NHS Finance

Over-ambitious STPs risk ‘blowing up’ because of scary funding shortfall

Local health economies are developing “vastly over-ambitious” sustainability and transformation plans (STPs) to try to meet multi-million pound funding shortfalls, the chief executive of NHS Providers has told MPs.

Speaking at a Health Select Committee inquiry yesterday afternoon, Chris Hopson said that health providers were told they could only submit STPs if they met the 2021 funding allocation, which comes after the ‘U-turn’ in NHS finances.

He described this as a “scary figure” with “millions of pounds of gap”, adding: “Every one of our members is up for a realistic stretching efficiency challenge, but the problem is the size of financial hole that is now being created in 2021.”

An impassioned Hopson said: “If you’re told you have to balance, that you can’t submit a plan if you don’t balance, then what that means is people are coming up with, to be frank, vastly over-ambitious plans that effectively rely on either vastly over-ambitious management plans or more often service reconfigurations that, to be frank, we know are not going to happen because they won’t command the required political support and there isn’t the capital available.”

The STPs were criticised recently by campaign group 38 Degrees after it revealed that they include potential hospital closures.

According to a survey from the Healthcare Financial Management Association, just 16% of NHS finance directors think a sustainable STPs are achievable.

Hopson said that the STP idea had “a lot of good in it”, but was being held back by the “breakneck speed” at which it has to be delivered and ongoing funding problems.

NHS Improvement papers show that it will be “extremely challenging” for trusts to complete their operational plans to support STPs for the March deadline.

“Our members are saying to us that they are spending quite a lot of time completing plans that, in their view, are not deliverable, and usually involve major structural service changes because that is the only way where they can create a balanced plan,” he said.

“And our view is that really risks blowing up and destroying a process that actually seems to us to have a huge amount of fundamentally positive benefits, and that is a consistent story that we’re getting from virtually all of our members.”

Hopson added it was “simply no longer possible” to “square the circle” of demand increasing and funding dropping.

He said the government expected the NHS to balance its budget without increased funding in the same way as other departments, but that this was not possible because of the strict requirements for which services the NHS delivers.

“Our members are trying to make the circle square by coming up with some very, very over-ambitious service reconfiguration plans that we know aren’t going to work,” he said. “If that is going to be the financial envelope, we need a proper, more effective debate about what other ways we are going to use to close that gap.”

‘Very real concerns’ about local authority involvement

Stephen Dorrell, chair of the NHS Confederation, also appeared in the hearing, and said that STPs should focus on delivering their goals of addressing the quality gap and the outcome gap as well as the finance gap. He said the “biggest gain” they offered was directing more resources towards social care.

Speaking at the Health+Care conference in June, Dorrell said STPs offer a “new vision” for more integrated care.

However, he added that there were “very real concerns in some parts of the country about the extent to which local authorities are true partners in the STP process”.

Dorrell said local government leaders were “better” at asking questions such as how long it would take to deliver plans.

An investigation by NHE’s sister title Public Sector Executive found that less than a third of councils reported having taken part in their local STP leadership nomination discussions.

In addition, Dorrell said: “This process needs to be strengthened to involve the professional staff working in the health and care system, it can’t be something that’s done to them by a bunch of experts meeting in an STP committee.”

Julie Wood, chief executive of NHS Clinical Commissioners, said that STPs needed to look at “the totality of the resource” and avoid shifting funding shortfalls from commissioners to providers.

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