Dear colleague, 

At this month’s Board meeting, I gave an update on our financial position and how we will deliver £61m of savings. I thought you might find it helpful if I provided a digest of the main points. 

Best wishes.

Matthew Trainer

Chief Executive 

Finance update

It’s going to be a tough financial year in which we will attempt to deliver a savings programme on a scale we’ve not had to do before. What’s in our favour is that we've submitted a compliant operating plan for 2025/26. We believe we will hit the government targets for cancer, treating people on our waiting list and urgent and emergency care. When you talk to staff who’ve been here for decades, they say BHRUT has never done that before. This is a really strong place for us to be.

Our challenge is to go further than the £30m savings we’ve delivered in each of the past two financial years. Our budget for 2025/26 is £1bn, up from £930m last year. It was £550m in 2019. 

BHRUT has the biggest budget it's ever had and much more money to spend on healthcare. However, demand is increasing and our costs have gone up as well. 

Both of our A&Es are under huge pressure. March was the busiest month we’ve ever recorded. Last month was the busiest April we’ve ever faced.

In the last financial year, almost 25,000 more people came to our hospitals seeking urgent and emergency care compared with the previous 12 months and we carried out 20% more operations between 2023 and 2024 in our Elective Surgical Hub at King George Hospital (KGH). 

Our focus is on meeting the government’s expectation that trusts no longer run up deficits as they’ve become used to doing and instead balance their books, in the same way that local authorities have had to do for many years. 

The £61m we have to save this year will mean that we must spend, on average, £5m less each month than it currently costs to run our hospitals. 

We’re going to do several things to achieve this. 

Our headcount is around 9,000 and we’re going to remove 115 whole time equivalent posts in our corporate services, a reduction of 8%. This will be a combination of redundancies and removing vacant posts. It will save £7.5m and will be on top of the £3.5m we saved in 2024/25, when we took out 40 corporate posts. 

Another area we are focusing on is the amount we spend on temporary staffing. It won’t involve cutting any posts or any redundancies. Rather, it will remove shifts from the clinical pool and mean we spend less money.

The noticeable improvement in how we are viewed externally has made us a more attractive employer and boosted our ability to recruit high calibre, substantive staff. Our problem is that, up until now, we have continued to use significant numbers of bank staff, despite having the highest number of permanent employees in our history. 

Last year, we spent £84.4m on bank and agency staff. This represents progress as our agency spend has fallen from £47m two years ago, to £18m. We need to build on this improvement and cut these additional shifts further. Our aim is to deliver a reduction of more than a third, as we need to reduce our pay bill by more than £40m. 

We will offer bank shifts to our permanent staff before they are made available to those who only do bank work at our Trust. We are conscious of the impact this will have on colleagues who’ve come to rely on bank shifts in recent years. We’ve set up a daily bank and agency tracker, so senior leaders can monitor usage in real time. 

As we head into summer – with its reduction in seasonal illnesses – we have more freedom to reduce our bed capacity (and temporary staffing costs), which we’ll do by closing the equivalent of two adult inpatient wards (60 beds), one at each hospital. It’ll provide us with a rare opportunity to tackle a backlog of maintenance issues and upgrade our wards to the benefit of patients and staff.

 

And, as we’ve done before during less busy months, we’ve closed eight paediatric beds at KGH. The temporary closure will save £15,000 each week and is being reviewed on a weekly basis by clinicians. They will reopen in time for the more demanding autumn and winter months. 

 

Residents will continue to be able to access consultant-led emergency services for children and adults at our two main hospitals. We will not change this. Taken together, these temporary moves will save us £6m.

 

Other initiatives we’re working on include:

 

• Our procurement colleagues (working with teams at Barts Health and Homerton Healthcare) are reviewing the cost of everything we buy and introducing more standardised purchasing with the goal of delivering a £5m saving that will have no impact on patient care.
• We think we can reduce our drugs’ bill by £2m, through adherence to national guidance and working on clinical protocols.
• We’re looking at the management of our PFI contract at Queen’s Hospital in the belief this will yield us £1m in cost reduction.
• We expect to save in the region of £2.7m - by either renegotiating contracts or bringing back in house - services like out of hours radiology and scan reporting that we have previously contracted out.
• We’ve renegotiated the price of products we use in pathology directly with our suppliers. This has led to discounts of between 10% and 40% and should deliver savings of around £2m.
• We’re also working with primary care colleagues to see where, together, we can reduce the use of tests that are of limited clinical value. For example, vitamin D testing costs more than £4m a year. 

We are working on more savings plans and will share the details at future Board meetings. 

We will mitigate any risks to patients as best we can and ensure we continue to have properly skilled clinical staff delivering good quality care to the patients that need it, in the right environment. 

I am also very conscious of how tough this will be for our staff. They will continue to do fantastic things every day and deliver a much appreciated service to the public, while also seeking better value for the taxpayers’ money we receive. 

The goal is to avoid ending the year in deficit, given the very clear government message that this is no longer acceptable in the NHS. 

The prize is that we will become a financially solvent, independent organisation that has moved on from its many years in special measure and has the freedom to make decisions about the future.