This quarter’s report is based on an online survey of the following groups:

This report details the results of an online survey of NHS trust finance directors carried out between 23 May 2014 and 6 June 2014. We contacted 248 NHS trust finance directors to take part and 73 responded (29 per cent response rate).

In addition, we contacted 206 clinical commissioning group (CCG) finance leads and 47 responded (23 per cent response rate). Between them these finance leads covered 61 CCGs (30 per cent of CCGs).

Respondents were asked about the financial situation of their organisation and local health economies over the past financial year; the state of patient care in their area; the £20 billion productivity challenge set for 2014/15 and beyond; the likely achievement of maintaining the 18-week referral-to-treatment waiting time target throughout the year; and their plans for both elective and non-elective activity in 2014/15.

End-of-year financial position: 2013/14

One in ten trusts ended the year in deficit. This is a slight improvement from the one in eight trusts forecasting this position in April, and seems to have been helped by organisations taking action to minimise or reverse deficits by one-off asset sales or otherwise non-recurring financial actions (figure 1).

These results are somewhat better than those reported for trusts and foundation trusts. End-of-year reports from Monitor and the NHS Trust Development Authority show that around a quarter of all trusts ended 2013/14 in deficit (Dorsett 2014, NHS TDA 2014).

The year-end position for CCGs was healthier, with only 3 per cent ending the year in deficit (figure 2). Overall, NHS England reported 19 CCGs ending the year with a deficit, accounting for 9 per cent of all CCGs (Baumann 2014).

The difference between the results of the NHS England survey (Baumann 2014) and those by Monitor (Dorsett 2014) and the NHS Trust Development Authority (2014) in part reflect the wording of our survey question (which allows organisations that expect a deficit of up to 0.25 per cent of turnover to report this as a break-even position but which would be reported by Monitor/NHS Trust Development Authority as a deficit) and the possibility that the survey has a slight bias towards better performing trusts.

Projected end-of-year financial balance: 2014/15

One in four trusts forecast a deficit for 2014/15 – the highest proportion since we began surveying in 2011. This suggests a worsening of trusts’ financial position compared to 2013/14 when 11 per cent reported a deficit (figures 3 and 5).

Around one in ten CCGs forecast ending 2014/15 in deficit (figure 4). Nationally, NHS England is struggling to present a balanced financial plan (Baumann 2014).

Cost improvement and QIPP programmes

The average cost improvement programme (CIP) target for trusts in the 2014/15 financial year is 4.7 per cent, ranging between 2.4 per cent and 8 per cent of turnover (figure 7).

The average quality, innovation, productivity and prevention (QIPP) target for CCGs for the 2014/15 financial year is 2.8 per cent, ranging from 0.5 per cent and 5.5 per cent of allocation (figure 7).

Since the end of 2013/14 there has been a marked loss in confidence in achieving planned CIPs/QIPPs (figures 10 and 11). Around four in ten NHS trust finance directors were fairly or very concerned about achieving their CIP plans this year (figure 8).

The £20 billion productivity challenge

As the £20 billion ‘Nicholson Challenge’ reaches its final year, views on the risk of achieving this value of productivity improvements are the most pessimistic to date (figures 14 and 15).

Around eight in ten NHS trust finance directors felt the risk of failure to achieve the productivity challenge was high or very high (figure 12). CCG finance leads felt fairly pessimistic too – with the majority of respondents assessing the risk of failure as fairly or very high (figure 13).

Although around 20 per cent of NHS trust finance directors felt care in their local area had got better over the past year, 27 per cent thought it had got worse (figure 16).

On the other hand, while a fifth of CCG finance leads felt patient care had worsened in the last year, more than a third thought it had got better (figure 17).

CCG finance leads continue to be most concerned about A&E and 18-week referral-to-treatment waiting time targets. For the first time since we started asking the question they are also very concerned about patients’ care experience (figure 20).

For trusts, staff morale drops down the list of concerns and waiting time targets and delayed transfers of care return to the top of their worries (figure 21).

Unusually for this time of year, a number of key waiting time targets and the A&E four-hour waiting time standard have been breached.

Around one in five NHS trust finance directors felt that their organisation would have a poorer performance for the A&E four-hour waiting time standard compared to last year (figure 22).

Worryingly, around one in three NHS trust finance directors felt fairly or very concerned that their organisation would not be able to maintain the 18-week referral-to-treatment standards throughout 2014/15 (figure 23).

Around one in three CCGs expect an increase in elective activity in 2014/15 (figure 27). However, more than two in three trusts are planning for an increase in elective activity in 2014/15 (figure 26).

The scale of the dissonance in planning assumptions widens considerably for emergency admissions; nearly 50 per cent of trusts expect an increase this year (figure 24), but more concerning is that while around 50 per cent of all trusts plan for an increase, 60 per cent of all commissioners plan for a reduction (figure 25).

The risk is that providers will be buoyed up by the level of income they expect from commissioners, and commissioners’ plans will be similarly balanced by the expected reduced expenditure. Both cannot be right; activity figures for the first few months of the year suggest higher, not lower, emergency activity, for example.

When asked how they felt about the financial state of their local health and care economy – not just their own organisations – over the next year, 86 per cent of trust finance directors were fairly or very pessimistic (figure 28).

In general, views about the financial future have become gloomier since our survey began in 2011 (figure 29).

CCG finance leads are similarly more pessimistic about the coming year (figure 30).

• Baumann P (2014). Consolidated 2013/14 Finance Report. Board paper, no 1505143. London: NHS England. Available at: www.england.nhs.uk (accessed on 7 July 2014).

• Dorsett J (2014).Performance of the foundation trust sector: year ended 31 March 2014. London: Monitor. Available at: www.gov.uk (accessed on 7 July 2014).

• NHS Trust Development Authority (2014).Service and financial outturn report for the period ending 31 March 2014. Paper F for Board meeting 15 May 2014. Available at: www.ntda.nhs.uk (accessed on 7 July 2014).