Organisation objective
- NHS Mandate from Government
Executive summary
This paper provides the Board with an update on the month 7 financial position for 2023/24.
Action required
The Board is asked to note the month 7 2023/24 financial performance of the NHS.
Month 7 financial positions 2023/24
Headline revenue position
1. The impact of strikes through to the end of October was a financial cost of over £1bn and an equivalent loss of elective activity. The latest 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 (as described previously plans were set for the year on the basis of no significant further industrial action and the Government’s forecast that inflation (as measured by the GDP deflator) would be 4.4% for 2022/23 and 2.5% for 2023/24). This has generated an unfunded pressure of £1.7bn.
2. In November, following agreement with Government, we have injected a further £800m into system allocations and reduced the elective activity threshold to 103% (from originally 107%) to largely address the financial impact of strikes to date on the NHS. We have also agreed with Government to allow flexibility on previously ring-fenced funds to enable systems to deal with the inflation pressure.
3. Table 1 sets out the revenue expenditure position to the end of October 2023. The bottom-line position is shown on a non-ringfenced RDEL basis. Compared to plan, the aggregate YTD system position shows expenditure to be above plan by £471m (0.6% variance versus allocation) after deploying the additional funding and support described below.
Table 1: Financial position at month 7
| Expenditure basis | In year allocation | Year to date | |||
| Plan | Actual | Under/(over) spend | |||
|
£m |
£m |
£m |
% | ||
|
Systems |
129,215 |
76,098 |
76,569 |
(471) |
(0.6%) |
|
ICB Net Expenditure Provider Expenditure Provider Income |
|
74,881 72,110 (70,893) |
75,008 74,639 (73,078) |
(127) (2,529) 2,184 |
(0.2%) (3.5%) (3.1%) |
|
Specialised Commissioning |
25,022 |
14,294 |
14,266 |
28 |
0.2% |
|
Other Direct Commissioning |
2,809 |
1,579 |
1,562 |
17 |
1.1% |
|
Central Costs |
12,268 |
7,094 |
7,021 |
73 |
1.0% |
|
Transformationand Reserves |
4,063 |
0 |
0 |
0 |
|
|
Technical and ringfenced adjustments |
(3,785) |
(2,217) |
(2,149) |
(68) |
3.1% |
|
Total – non-ringfenced RDEL |
169,592 |
96,849 |
97,270 |
(420) |
(0.4%) |
4. The full year expenditure limit as at month 7 of £169.6bn 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.
5. Within this position we are seeing continued improvements in productivity across the NHS (in particular, once we take account of strike action) as we recover from the impact of Covid, and agency spending adjusted for inflation is 10% down on the same period last year in real terms.
6. Reflecting the impact of the measures described above brings the system financial position much closer to their plans for the year.
7. In November systems were given two weeks to refresh their outturn plans assuming there is no further industrial action for the remainder of the year and provide assurance of delivery to NHS England. Systems have also been asked to provide assurances regarding their operational delivery.
8. The transformation and reserves funding shown in the table reflects the Service Development Fund and Elective Recovery funding which is not yet allocated to systems but is fully committed.
Capital expenditure
9. Providers have spent £2,438million on capital schemes to month 7 (excluding IFRS 16 expenditure relating to lease assets), representing 33% of their full year budget (compared to 29% at the same stage last year). The DHSC provider capital budget for 2023/24 (excluding funding for leases) is set at £7,480million against which we are currently forecasting an underspend of £1million.