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Revealed: PCNs have underspent on ARRS by £45m

by Beth Gault
13 June 2024

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PCNs in England have underspent on ARRS funding by more than £45m in the year 2023/24, according to latest figures.

The exclusive freedom of information investigation carried out by our sister title Pulse PCN found that only a fraction of that sum, around £2.3m was reallocated to PCNs, with the remaining £42.7m retained by NHS England.

The ARRS scheme is part of the Network DES, with funding allocated to PCNs based on their weighted populations. It covers the cost of hiring of non-GP staff, including pharmacists, physiotherapists and paramedics. 

When the money is unspent, integrated care boards (ICBs) have been able to invite PCNs to bid for any unclaimed funding. However in February, NHS England announced the mechanism for this bidding process would be stopped.

Figures acquired under the Freedom of Information Act suggest that only £2,382,730 of the unspent funding was reallocated under the mechanism in the 2023/24 financial year.

The FOI was sent to ICBs by Pulse PCN, in which 39 out of the 42 ICBs responded. Out of these, 20 had recorded an underspend figure.

Three ICBs (North Central London, Somerset and Derby and Derbyshire) said they did not have the information available yet.

In addition to this, two ICBs (Hampshire and Isle of Wight and Staffordshire and Stoke-on-Trent) said their underspend figures were not yet available, but stated they had already distributed £5.8m and £1m respectively to PCNs within their areas.

Sussex ICB disputed the term ‘underspend’, stating that it had redistributed all £3.6m of unallocated ARRS funds in October 2023 to be spent by 27 of its 39 PCNs which bid for extra funds.

Birmingham and Solihull ICB did not declare underspend but said it had also followed an ‘unclaimed funding process’ in October 2023 in which £2.1m was redistributed to 30 out of its 35 PCNs.

The total available ARRS funding for PCNs in those ICBs that responded was around £1.28bn.

By proportion of total ARRS funding, those with the highest underspend were Dorset ICB with £3.5m (18%), Bedfordshire, Luton and Milton Keynes with £3.6m (15%), and Mid and South Essex, with £3.8m (13.8%) (see box at the bottom for full breakdown).

Several ICBs also reported an underspend in the previous financial year, 2022/23, according to figures obtained by an FOI from Pulse PCN in 2023. The highest were in Kent and Medway, which had a £7m underspend and Lincolnshire with £2.1m.

Clinical directors highlighted the challenges around recruitment and the way the funding is allocated.

Clinical director at Central and West Warrington PCN Dr Laura Mount, said: ‘My PCN spent its budget but there are many reasons why a PCN may have an underspend. Many PCNs lack the staff and structure to employ a full contingent of ARRS staff. Recruitment to ARRS is limited by the wage cap allowable. Staff are often new to primary care and need supporting through expensive and intense training which is also not funded properly. This means that not all PCNs have the resource to support as many staff as they would like. There is often slippage in year if staff leave or are sick.’

Dr Mount added that once you develop an underspend you need to be careful not to over recruit the following years, but that it’s a ‘real fine balance to manage’.

‘This year, the budget in our PCN has not increased so we currently appear to be overspending, which is a concern when we know we cannot bid for funds from underspent PCNs this year,’ she added.

‘If there is underspend to be given to us from others we would prefer to know early in the year as its easier to plan and get temporary staff in.’

Dr Geetha Chandrasekaran, clinical director at North Halifax PCN, said though there was no underspend in West Yorkshire, this would potentially have consequences for future for ARRS budgets, as the allocation has remained ‘static’ into 2024/25.

She said: ‘Last year we were told not to have an underspend and that we needed to reach the maximum to keep that budget for this year, so you only get an allocation equivalent to your spend. In West Yorkshire, we’ve been very prudent and tried to spend it. But that’s also a con now, because the budgets have remained static. If you want to implement any rises from pay reviews or if you’ve decided to adopt Agenda for Change, you have nowhere to go as there’s been no rise in the budget at all.’

Ben Gowland, director and principal consultant at Ockham Healthcare, a think tank and consultancy, said it was ‘impossible’ for PCNs to recruit the staff in time to use the full allocation.

‘There has been an underspend every year so far on the ARRS budget, and that’s because the allocation grew significantly for each of those years,’ he said.

‘So even if PCNs use their full allocation they will still underspend as it is impossible for them to have been able to recruit all the new staff on 1 April.  If they recruit more staff to make up for this during the year, then the full year effect will mean that they will overspend the following year. 

