Organisation objective

• NHS Mandate from Government

Executive Summary

This paper provides the Board with an update on financial plans and the month 2 financial position for 2024/25.

Action required

The Board is asked to note the planned position and month 2 2024/25 financial position of the NHS.

2024/25 Planning update

1. The planning process for 2024/25 has now been concluded. Final plans were received from systems on 12 June; 31 out of 42 systems have a deficit plan for the year with a total planned overspend of £2.2bn. NHS England will cover this overspend, but this will leave no room to cover any further pressures. Therefore, it is imperative that all systems deliver their financial plan for the year.

2. Systems have agreed revenue spending targets for the year which in aggregate are affordable in the context of the overall NHS position. These targets take into account the historic financial position of each system. Alongside the targets, we have also revised the financial framework to provide rewards for systems that deliver breakeven, and consequences for those with the largest deficits.

3. For those systems with deficit plans, we have strengthened the oversight regime through the introduction of tighter spending controls, enhanced oversight and reporting. For the most challenged organisations we are also looking at the use of undertakings and directions, to support the existing Recovery Support Programme process and mandated financial recovery support.

Month 2 Financial position 2024/25

Headline revenue position

4. Table 1 below sets out the revenue expenditure position to the end of May 2024. The bottom-line position is shown on a non-ringfenced Revenue Departmental Expenditure Limit basis, which is the key measure for financial performance. Compared to plan, the aggregate system position shows expenditure to be above plan by £237m (1% variance versus allocation).

Table 1: Financial position at month 2 2024/25

5. The month 2 expenditure limit of £178.9bn includes a number of additional funding streams recognised by the Department of Health and Social Care (DHSC) but not yet included in the published financial directions. The most significant of which being additional funding to support elective recovery and COVID vaccination programme.

6. The overall adverse variance reported at month 2 is driven by overspends in systems with much of this driven by slippage against efficiency plans. This is in part due to the delayed completion of the planning process. It is expected that year to date overspends will be recovered in the latter part of the year resulting in a forecast position in line with plan.

7. To support delivery of plans, those systems assessed as having the highest risk of non-delivery are engaging external support to accelerate their efficiency plan delivery, ensure that spend controls are operating effectively and ultimately to reduce the rate of spend to match the available resource.

Capital expenditure

8. Providers have spent £596 million on capital schemes to month 2 (excluding IFRS 16 expenditure relating to lease assets), representing 8% of their full year budget (compared to 6% at the same stage last year). The DHSC provider and commissioning capital budget for 2024/25 (including IFRS16) is set at £8,818 million against which we are currently forecasting an overspend of £46 million.

Publication reference:  Public Board paper (BM/24/27(ii)(Pu))