• Around £600 million in funding will be withheld from NHS providers this financial year for fines imposed for breaching key performance targets
• This represents almost a quarter of £2.8 billion deficit expected to be posted by NHS providers by end 2015/16
• NHS is already facing need to achieve £22 billion in efficiency savings by the end of this Parliament a Guardian feature on sector fines, NHS Providers confirmed that around £600 million in funding

Analysis from NHS Providers, published in the Guardian, reveals that around £600 million in funding will be withheld from hospital, community, mental health and ambulance trusts this financial year as a result of fines imposed on them for breaching waiting time and other key performance targets, such as the four hour A&E target.

This represents almost a quarter of the approximate £2.8 billion deficit that is expected to be posted by hospital, mental health, community and ambulance trusts by the end of the 2015/16 financial year.

The money generated through these fines, which are levied by local and national commissioners, has historically been reinvested back into providers to help them address the underlying causes of performance target breaches.

However, the policy has been changed by NHS England in two ways. First, from the start of the 2015/16 financial year NHS England removed the ability of CCGs to waive fines. Consequently, under this new approach, every breach of a performance target by a provider must have a penalty attached. The local discretion on whether to levy fines available to CCGs in the 2014/15 financial year was therefore taken away.

Second, in January 2016 (with effect from 1 October 2015), NHS England removed the discretion of local CCGs to reinvest the funding in helping providers to address the underlying causes of performance target breaches. CCGs have been instructed to withhold the funding and put it towards their year-end financial positions.

Increased financial risk

The penalties are loading yet more financial risk onto NHS providers at a time of unprecedented constraint. The fines therefore not only risk driving providers further into deficit but also delaying patient care.

Commenting on the analysis, chief executive, Chris Hopson said: “NHS trust chief executives tell us they are intensely frustrated by these fines and see them as short-sighted, counter-productive and reflecting a sense of denial about how serious the problems facing hospital, community, mental health and ambulance services really are. They load yet more financial risk onto trusts at a time when the NHS is in the middle of the longest and deepest financial squeeze in its history and when trusts will end the year an unprecedented £2.8 billion in the red.

“Trust chief executives tell us they are under enormous pressure – for example, the number of people coming to A&E in January 2016 was up 10% year on year and emergency admissions were up 5%. So it’s no surprise that many trusts are missing their performance targets.

Blunt instrument

“Imposing fines or refusing to pay the full cost of treatment makes no sense at all in this situation and does nothing to address the underlying reasons for trusts missing their performance targets.

“In fact, it makes things worse, because if a trust has to pay a fine, it can’t spend that money on extra staff and better patient care. Fines also just drive the provider sector further into the red just at the point when we are trying to return to finance balance.

New approach required

“No one is arguing trusts should get a free pass – they should be accountable for how they perform – but fining them for circumstances largely beyond their control is counter-productive and leads to worse patient care and even bigger financial problems. NHS system leaders should suspend fines for 2016/17, starting this week.”