‘In previous years PCNs knew they were getting growth the following year so could “over-recruit” knowing they would still be within the following year’s budge. But this year because the budget is essentially flat, PCNs have not had this luxury.’

A spokesperson for Dorset ICB also explained that recruitment was an issue.

They said: ‘Nationally, various challenges have been cited, such as being unable to recruit certain roles and a lack of estate to house these roles. In addition, the model of care will affect which roles may be appropriate in certain settings, and therefore the spend of allocation.

As at May 2024, Dorset PCNs had recruited over 430 whole time equivalent additional roles across 18 PCNs, which is a huge achievement.

‘Over this financial year, NHS Dorset will continue to support PCNs.’

Levi Buckley, chief delivery officer at North East and North Cumbria ICB, which had almost £7m of underspend, said: ‘As England’s largest ICS and an area with significant rurality and deprivation, we face a number of challenges but have secured more than 2,000 skilled staff through ARRS.

‘Our region was hit hard by the pandemic, which had an impact on our progress in the early years of ARRS. We successfully utilised the total funding allocation for ARRS in 2023/24, and accessed the additional funding earmarked for PCNs – moving from a 22% overall underspend to 9% last year, at the same time as a £20m increase in budget.

‘Our strong recruitment drive has made a big impact but has been held back in some areas by shortages of trained staff in roles like physiotherapy and pharmacy. Some areas had difficulties with accommodation or oncosts, while many PCNs found that without the assurance of a further increase in funding for 2024/25, it was harder to commit to further new posts in a sustainable way.

‘We and our PCNs have worked hard to make the best use of ARRS, and the ICB has allocated as much funding as they were able to utilise as well as offering extra financial flexibility mid-year. The unspent £7m was retained by NHS England, in line with the scheme’s processes.’

A spokesperson for Bedfordshire, Luton and Milton Keynes ICB also said PCNs have been ‘actively recruiting’ to ARRS roles, but did not take up all the funding available.

‘Our practices and PCNs continue to recruit to roles eligible for funding via the ARRS, and we will continue to support them.  We look forward to our PCNs continuing their recruitment to these roles during 2024/25.’

A Suffolk and North East Essex ICB spokesperson, said: ‘We work closely with primary care colleagues to ensure practices are able to make best use of the resources available and the aim is for the full use of the ARRS budget in 2024/25.’

Although Hampshire and Isle of Wight ICB does not have the confirmed final ARRS underspend figure, James Roach, director of primary care services said: ‘Earlier in 2023/24, NHS Hampshire and Isle of Wight identified that there was an underspend in the ARRS and invited PCNs to bid for this.

‘A total of 22 PCNs received a share of the known underspend at the time – £5.8m, which is an average of £264,000 per PCN.’

In 2023/24, the total ARRS funding that was allocated to ICBs was £1.412bn. In 2024/25, that figure has increased slightly to £1.441bn.

ICB areas where there was an ARRS underspend 2023/24
ICBARRS allocationUnderspendPercentage
2Bedfordshire, Luton and Milton Keynes£23,269,000£3,599,00015.5%
3Mid and South Essex£27,500,000£3,800,00013.8%
5Suffolk and North East Essex£24,900,000£3,300,00013.3%
6Kent and Medway£45,185,000£5,185,00011.5%
7Hertfordshire and West Essex£34,618,349£3,876,28911.2%
9North East and North Cumbria£76,429,000£6,976,0009.1%
10North West London£58,440,000£2,940,0005.0%
11North Central London£38,556,553£1,907,3944.9%
12Cheshire and Merseyside£65,782,087£2,906,1064.4%
13Bristol, North Somerset and South Gloucestershire£22,717,323£593,5572.6%
15Cornwall and the Isles of Scilly£14,551,651£322,6152.2%
16Greater Manchester£74,800,000£1,600,0002.1%
17The Black Country£29,227,790£61,0470.2%
18South West London£35,178,000£72,5230.2%
19South Yorkshire and Bassetlaw£33,913,000£66,0000.2%
20Nottingham and Nottinghamshire£27,994,000£1,0000.003%
Source: Pulse PCN

Correction: This article was updated on 16 July with amended reallocation figures to remove one ICB’s figures. The story previously said there was £4,382,730 of unspent ARRS funding reallocated to PCNs. However, this figure has been updated to £2,282,730. The £2.1m funding that has been taken out of this figure was reallocated to PCNs, but it was not declared as unspent funding by the ICB.

A version of this article was first published in our sister title, Pulse PCN