Agenda item

To provide a finance update for the NCL including the overall strategic direction of travel, 2023/24 figures for the NCL ICB and for NHS Trusts that provide services to NCL patients.

The report for this item was introduced by Gary Sired, Director of System Financial Planning at NCL ICB, Chris Garner, Assistant Director of Transformation and Community Commissioning at NCL ICB and Anthony Browne, Director of Finance for Strategic Commissioning at NCL ICB.

Referring to the financial position in the previous year, Gary Sired explained that there had been concerns about the risks in the 2022/23 financial plan for the Integrated Care System (ICS) as a whole, including the ten ICS providers. The plan was successfully delivered with a balanced budget, though partly through some non-recurrent technical benefits and, as these were one-off measures, the underlying challenges remained in developing the financial plan for 2023/24. This meant that additional actions were required for providers, such as the stretching of efficiency targets for example. There was currently some in-year adverse variance in the financial plan and the main cause for this was the ongoing industrial action which resulted in a net cost.

Gary Sired, Chris Garner and Anthony Browne then responded to questions from the Committee:

• In response to questions from Cllr Clarke and Cllr Milne about the net financial cost of the industrial action, Gary Sired explained that consultants were hired during these periods to ensure continuity of services and that the cost of doing so outweighed the savings from unpaid wages to staff resulting in significant adverse variance in the budget. In addition, there was an adverse impact on elective work which also had a negative financial impact. Finally, there was a negative knock-on effect to delivering planned efficiency savings.
• Cllr Clarke asked about efforts to stop the strikes and Cllr Chakraborty asked about the potential impact of permanent staff such as junior doctors and consultancy staff striking at the same time. Chris Caldwell, Chief Nursing Officer, said that there were significant ongoing lobbying efforts across the sector to the Government as this was having a significant impact on patients and staff. She added that the upcoming strike action by permanent/agency staff would lead to a period of activity over two weeks and that some surgery would be cancelled because of the risk of not being able to provide intensive support afterwards. There were also now significant restrictions on the use of additional resources to hire agency staff.
• Cllr Connor asked whether consideration had been given to the provision of additional resources outside of the planned budget, given the ongoing financial difficulties caused by the industrial action. Gary Sired explained that the Trusts were paid according to the activity carried out and that the targets had been reduced in April to take into account the impact of the industrial action and so this provided some financial relief. There would need to be further discussions about financial relief given the ongoing situation with the strikes.  
• Asked by Cllr Clarke and Cllr Cohen for further details about the expected 30% budget reduction for the NCL ICB, Anthony Browne explained that the aim of this was to reduce management costs and so the ICB was currently redesigning structures to achieve these savings. Partial savings (20%) was scheduled for the next financial year and the full amount (30%) by the following year.
• Cllr Cohen welcomed the additional investment in adult community services, as set out on page 54 of the agenda pack, and requested further details about the part that related to intermediate community-based bedded care for up to 6 weeks to avoid hospital admission or to support rehabilitation after discharge. Chris Garner confirmed that this was a priority for community services and that £260k had been invested into intermediate community based bedded care this year. There was also a discharge fund to support care beds across NCL - £1.6m for P1 (pathway 1 for hospital discharge) and £1.3m for integrated discharge teams.  A key objective was to reduce the need for hospital beds and modelling had estimated that the additional investment this year would avoid a total of 1,600 hospital days which was important both for people’s health and for the sustainability of the system. He added that the ICB was working closely with NCL local authorities to develop a standardised, optimised model for P2 (pathway 2 for hospital discharge). Another area of investment was the expansion of community nursing support, including therapists, to support people to stay well in their own homes.
• Asked by Cllr Revah about support after hospital discharge for people with disabilities who also have mental health conditions, Chris Garner said that a written response on this could be provided to the Committee. (ACTION) Cllr Revah suggested that future financial reports should specifically address the impact on people with disabilities as this was an area that could sometimes be overlooked. (ACTION)
• Asked by Cllr Revah about the relocation of services from Moorfields Eye Hospital, Anthony Browne commented that the costs would continue to be met by the Trust but that the ICB was in the process of reviewing the ophthalmology pathway to ensure that it was fit for purpose. Cllr Revah proposed that the Committee should monitor this issue by including it in the JHOSC work programme. (ACTION)
• With regards to the mental health investment outlined on page 53 of the agenda pack, Cllr Chakraborty asked what learning there had been from the CYP Home Treatment Team in Barnet and how any subsequent roll out to the other NCL boroughs would be financed. Chris Garner said that the scheme would not be rolled out across NCL in the current financial year but that there was a framework with agreed criteria to prioritise investment and so this would be used to assess potential future financing in this area. He added that the pilot had been successful and that the learning had included the need to ensure high occupancy rates in virtual ward services by working with acute clinicians. Cllr Connor requested that the Committee be kept updated on the conclusions reached from the pilot and the financing and timescales for a potential future roll out of this service. (ACTION) 
