Unpicking the great CCG budget 'swindle'

This time last year Andrew Lansley was still insisting clinical commissioning groups would not inherit any “legacy debt” from primary care trusts and would start operating with a clean balance sheet. Twelve months on, just three months into the running of the new system, NHS England finance director Paul Baumann has warned “a quarter of CCGs are having real difficulty making ends meet, with little or no reserves to fall back on”. What is more, some CCGs also have “a significant underlying deficit to deal with”.

‘Paul Baumann is insisting NHS England will not dictate the pooling of resources “centrally”’

Of course many old stagers took Mr Lansley’s pledge with a barrel-load of salt - you cannot just wish away deep seated structural weaknesses within the finances of healthcare economies. They realised some accountancy jiggery pokery would enable the health secretary to claim a bright new dawn, but that problems would remain.

But it would be misleading to assume nothing has changed. The relationship between NHS England and CCGs is different from that between the Department of Health and PCTs. While local area teams are making some – largely cosmetic – attempts to balance CCG budgets by organising “potential” transfers between CCGs, they cannot insist on them – as the DH could with PCTs.

This is why Mr Baumann is insisting NHS England will not dictate the pooling of resources “centrally”. What he did not say is that this might change if CCGs are unable to remedy the situation individually or in concert.

Teething troubles

As ever with the NHS, the financial strength of CCGs and their ability to cope with any problems varies significantly – something disguised by an assurance process designed to get the commissioning groups through the starting gate.

This variation will now begin to become more apparent to all, including the CCGs themselves. It will be a trend accelerated as the activity data, which many CCGs are still struggling to access, becomes more widely available and the full range of spending commitments – which includes, but is not limited to, the cash clawed back by NHS England to meet its specialised commissioning commitments – is better understood.

Emerging problems will also not be limited to those whose 2013-14 funding allocations undershot expectations. There is concern over those that did relatively well not realising this and committing to projects that will become unaffordable as allocations are adjusted.

‘A fog hangs over the commissioning budget of the NHS that will only really begin to clear towards the end of this financial year’

Many observers will say these fears are the inevitable by-product of a new system’s teething troubles, and will be managed as and when they arise. NHS England is ensuring there is enough uncommitted funding in the system to patch up the majority of problems, while sticking resolutely to its claim any gaps will be “self-financing” as the totality of money in the system is adequate.

The truth is £90bn of public money has been shifted from one set of organisations to another with frightening speed. It is worth remembering real work on this did not really begin until the Health Act passed its final parliamentary reading just over a year ago. It is also the case that the auditing process necessary to lay PCTs to rest is still continuing in some parts of the country, as are contract negotiations between equally nervous commissioners and providers. 

As a result a fog hangs over the commissioning budget of the NHS that will only really begin to clear towards the end of this financial year. It is likely that when it does, many CCG leaders will feel, if not cheated, then certainly short-changed. Their reaction – and those of NHS England and the government – will tell us much about the new system’s robustness and its difference from past commissioning regimes.