Thank you, Malcolm.
There are four substantive pieces of business that we will be discussing this morning, in
addition to our usual focus on operational performance.
The first is the outcome of the Spending Review, which was announced on 25th November, five
days after our last public Board meeting.
The second is the publication of the mandate to NHS England and the wider NHS, which has
been laid before Parliament this morning.
The third is the principal item of business here, which is the allocation of £560 billion
of public spending to the National Health Service over the next five years.
Fourthly, the work that is going on with our partners, the other national leadership bodies
of the NHS, for the NHS planning guidance, which we expect to be able to issue within
the next several days.
Taking those in turn: on the outcome of the Spending Review – as you will see in my
Chief Executive’s Report here, and as has obviously been widely reported in the media
– judged against our request for a front-loaded settlement, we have clearly achieved that:
£3.8 billion of real-terms growth for the National Health Service next year.
In effect, three fifths of the five year funding will have been delivered in the first two
out of the five years.
We have some very substantial funding pressures in the system that have to be dealt with next
year – the pensions cost, the £1.8 billion for the sustainability focus that was set
out yesterday – and those are all part, frankly, of the reasons why the front-loaded
nature of the settlement was not only welcome, it was necessary.
At the Annual General Meeting, however, we talked about four other tests in addition
to the front-loading, and I think it is worth the Board just describing our assessment as
to where we have landed on those.
In addition to front-loading, the second of the tests was ensuring that there was a syncing-up
of the requests that were being made by the Government to the National Health Service,
with the phasing of the extra funding year by year over the five-year period.
My judgement is that the mandate published today, in terms of the affordability of the
asks for 2016/2017, corresponds to that with a broad set of goals for 2020/2021.
Obviously, there is a discussion about precisely what the sequencing looks like over the rest
of the Parliament, but we effectively have a U-shaped funding settlement, front-loading
and back loading.
So as we think about logistically the roll-out of some of the workforce and other developments,
including seven-day services and hospitals, we will have that U-shaped funding settlement
in mind.
Thirdly, we made the point that we need a realistic and deliverable set of efficiency
expectations, particularly through the traditional provider-tariff mechanism, and I think we
have arrived at a situation where just slightly less than half of the much-discussed £22
billion, slightly under £11 billion, will have to come from that source.
There is also wider action that the Department of Health, government and national leadership
bodies will need to take, and in fact we now have a clear and detailed description of those
efficiencies, and the Government will be making announcements on elements of those shortly.
However, there were two other elements to the five tests that were outside the immediate
bailiwick of the National Health Service, one of those around prevention and public
health.
There were continuing funding cuts in local authority finance, public health services,
on the back of the Spending Review.
My judgement is that we need to see concerted action from Government, both nationally and
in terms of new powers for local government – the manifesto of the new Childhood Obesity
Strategy in the new year, for example – in order to be able to say that that test would
have been met.
On the fifth of our five, we made the point that the level of demand facing the NHS was
obviously a function of the availability of social care.
There were, as I say in my report, some welcome moves to hypothecate new funding streams through
the precept, through a funded expansion of Better Care Fund, and other mechanisms.
Nevertheless, even with that, there will still be – as the Local Government Association
and the Association of Directors of Adult Social Services have pointed out – a widening
gap between the availability of funding and the need for social care.
If that is not addressed over the remainder of the period through 2020, then that will
result in extra demand over and above that which was modelled into the Five Year Forward
View.
That is just a statement of fact; it is not a controversial statement, I do not think,
but I think it is important that as a Board we understand how we have landed on those
five tests.
Allocations is obviously what we are going to spend the bulk of the time talking about
today.
Paul will walk us through that.
I would simply underline the fact that we are seeking to do three things, I think, with
the allocation recommendations before the Board this morning.
First, we want to provide the wherewithal to stabilise performance and fund the implementation
of the Forward View, and we are proposing doing that with the creation of a Sustainability
and Transformation Fund to the tune of £2.1 billion next year, of which £1.8 billion
would principally be to do with the financial pressures in the National Health Service,
the sustainability element, if you like; £300 million – £340 million, in fact – to
continue with vanguards and expand some of our work on implementing the Forward View
in 2016/2017.
More importantly, the Transformation Fund would grow from £2.1 billion next year to
£2.9 billion the year after, reaching £3.4 billion by 2020/2021, and an increasing share
of that expanding Transformation Fund would be available for the implementation of the
new care models, the parity of esteem on mental health, the technology and other investments
that we want to see.
So the first theme is stabilising performance and funding the Forward View.
The second theme of our recommendations is ensuring that we have reasonable funding locally,
with our thumb on the scale, particularly for primary care, and also ensuring that every
CCG is getting real-terms growth, while recognising that there will continue to be funding pressures
in specialised care; particularly next year, as Paul will establish, for some of the new
hepatitis C drugs.
That is something not in our discretion that we cannot ignore.
Then thirdly, continuing the strong push that this Board has made since its creation, ensuring
that we use the allocations process to contribute to inequalities reduction.
You will recall that, this time last year, we managed to reduce from 34 to 17 the number
of CCGs who were more than 5% below their fair shares, with the commitment to seek to
deal with the remaining 17 this year.
The recommendation before you would get every CCG no more than 5% below its fair share;
not just for CCG-commissioned services, but for the first time also taking into account
the total healthcare usage of their population, so CCG services but also primary care and
specialised services.
Then over and above that, for the first time putting in an explicit inequalities adjustment
for specialised commissioning spend, and making substantial progress in the fairness of allocations
for primary care services that Paul will describe.
In a nutshell, stabilising performance, investing in the Forward View, local funding that enables
people to make their plans work, and action to cut inequalities.
Those are the recommendations before you.
I will also just mention in this context that, with the leadership of Paul and colleagues,
we are continuing progress in our devolution discussions across the country.
As part of this package, you will see we are recommending that we reach agreement with
Greater Manchester on a carved-out, ringfenced settlement for them.
In addition, together with the Chancellor, the Mayor of London and the Health Secretary,
I launched five integration pilots across London earlier in the week on Tuesday, and
have met with my colleagues, the leaders of councils from the North East, to talk about
the health agenda that they are keen to pursue and we are wanting to work with them on.
I think we also need to recognise that this Board established a clear set of criteria
that we thought should be applied to genuine efforts to decentralise or devolve funding,
and we need to make sure that those are rigorously applied.
Frankly, where there are problems about that, we should call a spade a spade, as we have
done recently – in fact, within the last week – in respect of Kernow CCG in Cornwall,
where we have had to issue legal directions.
So the prospect that they would be in a position to take on substantial extra delegated, devolved
powers, I think they have a lot of work to do before we could imagine that that would
be real.
You will see from the Other Activities section of my report that, as usual, there is a range
of front line engagement: joint work with NHS Improvement, including two face-to-face
meetings of all Trust and CCG Chief Executives, that Jim Mackey and I held a couple of Fridays
ago in Leeds and London, which was very important.
In fact, we held a joint NHS England/NHS Improvement meeting of our regional directors to talk
about place-based challenges across the country yesterday afternoon.
Any questions, of course, but I think that is to some extent setting the table for the
substance of the discussions we are about to have.
Thanks, Simon.
Let me extend his invitation to the Board for any comments, comments, on the Chief Executive’s
Report.