• Asked by Cllr Atolagbe about the additional recurrent funding for mental health services, as set out on page 53 of the agenda pack, Anthony Browne explained that the recent uplift for mental health services against the previous year had been around 7% for the NCL area, some of which was required to meet increased costs, with other specific areas of investment as set out in the report. Chris Garner added that a particular priority was to intervene early in order to prevent more acute problems from developing which could result in more complex care needs or expensive out-of-area placements.
• Cllr Atolagbe requested further clarification on the text on page 47 of the agenda pack which stated that “NHS organisations cannot carry forward expenditure reserves from one year to another” and the £89m surplus in the NCL ICS system in 2021/22. Gary Sired explained that NHS organisations cannot plan to have a deficit by using surpluses from previous years and that, while surpluses were not planned, there had been a particular issue in 2021/22 where not all of the money had been spent and so this stayed on the balance sheet. He acknowledged that there was an issue nationally with unused cash balances and that there was an ongoing debate about this.
• Cllr Connor noted that page 47 of the agenda pack also stated that “NCL ICB will inherit the cumulative NCL CCG historical deficit and will have an obligation to repay it unless the ICB and the system are in balance for the first two years” and asked how these deficits would be addressed, including that of the Royal Free NHS Trust which had been in deficit for some years. Gary Sired said that the historic deficit was just over £100m and that this had been successfully balanced in the first year although there were ongoing risks with the plan for the second year, including the impact of industrial action as previously discussed. In relation to the Royal Free, he noted that the ISC budget needed to be balanced as a whole system and so if one Trust was in deficit then other Trusts would need to be in surplus. It was therefore a priority to improve the Royal Free’s financial position and there was an ongoing, active piece of work to achieve this. He was not currently aware of any measures that would lead to a reduction in services provided by the Trust. Anthony Browne added that achieving balance was a system-wide objective and that the savings required across the NCL Trusts were roughly in the same ballpark but that the Royal Free may receive more scrutiny from the regulator due to their financial position. Cllr Connor recommended that future financial reports should specifically set out whether there would be a direct impact on services resulting from deficits within the system. (ACTION) Cllr Revah requested that future financial reports should also include more detail on the reasons for the highest deficits, such as that of the Royal Free NHS Trust. Chris Caldwell noted that Royal Free NHS Trust had previously spoken to the Committee directly about finance issues and Cllr Connor suggested that this could be added to the work programme for future consideration. (ACTION)
• Cllr Connor asked about potential risks relating to existing capital projects, given ongoing issues with interest rates and building costs. Gary Sired explained that there were two main streams for capital funding – national funding or the NCL capital funding limit of around £180m per year which was allocated to organisations at the start of the year. Due to the changing financial environment, there was now more likely to be slippage rather than overspend so efforts were made to support flexibility where possible, while some funding could be diverted to strategic capital needs such as digital. A deep dive on this would be carried out in month 6 to enable a forecast but they were currently expecting year end objectives to be met. Cllr Connor recommended that future financial reports should include details of risks and slippage/overspend associated with capital projects including any impact of revenue budgets (due to interest costs for example). (ACTION) Cllr Atolagbe and Cllr Connor also requested an update on the major St Pancras Hospital capital project. (ACTION)
• Asked by Cllr Cohen how the additional mental health funding would affect voluntary organisations in this sector which often found it difficult to obtain secure funding, particularly because a lot of funding tended to be allocated on a short-term basis. Anthony Browne acknowledged that the voluntary sector was a significant part of the mental health offer and that they had been engaging with voluntary sector partners on investment and sustainability issues. He added that the ICB was engaged with a piece of work on the core mental health offer and examining the network of funding to ensure that the best possible outcomes were being achieved. Cllr Connor noted that the Committee was due to hold a meeting to discuss the mental health core offer in March 2024 which would involve voluntary sector representatives. It was agreed that information about funding issues, including the sustainability of funding for voluntary sector organisations, should be provided for this meeting. (ACTION)
• Cllr Clarke expressed concerns about the amount of money spent by the Trusts on agency staff and requested that figures on this be provided in future financial updates to the Committee. (ACTION)

RESOLVED – That further information be provided to the Committee on:

• support after hospital discharge for people with disabilities who also have mental health conditions.
• conclusions for the pilot and timescales of the roll out for CYP Home Treatment Team project
• the St Pancras Hospital capital project.

RESOLVED – That the next finance update include details on:

• the impact on people with disabilities.
• whether there was a direct impact on services resulting from deficits within the system.
• the reasons for the highest deficits within the system.
• risks and slippage/overspend associated with capital projects including any impact of revenue budgets (due to interest costs for example).
• figures on the amount spent on agency workers.