Our strategy for finance
Decisions about where and how we use the financial resources we are allocated as a Health and Care Partnership, serving the population of West Yorkshire, plays a critical part in the delivery of the strategic objectives of the Partnership. The strategy sets out a high-level framework that links our strategic objectives to how we manage our financial resources in the partnership. It is intended to provide an overarching sense of direction and principles that will guide the development of a series of finance strategies across places, provider collaboratives and individual organisations. At the same time, it is designed as an enabler to the overall West Yorkshire Health and Care Partnership five-year integrated care strategy and will similarly be an enabler to Health & Wellbeing strategies at place.
The fiscal outlook is very challenging for the NHS, local authorities and voluntary, community and social enterprise organisations. The NHS is emerging from the COVID-19 pandemic with an imbalance between service demands (whether relating to elective recovery, urgent care, mental health/learning disability and autism services) and availability of financial resources. At a national, regional, and local level, the underlying financial position is one of financial deficits. Local authorities are also experiencing significant financial pressure, having to find ways of balancing the books within a context of shrinking revenues, lower grants from central government, inflationary cost pressures and growing demands for services, not least social care services for adults and children.The impact on the third sector has also been noticeable and has threatened the viability and sustainability of some organisations, whether through reductions in grant funding or donations from the public.
All of these pressures run alongside the cost of living issues that people are facing across West Yorkshire, and the unequal impact on those individuals and parts of the population who are already disadvantaged. This context means that decisions about resource allocations and utilisation will be more important than ever.
Medium Term NHS Financial Plan
The challenges highlighted above are now manifested in the financial plans for the NHS. At the end of 2023/24, the combined NHS position across West Yorkshire was a breakeven position, with all NHS organisations either delivering or slightly exceeding their plans, but that was only due to use of significant non recurrent measures which meant there was a large underlying deficit when coming into 2024/25. A similar position was reported across the local authority sector.
That underlying deficit, together with additional pressures specific to this financial year, mean that the system are planning a deficit of £50m in 2024/25, the level of efficiencies included in financial plans across the NHS system are set at c.7% of our total allocations. When developing financial plans, there are a number of key principles which we ensure we adhere to as a system, including that:
- Finance supports quality
- Plans are owned by partners
- We use good governance
- Decisions are subject to equality and quality impact assessments
The final plan submitted to NHS England in June 2024 represents the end point of a challenging planning process and follows several earlier iterations of the plan which all reflected deficits in the majority of our NHS organisations. Those deficits were predominantly driven by the pressures described above and, in each case, represented the best assessment by each organisation, at that stage in the process, of what could realistically be delivered in terms of efficiency and productivity, without compromising quality or safety.
Each iteration of the plan was subject to local and system peer review and challenge. This process was designed to highlight potential improvements organisations may be able to deliver based on the sharing of best practice and by maximising the consistency of approach in each organisation, whilst maintaining local ownership at all times. Plans were then subject to review by place and system committees for further analysis and approval.
The challenges inherent in delivering the plan position for 2024/25 are in the context of a headline financial settlement for the NHS which saw real terms growth of 2% when compared to 2023/24. The overall NHS funding settlement is shown in the table below.
| £m | 2021-22 | 2022-23 | 2023-24 | 2024-25 |
|---|---|---|---|---|
| NHSE RDEL pre-Autumn Statement | 150,614 | 152,595 | 157,403 | 162,641 |
| Autumn Statement employer NI change | - | - | (580) | (590) |
| Autumn Statement core funding uplift | - | - | 3,300 | 3,300 |
| Autumn Statement Better Care Fund | - | - | 300 | 500 |
| NHSE RDEL post-Autumn Statement | 150,614 | 152,595 | 160,423 | 165,851 |
| Comparison to adjusted RDEL (per October board paper) | ||||
| Adjustment for vaccines, testing, other Mandate changes | (2,964) | (1,095) | - | - |
| Adjusted NHS RDEL | 147,650 | 151,500 | 160,423 | 165,851 |
| Real terms growth on prior year (latest GDP deflators) | -2.1% | 2.6% | 2.0% |
The assessment of real terms growth is based on an estimation of the GDP deflator which is not necessarily a realistic reflection of inflationary pressures faced by the NHS - several additional pressures have been highlighted in 2024/25 and as such the headline growth figure may now be over-estimated. This,together with the likelihood that delivery of such a significant efficiency ask will be dependent on further non recurrent measures, would indicate that 2025/26 is likely to be equally as challenging as the current year.
At present no allocations have been announced for 2025/26 and beyond, and as such medium-term financial planning becomes more difficult. We will however continue to iterate the plan each year and are in the process of building a series of assumptions which will be tested and agreed with system partners for use in developing a medium term plan, and these will be further tested across the wider NHS region.
As a Partnership we will continue to be ambitious in the way we develop plans in future years, and they will be predicated on an assumption of comparable growth and a commitment by government to continue to invest in the NHS.
Our priorities for capital
Operational capital
We have been allocated £167m to invest in 2024/25 on operational capital schemes across our ten NHS providers, and plans have been developed to spend the allocation in full. This level of spend is in the context of backlog maintenance across ten NHS providers of £750m.
