Operational Plan 2019-20

Our Operational Plan sets our our priorities for the years 2019-2020

Publication date:
04 April 2019
Date range:
April 2019 - April 2020

Financial planning

Financial Forecasts and Modelling

The Trust has in place a robust financial and business planning process. The process has focussed on the following items:

  • Budget Setting Principles for 2019/20
  • Care Group plans for 2019/20
  • Accurate budgets to reflect establishments and Care Group requirements
  • Clear recurrent savings plans for 2019/20 focussed on pathway redesign and back office efficiencies

Financial Planning Process

The financial planning process was launched to the organisation in October 2018. Since then Care Groups have worked to collate their plans and developments in an overarching business planning pack, meeting regularly with Finance and HR colleagues to discuss proposals. Care Group draft business plans include:

  • Performance and Quality Metrics
  • Workforce
  • Activity
  • Income and Expenditure Overview
  • Cost Improvement Plan (CIP)
  • Capital Investment Programme
  • Risks

These have been reviewed and challenged by members of the executive team on progress to date and the robustness of plans, with a series of actions to be undertaken between this draft submission and final plans.

Financial Forecast

We will continue to drive efficiencies in the organisation; we recognise we have been awarded non recurrent Financial Recovery Funding of £4.5m this financial year but we need to be at break even in March 2020 on a sustainable basis. This means in addition to the 2019/20 CIP target, the Trust needs to improve run rate by a further £4.5m by April 2020.

For the current year the Trust has a forecast year end deficit of £1.8m after technical adjustments, which is on plan for the control total set by NHS Improvement for 2018/19. The forecast capital spend for 2018/19 is £9.7m. The bridge below highlights the key movements from forecast outturn that demonstrate how the Trust is planning to deliver the accepted

control total, which for 2019/20 is breakeven after receipt of £1.4m of Provider Sustainability Funding (PSF) and £4.5m of Financial Recovery Funding (FRF).

  • FYE CIPs – this is the net impact of £2.5m non recurrent savings which have been reversed, offset by £1.0m full year impact of schemes that commenced during 2018/19 and have not yet realised their full value.
  • FYE 18/19 outturn – this includes funding of vacancies, which at this stage have not yet been phased to reflect recruitment assumptions; and reversal of one off benefits in year such as bad debt provision adjustments and AUC write offs.
  • 18/19 underlying deficit – for the Trust this is currently estimated as £4.4m, which is known to the Trust Board and is an improvement on the underlying deficit in the organisation for the past few years.
  • 19/20 cost pressures – these include increased estates maintenance costs; increase in financing charges; the reinstatement of a 1% contingency, and £3m of new services including Criminal Justice Liaison, Mother and Baby Unit and dementia nursing .
  • 19/20 inflation – this is the non-pay element of inflation
  • 19/20 pay uplift – this is the estimated impact of the new pay award, based on staff in post at the time of budget setting and inclusive of incremental drift, as well as the full year impact of the medical pay award from October 2018
  • 19/20 income growth and inflation – this includes 3.8% inflation, reduced by 1.1% efficiency, with provision for growth and Mental Health Investment standard following CCG contract discussions
  • 19/20 invest growth funding – this is the corresponding investment for the growth and MHIS component of contracts which will predominantly be in staff to deliver developments such as liaison services, dementia pathway and community mental health teams
  • 19/20 CIPs – these are discussed in more detail below.
  • Financial Recovery Funding – as advised by NHSI.

Key Assumptions

In developing the plan a series of planning assumptions have been made. These are listed below:


  • Inflation has been included at 3.8%, with required efficiencies of 1.1%, resulting in a net 2.7% increase. This is on the basis of national guidance and has been discussed with our Commissioners during negotiations.
  • Growth has been assumed based on CCG contract discussions. This has been offset by an assumption that income will be reinvested into services to deliver increased activity levels.
  • CQUIN has been included assuming full delivery at 1.25%, with the remaining 1.25% included in base contracts.


  • Establishments have been set in conjunction with budget holders and managers.
  • All vacancies have been fully funded in the budget phased from April and only removed when supported by a CIP and QIA.
  • Headroom has been included at 21% for rostered services unless otherwise evidenced by the service. This provides for annual leave, sickness and mandatory training cover.
  • Inflation and incremental drift have been included in line with the national pay scales for 2019/20. This amounts to 2.78% and 0.77% respectively.

Non Pay:

  • A cost of £3.3m for PICU beds (private placements) has been included in budgets. The intention is for this to reduce but this is based on 2018/19 forecast levels.
  • Contingency has been included at 1% as per national guidance which is £1.8m.
  • CNST premium has been included at the advised value from NHS Resolution which is marginal reduction on 2018/19 cost.
  • Inflation has been assessed at 2.1% where contracts or consumables are expected to increase.


  • Opening cash balance of £12.5m following a property disposal in 2018/19. This excludes any additional bonus Provider Support Funding that may be received and notified as part of the Annual Accounts process.
  • £3.0m will be utilised for capital in year, outlined in more detail below
  • £2.3m to be utilised to repay existing revenue loan
  • £5.9m will relate to payment of creditors from 2018/19 particularly in relation to the capital programme.
  • This results in a closing cash balance of £1.3m in March 2020.

Efficiency savings for 2019/20

A 3.5% CIP target has been set for 2019/20 equating to £6.0m. This is in line with the value delivered for 2018/19 and is above the nationally expected 1.1%, as a result of the Trust’s underlying deficit and emerging cost pressures.

The Chief Operating Officer is currently leading a care pathway programme aimed at delivery of best practice, operational effectiveness and efficiency. This will form the majority of the efficiency savings within the Care Groups.

The programme is in pilot and test for change stages: financial impact will be quantified once tests for change have been evaluated. Work has been undertaken to set the baseline and establish clear performance indicators and outcomes for the projects.

The table below outlines the financial values attributed to the CIP Programme for 2019/20 and the current gap to close.



Care Group

Target (£000)

Identified (£000)

Unidentified (£000)





Community Recovery




Forensic and Specialist




Older People




Support Services




STP Productivity








Agency Rules

The Trust has a robust and well established process in place for booking and approving agency for all staff groups. The agency cap was delivered in 2017/18, is forecast to deliver for 2018/19 and spend is anticipated at a similar level for 2019/20. The main areas driving the use of agency are vacancies within the medical establishment, vacancies within the community mental health teams and high observation levels on wards.

Full establishment reviews have taken place as part of budget setting and all vacancies are being considered for alternative methods of providing healthcare. This is with the aim of providing better quality care, as well as more cost effective by reducing the reliance on agency workers.

The Trust is actively engaged in the STP workstream for temporary staffing and has also managed to negotiate rates locally to within the cap rates for the majority of shifts.

Capital Planning

The proposed capital programme for 2019/20 equates to £9.5m. The programme includes:

  • £1m completion of Willow Suite refurbishment.
  • £2.1m IT and Informatics
  • £1.4m estates and maintenance
  • £2.8m completion of the Canterbury Ward Reconfiguration.
  • £2.2m for the next stages of the Modernising Inpatient Facilities programme.

There is one planned disposal for 2019/20. The funding source for the capital programme is as follows:

  • £4.5m depreciation (net of capital loan repayments).
  • £0.8m proceeds from disposal of properties.
  • £3.0m cash brought forward from the sale of St Martins West, achieved in 2018/19.
  • £1.2m PDC for centrally funded schemes

The main risk to achieving it is in ensuring those remaining activities are relocated in good time. There is a project board coordinating all of the service relocations and a specific, dedicated project group responsible for the most challenging of those relocations.