The guidance is a more slimmed-down version than previous years, at just 20 pages (compared with 41 pages last year), and with a reduction in objectives from ~130 to ~35. Some notable priorities dropped from the 2022/23 Planning Guidance were improving the BAME disparity ratio and increasing the number of patients referred to post-COVID-19 services.

Given the pressures on capacity, demand, and workforce - triangulating plans and understanding what is deliverable in 2023-4 is critical to agreeing a plan that is feasible yet challenging. This requires support across Systems, from finance and clinical teams.

Here is our full analysis of 23/24 Planning Guidance - or read on for our topline takeaways... 

Key takeaways and implications

Here are our seven key takeaways from the 2023/24 Planning Guidance and their implications for Systems and Providers:

1. Allocations

Financial allocations for the next two years will be flat in real terms, including funding for COVID-19 and the Elective Recovery Funding (ERF), with additional funding available to expand capacity.

System plans need to move towards a longer-term planning horizon, beyond just the current year, and incorporate consistent planning assumptions.

2. Efficiency Requirement

Another important aspect is the 2.2% core efficiency target, which is double last year's 1.1% target and on top of any convergence requirement faced by ICBs.

To meet these savings targets, Systems need to identify key opportunities for improvement by organisation and service, consider what levers they have at their disposal to address them, and think about how to build local ownership from the outset. Likely opportunities for improvement include:

• Workforce productivity
• Theatre productivity
• Agency spend
• Corporate running costs
• Procurement and supply chain
• Inventory
• Medicines

3. Elective Activity

NHS England will pay unit prices for elective activity delivered above agreed targets, although this is not the case for outpatient follow-up appointments.

This represents a move away from block contracting and could have a significant impact on contracts and Providers in 2023/24, depending on how Systems and Providers performed against elective targets in 2022/23. Clawback of ERF for Systems that underdelivered against elective targets in 2022/23 will not be taking place.

4. System Planning

Systems are being urged to triangulate their plans for activity, workforce, finance, and have them signed off by March 2023.

To do this, Systems should mobilise early, ensure they have established clear governance and decision-making structures, and put regular touch points in place, to test ongoing assumptions and identify areas of misalignment. Additionally, the plans must consider capacity, including length of stay and capital (e.g. extra beds) constraints.

5. Capital Funding

There is potential for an additional £300m capital top-up, but only if the System delivers to budget. This raises important questions about the case for investment and priorities for Integrated Care Boards (ICBs).

6. Joint Forward Plans (JFPs)

ICBs and partner trusts need to prepare 5-year JFPs before the start of each financial year. To deliver these, Systems need to consider their capabilities and capacity, as well as to further mature their planning processes.

7. Budget Delegation

Budgets will be delegated to Systems for Pharmacy, Ophthalmology, and Dentistry in 2023/24, but have been delayed to 2024/25 for Specialised Commissioning. Systems need to ensure that plans are in place for managing these budgets and to consider where efficiencies can be found in these areas.

If you’re interested to hear more about the areas we’ve discussed in this article, get in touch with Samuel Rose (Samuel.rose@thepsc.co.uk).

The PSC is a specialist public services consultancy, providing strategic financial planning and multidisciplinary support to health Systems and Providers. With over 15 years experience work working with leaders in healthcare, education, and national government.

Authors: Dave Chappell, Nivedita Prasad and Samuel Rose, The PSC Strategy Team