Organisation objective
- NHS Mandate from Government
Executive summary
This paper provides the Board with an update on the financial position for 2023/24.
Action required
The Board is asked to note the month 9 2023/24 financial performance of the NHS.
Background
Month 9 financial position 2023/24
Headline revenue position
1. The latest economic data published in the Autumn Statement shows inflation outturned for 22/23 at 6.7% and is forecast to be 6.1% for 2023/24. This latest position generated pressure for the NHS of £1.7bn. In addition to the inflationary pressures, continued strike action through to the end of January is expected to create a financial cost for the service of around £1.5bn and an equivalent loss of elective activity.
2. In November 2023, following agreement with Government, we injected a further £800m into system allocations, reduced the elective activity threshold to 103% to address the financial impact of strikes up to October, and agreed with Government to allow flexibility on previously ring-fenced funds to enable systems to deal with the inflation pressure. Further action to support ICSs will now be required to allow systems to achieve their financial targets for the year. Table 1 sets out the forecast revenue expenditure position for the financial year as reported for December 2023. The bottom-line position is shown on a non-ringfenced RDEL basis.
| Expenditure Basis | In Year Allocation | Forecast Outturn | |||
| Plan | FOT | Under/(over) spend | |||
| £m | £m | £m | % | ||
| Systems | 130,457 | 131,125 | 132,190 | (1,065) | (0.8%) |
| ICB Net Expenditure Provider Expenditure Provider Income | 129,940 123,239 (122,053) | 130,309 127,240 (125,359) | (369) (4,001) 3,305 | (0.3%) (3.2%) (2.7%) | |
| Specialised Commissioning | 25,115 | 25,115 | 25,031 | 83 | 0.3% |
| Other Direct Commissioning | 2,781 | 2,781 | 2,724 | 57 | 2.1% |
| Central Costs | 12,295 | 12,295 | 12,116 | 179 | 1.5% |
| Transformation & Reserves | 3,220 | 3,220 | 3,220 | 0 | 0.0% |
| Technical & ringfenced adjustments | (4,089) | (4,089) | (4,089) | 0 | 0.0% |
| Total – non-ringfenced RDEL | 169,779 | 170,448 | 171,192 | (745) | (0.4%) |
3. The full year expenditure limit as at month 9 of £169.8bn includes a number of additional funding streams confirmed by DHSC but not yet recognised in the published financial directions, including the extra revenue funding to cover the cost of industrial action.
4. We are seeing continued improvements in efficiency across the NHS (in particular, once we take account of strike action) as we recover from the impact of Covid. Total provider expenditure for month 9 is 1.7% lower than the previous month, agency spending adjusted for inflation is 12% down on the same period last year in real terms, and so far this year ICSs have delivered efficiencies totalling £4.8bn, compared to £3.3bn last year.
5. This has been achieved while improving emergency performance; in particular ambulance handover times and ambulance response times are significantly better than this time last year, and A&E wait times are showing reductions compared to the previous year. In planned care the latest published data shows that we have seen reductions in the total number of people waiting for treatment and a reduction in people waiting over a year.
6. The transformation and reserves funding shown in the table reflects the Service Development Fund which is not yet allocated to systems but is fully committed.
Capital expenditure
7. Providers have spent £2,912million on capital schemes to month 8 (excluding IFRS 16 expenditure relating to lease assets), representing 39% of their full year budget (compared to 37% at the same stage last year). The DHSC provider capital budget for 2023/24 (excluding funding for leases) is set at £7,497million against which we are currently forecasting an underspend of £64 million.