Agenda item

To provide a finance update for the NCL including the overall strategic direction of travel, 2024/25 figures for the NCL ICB and for NHS Trusts that provide services to NCL patients.

Report to follow.

The Director of Finance Strategy and Planning introduced the report on the system financial position.  He outlined that the ICB NCL System were the system finances of nine providers and the ICB. This report covered the financial positions of all these organisations amalgamated. He outlined the outcomes of the Outturn in 23/24 . He stated that the plans had been achieved despite the high level of cross organisational efficiencies that was required to balance the books and also industrial action that had occurred twice that year. Funding to cover the industrial action had been received and he also stated that there had been a surplus. UCLH had received some late payments which had affected the budget – however this has also benefited this year’s status as Capital Allocation had been made ‘pound for pound’ plus an additional £25m in Capital Funding in 2024/5.

He explained that the ICB had inherited a historic £100 million deficit – from all the organisations that made up the ICS. However, an agreement had been made, that if balanced books were achieved in the first two financial years of the new amalgamated organisation, then the historic debt would be written off.  This had been achieved.

In response to questions as to the way the hospital finances were viewed together within the ICS Financial Systems, and the nature of incentives for individual hospitals running a high deficit to go back to a more positive balance. It was stated that there were no penalties for hospitals in deficit - all hospitals were treated the same. Work was being carried out to improve the situation of those in a worse position. It was also pointed out that any hospital in deficit would always be under greater scrutiny.

The Director of Finance Strategy and Planning also stated that funding had been successful to cover the costs of industrial action over year. The Capital Programme was then discussed. In response to queries, the Finance Director emphasised that put simply -  £180 million in Capital Funding was allocated per year however it could be rolled over into the next year, as long as allocation was carried out within that year. These projects would still be subject to change and slippage – and inflation and price rises. The Chief Strategy and Population Health Officer also clarified that in addition to updated equipment (such as MRI scanners), the Capital Fund would also fund New Builds and Business As Usual Maintenance. These projects could be carried over into the next year but would also have to be allocated in this financial year.  He emphasised that this year there had been concerns that spending plans would not cover the Capital Fund, however the organisation had received three further streams of funding, and this had helped the Trust achieve its goals. In addition, the team had put aside £14m as a contingency and audited any risk issues. 

Clarification was sought by the Chair as to whether another surplus should be sought next year in order to receive extra funding that the surplus would unlock. The Finance Director affirmed that it would be sought but could not be guaranteed at this stage. Reconfirmation would be sought from all the Trusts in regard to efficiencies to manage the system position. In addition, in context with other ICBs in the UK the trust was performing well financially.

The medium-term financial forecast was then discussed. It was outlined that this would cover four years. The expectation was that the allocation for the trusts would occur as usual next year however the year after the allocation would for the next three years. The Director stated that a number of assumptions had been made – such as a no increases in funding over the next few years. However, he outlined, there were assumptions for which it was hard to make a prediction over – such as inflation and supplier price rises. He stated that for management this was a useful exercise as conceptually finances could be also balanced against productivity and corporate aims.

The Committee sought clarification as to why essential council services had suffered due to the adverse economic climate, however there seemed to be little or no effect on the NCL ICB budget. Furthermore, it was questioned as to whether the move to patients being cared for in their own homes was one of the reasons why. In this context reassurance was asked for to ensure that care was not being placed onto unpaid family carers and councils in order to balance the NHS books.

The Chief Strategy and Population Health Officer responded that budgets were activity-related and therefore hard to forecast. In order to help plan for demand trends in population were analysed. It had shown there was an increase in ‘unplanned for’, non-elective care. Furthermore, patients were staying for longer in hospital as needs were more complex.  She also stated that there was a huge drive for elective care in the NHS – and where there were delays in waiting times - interventions had occurred and additional capacity had been put on. She also explained that mental health was another crucial pressure area for the NHS. They were observing that key societal pressures such as  the cost of living and economic crises. These pressures had an affect on adults and children alike in terms of increases in depression, stress and anxiety and more demand for children and adult’s mental health services. She also stated that interventions could be used however this would mean that the NHS would have to spend more money that would otherwise be allocated for  more elective, secondary care.

