGS OR
MEMBERS OF
THE PUBLIC.
Public debate about access to services and potential service reconfiguration
needs to be informed by complete and easily accessible data. The
Department should work with the NHS Information Centre to ensure
that information on costs and outcomes is easy for members of
the public to access and understand.
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