This quarter’s report is based on an online survey of 72 NHS trust finance directors and 39 clinical commissioning group (CCG) finance leads (covering 48 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; workforce issues.

• Just over half of all trusts (54 per cent) in our recent survey forecast ending 2016/17 in deficit (Figure 3). Around 86 per cent of trust finance directors reported that their forecast position for 2016/17 would depend on significant financial support, including 25 per cent who are delaying or cancelling capital spending (Figure 5). Furthermore, 55 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 72 provider organisations surveyed amounted to £322 million. For acute providers the net deficit is £266 million. For organisations who have refused to agree control totals, or who have had Sustainability and Transformation Fund payments withheld, some of these deficits will be partially offset by these unspent payments held by NHS Improvement.

• We also asked trusts to provide details of their agreed control totals for 2016/17. Of the 66 trusts that had agreed control totals or were in the process of agreeing control totals, 30 per cent forecast a worse end-of-year position against their control total. Furthermore, 47 per cent of them were either fairly or very concerned about meeting their agreed control totals in 2016/17 (Figure 7). Both represent a deterioration since the July survey.

• 63 per cent of all CCGs forecast a surplus for 2016/17, and 10 per cent are expecting to overspend (Figure 4).

• 71 per cent of CCGs surveyed reported their forecast position for 2016/17 depends on significant financial support (Figure 6). For half of the CCGs surveyed, their end-of-year position depends on delay or cancellation of spending; for a further 21 per cent, end-of-year position depends on draw down of surpluses from previous years, and 21 per cent are relying on having their 1 per cent risk reserve released back to them.

• Across the 48 CCGs covered, there is a net surplus forecast for 2016/17 of around £94 million, although this includes some CCGs carrying forward surpluses from previous years.

• The average cost improvement programme (CIP) target for trusts for 2016/17 is 4.3 per cent, ranging from 2 per cent to 8 per cent of turnover (Figure 8).

• The average quality, innovation, productivity and prevention (QIPP) target for CCGs for 2016/17 is 3.2 per cent, ranging from 0.9 per cent to 7 per cent of allocation (Figure 8).

• 52 per cent of all NHS trust finance directors are either fairly or very concerned about achieving their savings plans this year (Figure 9).

• For the third consecutive time since we began surveying, CCG finance leads were more pessimistic than their trust counterparts about their savings programmes. Of the CCGs surveyed 71 per cent of finance leads were fairly or very concerned about achieving their plans this year (Figure 10).

• 63 per cent of trust finance directors felt that patient care had worsened in their local area in the past year (Figure 11).

• For CCGs, 49 per cent of all CCG finance leads felt that patient care had worsened in their local area in the past year (Figure 12).

• For trust finance directors, delayed transfers of care continue to be their main concern. This is followed by the A&E four-hour waiting time target and then staff morale (Figure 13).

• For CCG finance leads the four-hour waiting time standard in A&E is now their main concern, followed by the 18-week referral-to-treatment standard. They also continue to be concerned about delayed transfers of care and the cancer treatment waiting times targets (Figure 14).

• As providers continue to operate within an extremely challenging financial situation, a number of measures are available to them in order to achieve a break-even position (or close to). One way providers can significantly reduce expenditure is to reduce the number of clinical staff. Reducing overall agency spend is one condition attached to the receipt of sustainability funding.
• 68 per cent of trusts plan to reduce clinical agency staff in 2016/17 (Figure 15). A smaller number (29 per cent) are also looking to reduce their permanent clinical headcount. In the acute sector, 17 per cent of providers are looking to cut headcount, rising to nearly per 54 cent of community and mental health providers. Two trusts surveyed plan to reduce both the number of clinical agency staff and clinical headcount

• As a condition of receiving sustainability and transformation funding, trusts are expected to develop credible plans for maintaining delivery of core standards for patients, including the four-hour A&E standard and the 18-week referral-to-treatment standard. With this in mind, we asked trust finance directors how confident they were in their organisation’s ability to deliver on these standards by the end of 2016/17.

• Worryingly, 73 per cent of finance directors surveyed were either fairly or very concerned that their organisation would not be able to deliver these operational standards by the end of 2016/17 (Figure 17).

• 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 79 per cent of trust finance directors and 90 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 17 and 18).

• When asked for their views about the financial state of their wider local health and care economy over the next 12 months, 96 per cent of trust finance directors (Figure 19) and 90 per cent of CCG finance leads were fairly or very pessimistic (Figure 20). For trusts, this is the highest level of pessimism since we began reporting.

• With 52 per cent of all trusts surveyed forecasting a deficit for 2016/17, the situation looks worse for 2017/18; 63 per cent of NHS trust finance directors were very or fairly pessimistic about balancing their books in 2017/18 (Figure 21).

• 57 per cent of CCG finance leads were very or fairly pessimistic about achieving financial balance in 2017/18 (Figure 22).

Our snapshot online survey of GP partners and practice managers received 129 individual responses (which may include some from a single practice).

• When asked about their end-of-year financial situation, 28 per cent of GP survey respondents reported that their practice’s end-of-year financial situation was bad or very bad, with half saying it was neither good nor bad (Figure 23).

• GP practices are businesses – if they run at a loss, partners must borrow or invest more. Even those reporting neither good nor bad financial situations commented that they were absorbing a loss of income through pay cuts for partners (Figure 24), and 45 per cent of respondents reported that they planned to end the provision of unfunded services (such as ECG (electrocardiogram) recording, spirometry and post-operation suture removal).

• Our report Understanding pressures in general practice found that activity was increasing faster than resources. In this survey, 94 per cent of respondents felt that demand for appointments was increasing and 6 per cent that it was staying the same; none felt that it was decreasing.

• We asked respondents what they were doing to address this increased demand. The most common measures were changing skill-mix and the use of telephone triage (Figure 25).

• While other research has suggested that GP practices have been finding it difficult to recruit partners for some time, the difficulties reported in this survey in recruiting salaried doctors seem new. Respondents also reported a greater use of locum doctors and that younger GPs seem to favour locum roles (Figure 26).

• Some 44 per cent of respondents reported that their practice had partners planning to retire in the next 12 months.

• We asked how practices were planning to address difficulties in recruiting staff. Of the people who responded, many said they were planning to use locum staff. Some respondents also said they were struggling to find locums. Several respondents were trying to encourage current staff to increase their hours.

• When asked about staff morale, only 24 per cent of respondents felt it was fairly high or very high (Figure 27). Rising workload was the most commonly cited reason for low morale. Those who reported high morale suggested that practice culture, a strong team and a good learning environment were key. For those reporting low morale, ability to cope with rising demand was the key reason cited.

• While government policy has placed emphasis on access to urgent appointments, practices have found it hard to manage both immediate access and offering continuity of care through routine appointments. The increasing volume of tasks referred from other providers was also cited (Figure 28). The top three concerns reflect the findings from our report published earlier in the year.