The Chief People and Population Health Officer then drew the Committee’s attention to The NHS Better Care fund for local organisations and prevention/ intervention projects. There were two allocations of up to £13m and an additional £7m for projects. This she said recognised that interventions were a vital part of keeping A&E pressures and length of stay to a minimum. The Director for Finance for Strategic Commissioning  stated that they had recognised an urgent need to invest in Community  and multidisciplinary care in order to address the future pressures . He stated that Virtual Wards were also an important part of addressing the management of care in a sustainable way. He pointed out that there had been incremental investment from 2021. This had meant that the organisation was slightly ahead of the rest of London. This has already shown some results in the form of a positive  impact on the key performance indicators.

Another question was asked on the total cost of the industrial action-it was responded to that £4.5 m this year was covered by funding. Last year direct costs were also  funded  in total £80m.

The Chair pointed out that funding issues in hospitals had a direct impact on the delivery of prevention services – no matter how much was being put in. She used the example of the Wood Green Health Hub. She asked further whether there were any oversight on the opportunities for a joined up approach to deliver prevention and health services at the ICB level,  or whether it was still a case of individual budgets in each hospital in the trust being paramount. The Director of Finance for Strategic Commissioning responded that the proposed Wood Green Hub had been predicted to be a huge cost pressure. It was not just the Whittington Hospital budget that was considered in this case. Each organisation in the trust had a financial element in the project – and it had been deemed as too expensive. The Chair pointed out that in cases such as these, it would be helpful to understand the learning that had been done as to why the projects such as these had hit the buffers.

Efficiency savings in relation to the financial plan was then discussed in detail. Questions were raised as to the nature of these efficiency savings - whether these meant staff cuts or services affected. The Director of System Financial Planning stated that there were a large variety of different activities that this would include. The upshot of which would mean that services would be delivered in a more efficient way. The Director offered to come back to the Committee with more analysis and examples on this.

The Chair made a recommendation on behalf of the Committee that more information be provided as to the nature of these efficiency savings. She requested a written response and in addition a response to last year’s question as to whether there was to be any direct impact on services. ACTION

A question was raised as to the 2024/25 commitment of  a £3m reallocation of funding from Acute Care Services to Community Services across the five boroughs. It was pointed out that this was a particularly low amount of money for a hospital setting. It was clarified that the Community Investment Fund would have a £225m baseline. This was deemed necessary as the investment had to be carried out in a sustainable way.

In response to a question as to whether the £3m reallocation meant the removal of acute beds, the Director of Finance for Strategic Commissioning outlined that beds would not been removed however with more emphasis being given to Community intervention projects this was something they would expect to see at a later date.

The Chief Strategy and Population Health Officer also pointed out that as were seen  more in a community setting, the success of which would not necessarily be measured by the reduction of patients using emergency hospital services but also a reduction in length of stay which averaged 12 days. It was the clarified that the savings would be attached to the efficiencies of the usage of the bed days -as there were days that beds were not being used in the most efficient ways.

The Director of Finance for Strategic Commissioning, then responded to questions from the Committee as to whether £3m allocation across the 5 boroughs was enough. With reference to slide 11 of the report, it was clarified that £3m was the contribution from the Acute Care Department. In reality a much higher level of funding had been allocated- approximately totalling £15m. The Director pointed out that this sum would not meet demand, however the extra money would divert and manage patients coming into hospitals with a higher level of complexity in a more sustainable way.

The Chair then RECOMMENDED that a future paper be prepared on acute care and community services in the next financial report. The report should include an overview of pressures and risks associated with this. ACTION

Discussion then turned to a sustainable Voluntary Sector Investment Framework. The Finance Director explained that this framework was a 360 degree view of all the money going into the voluntary sector from the ICB, Trusts and council services including Adult Social Services. This was so that services and finances could be mapped and tracked.

The Chair then RECOMMENDED that for the next financial review a future paper be prepared to update the Committee with more detail as to the distribution of funds amongst the Voluntary Sector. In addition, more information was requested as to the lines of communication between departments and how financial decisions were reached. An assessment of the impact of these funds on services (including if monies had been diverted from another department) was also requested. ACTION

The Chair also then asked for a written response from the Officer Panel on :

• The impact of the financial decision on those with disabilities.
• The impact on revenue on any capitalisation projects.
• Any direct impact on services.