Working towards place-based finance


By Rob Whiteman, CIPFA CEO

I think it’s safe to say that most people pay very little mind to the inner workings of public sector finance. As long as the services they need are paid for, there is little concern for the who or the how. So the move towards thinking in a more place-based way is no big surprise. 

This is the basis on which we at CIPFA built our Aligning Local Public Services framework. The health sector sees the activities of many local organisations overlap, but not always join up. And after over a decade of diminishing resources across the entire public sector, working together will be the key to a successful future. 

Creating financial synergies increases efficiency and reduces inter-organisational barriers to smooth and robust financial management. Through collaboration between organisations within a locality, public finance professionals can play a central role in aligning financial sustainability ambitions across the health sector.

To put it bluntly, it makes sense that our financial structures should support the public sector as a whole to deploy resources in a way that focuses on outcomes rather than which ‘pot’ the money originates from.

In this sense, system control totals seem sensible at a surface level. A step change towards more integrated working through a collective financial goal provides a shared incentive to focus on efficiency and supports a collaborative approach. 

However, while sensible in theory, it throws up challenges in practice. Given this is the first year that system control totals have been in place, some teething problems remain. Control totals at an organisational level still need to be achieved within the context of the system control totals. In addition to this, we have seen a few instances of STPs/ICSs being asked to financially support regional neighbours that sit outside of their own system. 

While regional financial targets are not currently in place, such stirrings from NHSE/NHSI create confusion and stand in the way of the ability to plan ahead. Changing goalposts are the nemesis of forward planning and good financial management. In order for control totals to be effectively met, the sector urgently needs clarity from the centre around what levels the targets are being set at. 

The second major challenge is around relationships. In any context, effective partnership working requires a level of trust between the parties working towards a shared goal. However, after decades of the system putting various parts of the sector at odds with one another, that trust is going to take time to build. And with organisational targets still very much in place, time will tell how integration will sit alongside a framework that still promotes a ‘competition and choice’ agenda.

The fact of the matter is that the financial structures of the NHS can seem labyrinthine in their complexity, and often at odds with the policy agenda. Working together towards shared financial goals in the way system control totals demand is a very new thing. Greater clarity over the exact expectations, as well as time to iron out the wrinkles in the process, will go a long way towards getting the sector on track. 

This article first appeared in NHS Providers.

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