This quarter’s report is based on an online survey of 87 NHS trust finance directors and 42 clinical commissioning group (CCG) finance leads (covering 47 CCGs).

Respondents were asked about their organisation’s financial situation and the financial outlook for their local health economy over the past and forthcoming financial year; the state of patient care in their area; the financial situation looking ahead to 2017/18; the key organisational challenges facing trusts and CCGs; and workforce issues.

• The survey confirms the scale of deficits across the provider sector last year. 67 per cent of all providers say they ended 2015/16 in deficit – including 87 per cent of acute trusts (Figure 5).

• Around 74 per cent of trust finance directors reported that their forecast position for 2015/16 relied on various forms of financial support and borrowing, including the release of resources from their organisation’s balance sheet; additional financial support from the Department of Health; drawing on reserves; and/or delaying or cancelling capital spending programmes (Figure 6).

• The financial situation for CCGs has been and remains less precarious than for providers: 87 per cent of CCGs say they ended 2015/16 in surplus or breaking even, and 13 per cent expect to overspend (Figure 7).

• Compared to end-of-year forecasts made at the beginning of the financial year, this survey forecasts the highest proportion (54 per cent) of trusts ending the current year (2016/17) in deficit (Figure 8).

• Around 84 per cent of trust finance directors reported that their forecast position for 2016/17 would depend on significant financial support (Figure 9). Furthermore, 48 per cent of providers expecting to receive Sustainability and Transformation Fund monies still forecast a deficit by the end of the year.

  • The total net deficit forecast for the end of 2016/17 for the 87 provider organisations surveyed amounted to £381 million. Scaled up to all acute providers the net deficit is £507 million (ranging from £1.45 to £40 million). Scaled up for each type of provider organisation, these figures suggest a net overall provider deficit across the NHS by the end of the 2016/17 financial year of around £1.4 billion.

• Although around 60 per cent of CCGs forecast a surplus for 2016/17, nearly 20 per cent are expecting to overspend – the highest proportion since we began our surveys (Figure 10).

• Across the 42 CCGs surveyed, there is a net surplus forecast for 2016/17 of around £44 million. Scaled up to all CCGs this is equivalent to a net surplus of around £200 million.

• The average cost improvement programme (CIP) target for trusts for 2016/17 is 4.2 per cent, ranging from 2 per cent to 9 per cent of turnover.

• The average quality, innovation, productivity and prevention (QIPP) target for CCGs for 2016/17 is 3.4 per cent, ranging from 1.5 per cent to 6 per cent of allocation (Figure 11).

• 38 per cent of all NHS trust finance directors are currently concerned about achieving their savings plans this year (Figure 12); this is the most pessimistic finance directors have been at this time of year since our survey began.

• For the first time since we began surveying, CCG finance leads were more pessimistic than their trust counterparts about their savings programmes. Just under two-thirds (61 per cent) of all CCG finance leads were fairly or very concerned about achieving their plans this year (Figure 13).

• Continuing the worsening trend since our last survey in January, 65 per cent of trust finance directors and 54 per cent of CCG finance leads felt that patient care had worsened in their local area in the past year (Figures 14 and 15).

• For trust finance directors, delayed transfers of care is now their main concern, followed by the A&E four-hour waiting standard. Staff morale also continues to be one of the top three issues. (Figure 16).

• CCG finance leads continue to be most concerned about the four-hour waiting time target in A&E, delayed transfers of care and the cancer treatment waiting times targets (Figure 17).

• As part of the strategy to return the provider sector to balance this year, and linked to access to additional funds, central controls on trust spending were announced earlier this year (NHS England 2015).

• However, it is clear that this ‘money-with-strings’ deal is not straightforward for many providers. For example, our latest survey finds that just under half of respondents (44 per cent) still do not have an agreed control total in place for 2016/17 (Figure 18). Furthermore, 73 per cent of those that do have an agreed control total in place are either concerned or uncertain about meeting their control totals for 2016/17 (Figure 19).

• Another part of the strategy to control provider spending has been the imposition of trust-by-trust controls on spending on agency staff. These included setting a maximum hourly rate for agency doctors and nurses and placing a cap on total agency staff spending for each NHS trust.

• More than half of all providers in our survey (54 per cent) were fairly or very concerned about their organisation being able to secure agency nursing staff at the Agenda for Change (AfC) ‘+ 55 %’ hourly rate cap as set by NHS Improvement (Figure 20).

• Previous surveys have revealed a high degree of scepticism about the achievability of the productivity challenge as set out by the Forward View.

• This survey shows that around 87 per cent of trust finance directors and 79 per cent of CCG finance leads think there is a high or very high risk of failing to achieve the productivity gains suggested by the Forward View (Figures 21 and 22).

• On 1 April 2016 the Department of Health introduced the first mental health access and waiting times standards (Department of Health 2014). Among these new targets is an Improving Access to Psychological Therapies (IAPT) programme and standards for Early Intervention in Psychosis (EIP).

• Just under two-thirds (64 per cent) of CCG finance leads are either fairly or very confident that the providers with which they contract will meet the new standards in mental health (Figure 23). However, 41 per cent of mental health trust finance directors are either very or fairly concerned about meeting the new standards (Figure 24).

• When asked for their views about the financial state of their wider local health and care economy over the next 12 months, 95 per cent of trust finance directors are fairly or very pessimistic (Figure 25). Around 86 per cent of CCG finance leads feel fairly or very pessimistic (Figure 26).

• With slightly more than half of trusts (54 per cent) forecasting a deficit for 2016/17, the situation looks worse for 2017/18: 64 per cent of NHS trust finance directors are very or fairly pessimistic about balancing their books in 2017/18 (Figure 27).

• Overall, CCG leads are less optimistic than in previous surveys, and more than half (54 per cent) are very or fairly pessimistic about achieving financial balance in 2017/18 (Figure 28).

• NHS England, NHS Improvement, Care Quality Commission, Public Health England, Health Education England, National Institute for Health and Care Excellence (2015). Delivering the forward view: NHS planning guidance 2016/17 – 2020/21. Leeds: NHS England. Available at: www.england.nhs.uk/ourwork/futurenhs/deliver-forward-view/ (accessed on 13 May 2016).

• Department of Health (2014). Achieving better access to mental health services by 2020. London: Department of Health. Available at: www.gov.uk/government/publications/mental-health-services-achieving-better-access-by-2020 (accessed on 13 May 2016).