Hertfordshire and West Essex Joint Forward Plan 2023 - 2028

Appendix 2 – ICB Financial Duties

As set out in section 223M of the National Health Service Act 2006 (“the 2006 Act”) (as inserted by section 29 of the Health and Care Act 2022), each ICB and its partner trusts must exercise their functions with a view to ensuring that, in respect of each financial year:

  • local capital resource use does not exceed the limit set by NHS England
  • local revenue resource use does not exceed the limit set by NHS England.

Furthermore, under section 223L of the 2006 Act (as amended) NHS England may set financial objectives for ICBs and their partner trusts, and each ICB and its partner trusts have a duty to seek to achieve those objectives. NHS England has set the objective that each ICB, and the partner trusts whose resources are apportioned to it, should deliver a financially balanced system, which may be referred to as a ‘duty on breakeven’.

ICBs also have a duty to deliver financial balance individually (section 223GC of the 2006 Act). This is to promote careful financial management and to reflect legislation that requires NHS England and ICBs to manage within a fixed budget. Where an ICB considers it necessary to deliver overall system financial balance but with a deficit in the ICB itself, NHS England should be notified at the earliest opportunity. Additionally, each ICB should ensure it does not exceed the running cost allocation limit, which will be published as part of ICB allocations.

Under the legislation, the system financial duties rest on each ICB and its partner trusts. As each trust may be the partner of more than one ICB, the legislation provides for NHS England to apportion a trust’s resource use for these purposes to one or more ICBs. NHS England has apportioned the revenue and capital resources of all trusts exclusively to a single principal ICB. The objective of this approach is to ensure that the ICB and trusts’ mutual responsibilities are clear, e.g. to meet system financial balance, and to provide stability and continuity in planning relationships.

While the measure of system financial balance will be based on the mapping of a trust to a principal ‘host’ system, this does not change the requirement for all commissioners to work with the providers of their commissioned services to support financial sustainability and agree contractual terms that underpin this. Likewise, trusts that are formal partners of more than one ICB are required to confirm that their operational and financial plans are compatible with and align to all relevant system plans.

Given the requirement for systems and ICBs to seek to deliver a breakeven position each year, they should not plan for any in-year surplus or deficit. Any system or ICB that is overspending is expected to take all necessary steps to correct its rate of expenditure to address the overspend. In the event a system does overspend against its allocation for the year, the amount of the overspend will be carried forward and maintained as a cumulative system position. Cumulative system overspends will need to be repaid.

Access to any historical surplus for non-recurrent expenditure will be aligned with performance through the NHS Oversight Framework, and subject to national affordability. Any approved drawdown must be used for non-recurrent investment. The brought forward balance from the former CCGs within the system is £16.7m.

In response to the COVID-19 pandemic, the NHS adopted emergency payment arrangements from the start of 2020/21. Those arrangements included the establishment of nationally calculated block payments, with the balance of funding to support system breakeven issued as a 'system top-up' through a host clinical commissioning group (now ICB) for each system. As a consequence, although individual trusts received the totality of funding available either through their individual contract arrangements or system top-up flowing from their host ICB, funding did not necessarily flow to the trust from the appropriate responsible commissioner (ICBs or NHS England). 

To address this issue, a short exercise was run during 2022/23 to correct material issues with contract values and allocations.

Hertfordshire and West Essex Joint Forward Plan 2023 - 2028

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