Organisation objective

• NHS Mandate from Government

Action required

The Board is asked to note the month 4 financial position of the NHS.

Month 4 financial position 2024/25

1. As a result of the lower level of 2024/25 revenue growth, we started the year needing to inject additional funding of £2.3 billion into systems in order for them to breakeven, which we are now about to allocate. We will also allocate funding to cover the cost of pay deals and the direct costs of industrial action. The requirement on systems and providers is to deliver financial plans approved by their boards for the year.

Month 4 revenue position

2. Table 1 below sets out the revenue expenditure position to the end of July 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 £487 million (1% variance versus allocation), with a net year to date overspend of £387 million at the aggregate NHSE level.

Table 1: Financial position at month 4

3. The month 4 expenditure limit of £179.1 billion 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 the COVID vaccination programme, additional funding for technology investment, and to cover the costs of industrial action.

4. The overall adverse variance reported at month 4 is driven by overspends in providers with much of this due to slippage against efficiency plans and the impact of industrial action in June and July. We estimate the costs of Industrial Action in the 2024/25 FY at around £180 million so far. Year to date overspends will need to be recovered in the latter part of the year in order to deliver the forecast position in line with plan.

5. The systems assessed as having the highest risk of overspending their plan have been directed to engage external support to ensure that spend controls are operating effectively, accelerate their efficiency plan delivery and ultimately to reduce their rate of spend to match the available resource. Tighter cash-borrowing controls have been introduced since the start of the year, also to make sure that spending remains in line with plan.

6. Delivering against plans will require systems to deliver significant efficiencies of £9.3 billion (equivalent to 6.9% of their total allocation), this compares to £7.2 billion of efficiencies delivered in 2023/24. At month 4, systems have delivered £2.0 billion of savings which is £0.2 billion lower than plan. This compares to £1.6 billion delivered to the same point in 2023/24.

7. Overall workforce levels have reduced by 1.2% since the start of the year. Bank spending remains at high levels. This is driven principally by medical staff and includes the impact of industrial action. Agency spending has reduced significantly in the last two years and is continuing to fall in 2024/25. Spending on agency staff is lower now than at any point in the last two years and at 2.8% of total pay costs, is lower than at any point since 2017, the earliest year we have data for. The NHS remains on track to reduce it from £3.1 billion in 2023/24 to £2.6 billion over this year.

Month 4 capital position

8. Providers have spent £1,130 million on capital schemes to month 4 (excluding IFRS 16 expenditure relating to lease assets), representing 15% of their full year budget (compared to 14% at the same stage last year). The Department of Health and Social Care (DHSC) provider and commissioning capital budget for 2024/25 (including IFRS16) is set at £8,692 million against which we are currently forecasting an underspend of £16 million.

Publication reference: public board paper (BM/24/35(ii)(Pu)