We have also received £4m to spend on primary care medical (GP) premises and have to access other sources of funding for any significant primary care developments. This may be through third party private funding or local authority borrowing.
Approved large scale schemes
Calderdale and Huddersfield NHS Foundation Trust continues to be the West Yorkshire Health and Care Partnership’s top priority for capital investment. New state of the art healthcare facilities to improve the safety, quality, and outcomes of patient care and ensure the sustainable provision of acute and emergency services in the future form part of this priority. Work is currently underway at Huddersfield on the Accident and Emergency department. There is cross Partnership commitment to the project and approval is currently being awaited by His Majesty’s Treasury.
Leeds Teaching Hospitals NHS Trust: Hospitals of the Future Project. Includes construction of a new children’s hospital, new adult hospital and new maternity centre (which will meet increasing demand for specialist regional services). This project will unlock five hectares of land in a prime city centre location, bringing with it an estimated 3,000 new jobs and more than £11bn boost to the local and wider regional economy.
Leeds Teaching Hospitals NHS Trust was successful in being included in an earlier wave of the New Hospital Programme and is moving forward to finalising enabling works business cases to support delivery of the new hospital. The trust is expecting further confirmation of next steps from the New Hospital Programme imminently.
New hospital programme bids
Replacement of Airedale General Hospital. The hospital was built 52 years ago with an expected 30-year life. Structural engineer advice is that hospital should be fully replaced as soon as possible, and no later than 2030 due to having the most extensive presence of RAAC in the UK. The Trust has a robust inspection and monitoring programme supported by structural engineers, and a programme of structural works and decanting underway. This work is accelerated in view of two significant incidents which have occurred in 2022 which are redefining the scope of works to manage the RAAC risks. This has recently been approved for development since submission of 2023/24 financial plans. Short form businesses cases are being developed for funding of further elements of the enabling works, and work is underway to develop the Strategic Outline case for the whole programme.
Replacement of Lynfield Mount Hospital for mental health services. Lynfield Mount is considered significantly outdated, with safety issues identified by the CQC. It has severe privacy and dignity issues (e.g., large numbers of patients sharing a single bathroom) and is a very poor therapeutic environment. The rapidly failing infrastructure results, for example, in sewage often flooding patient areas. It’s no coincidence that Lynfield Mount has one of the worst average patient lengths of stay in the country, both in terms of patient experience and budget (e.g., £6m of out of area placements p.a.). A relatively modest £90m scheme would be transformative and could be underway within one year.
Bradford Teaching Hospitals NHS Foundation Trust: Two land-locked sites at Bradford Royal Infirmary and St Lukes Hospital, some of which constructed over 100 years ago, some of which is listed, with significant backlog maintenance requirements. This restricts our ability to meet the needs of our growing population, achieve the right clinical adjacencies and to achieve our net-zero commitments. The future offers opportunities to integrate with our system partners, collaborate with the university to contribute to future workforce development and contribute to the local economy and built environment.
Our approach to productivity and efficiency
As budgets across the health and care sector continue to be challenged further, it will become even more important to ensure that we are using the collective resources we have better. To support this, we intend to establish arrangements to support and to better link the transformation and efficiency agendas, in the context of the challenging financial position across the Partnership in 2024/25 and beyond, ensuring that we maximise the use of available resources to achieve our strategic objectives as an integrated care system:
- Improve outcomes in population health and healthcare
- Tackle inequalities in outcomes, experience, and access
- Enhance productivity and value for money
- Help the NHS support broader social and economic development.
This will include the establishment of a system-wide Transformation and Efficiency Oversight Group, as well as setting out the key expected areas of a system-wide efficiency. As part of this work, it is expected that there will be at least four levels of focus to tackle the transformation and efficiency challenge:
- Individual organisational arrangements
- Local place arrangements
- Provider collaboratives
- System (West Yorkshire) arrangements.
The efficiency challenge will be a fundamental part of developing robust activity, quality, workforce, performance, and financial plans for 2024/25 and beyond.
Ensuing that the development of the financial and efficiency plans are not undertaken in isolation from the other elements of the operational plan is more important than ever, and it will be critical to continue to develop ways of working that enables this approach.
In terms of the focus on efficiencies, and a full and shared involvement of stakeholders, all NHS provider organisations have a range of arrangements in place. Some have maintained a focus on waste reduction/efficiency delivery during the Covid pandemic, whilst others have more recently reinvigorated their arrangements due to emerging financial challenges.
Our places will also continue to develop place-based arrangements to identify and implement collective efficiencies through integration of services, shared risk management and joint initiatives. These arrangements will build on the history of joint working between NHS organisations and local authorities and other partners in all places.
Our provider collaboratives also continue to work through a range of initiatives and joint projects to manage risk, improve access and outcomes, achieve better value for money, and address workforce challenges amongst other areas. We will continue to work together to support these through the lifetime of this plan. Likewise, our work to refresh our WY operating model will also ensure that the dedicated programme resources at WY system level are focussed on productivity and efficiency, alongside improving population health, reducing health inequalities, and maximising societal impact.