2013 accountability hearing with Monitor - Health Committee Contents

2  Monitor's view on the NHS financial position

7. The Committee's recent report into Public Expenditure discusses the NHS financial position in detail. At this year's accountability hearing the Committee gave Monitor the opportunity to provide its views on the current financial situation facing the NHS, and in particular to discuss Monitor's recent publication Closing the NHS Funding Gap.[7] In its written evidence to the Public Expenditure inquiry Monitor said:

    On the basis of the track record of Foundation Trusts in recent years, the Annual Plan Review indicates the sector will continue to be resilient in the short term.However, we know that the number of foundation trusts in financial distress has increased, as has the number struggling to meet operational demands.The outlook on overall funding is uncertain and the spending review has confirmed that financial pressures will increase beyond 2015/16.... [8]

    ....Without transformational change, for example through integration of services and service redesign, efficiency opportunities are likely to become increasingly difficult to identify and deliver which may lead to increasing financial distress across the FT sector.[9]

8. Monitor reported that the percentage of acute NHS FTs subject to regulatory action grew from 13% in April 2011 to 24% at the end of October 2013.[10]

9. Dr Bennett told the Committee that one of the important messages of Closing the NHS Funding Gap was that the funding gap "can only be closed if there is a lot of innovation-a lot of new approaches-to the provision of health care, approaches that we have not seen today, or certainly have not seen in this country." He also stated that in his view, "it is going to be a big stretch to get there".[11]

10. When asked whether there was a single health economy that they could identify where good progress was being made, Dr Bennett replied that while "you see examples of good practice in many health economies", he was "not sure there is really good evidence of any health economy that has all the different pieces together in a coherent way".[12]

Funding Pressures in 2015-16

11. Dr Bennett highlighted "a particular problem with 2015-16",[13] when the Government plans that the Better Care Fund should transfer £2bn from traditional NHS providers to community based health and social care provision. He told the Committee that Monitor expects that this transfer will result in reduced funding for NHS acute care providers:

    In 2015-16, as you will know, there is an additional £2 billion taken from the NHS to be put into the integration transformation fund. That is expected mostly to come out of the acute sector, which means that the acute trusts in particular are going to face a very significant funding squeeze in 2015-16. So, although there is this challenge we were talking about earlier of, "How do you get yourself to a position where you can deal with a situation, say, in 2021-22?" just dealing with 2015-16, I think, is going to be a huge challenge particularly because of the need to get there very quickly. We are in intensive discussions now with NHS England, with the TDA and with the Department of Health to try and work out how that gap between underlying costs and funding can be closed in 2015-16.[14]

12. The Committee drew two conclusions from the evidence presented by Monitor:

a)  It remains concerned that the model of care provided by the health and care system is not changing quickly enough with the result that pressures continue to build, threatening the financial stability of individual providers, and therefore the quality of care provided;

b)  These pressures are likely to be particularly marked in the acute sector as plans are prepared and implemented to achieve the resource transfer required by the introduction of the Better Care Fund from April 2015.

7   Closing the NHS Funding Gap - how to get better value health care for patients, Monitor, October 2013 Back

8   Monitor (PEX 0018) para 2.2 Back

9   Monitor (PEX 0018) para 2.6 Back

10   Monitor (AMO 0010) para 3.20 Back

11   Q3 Back

12   Q4 Back

13   Q19 Back

14   Q20 Back

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Prepared 26 March 2014