The Southern Health & Social Care Trust has drawn up a £42.4 million savings plan for 2026-27, but says further reductions could put frontline services, staffing levels and patient access at risk.

The proposals were presented to the Trust board at a meeting on Thursday, August 27, where the financial plan for 2026-27 was the sole agenda item. The Trust says the identified savings represent about 3.6 per cent of its annual budget, below the 4 per cent target being applied across Health and Social Care.

Catherine Marks, the Trust’s Executive Director of Finance, Procurement & Estates, said the total requirement for the year was £47.5 million. That figure includes £41.7 million linked to the 4 per cent savings requirement and a £5.8 million deficit carried forward from the previous year.

Why the Trust says the financial challenge is growing

The Trust delivered approximately £43 million in savings last year, equivalent to around 4 per cent of its budget. However, £5.8 million of those savings were non-recurrent, meaning they did not provide a permanent solution and contributed to the deficit entering the current year.

At the same time, the organisation is dealing with rising demand for services, workforce pressures and continuing inflationary costs. Ms Marks said achieving financial balance while maintaining safe and effective services was becoming increasingly difficult.

The first phase of the programme, already approved by the board, amounts to £29.9 million. It focuses mainly on what the Trust describes as low-risk measures, including workforce efficiencies, reducing agency and locum spending, tighter expenditure controls and income initiatives.

Of that £29.9 million, £24.1 million contributes directly to the 4 per cent savings requirement. The remaining amount addresses the opening deficit. Implementation of the first phase is already under way across all directorates.

After Phase 1, a £17.6 million gap remained. The Strategic Planning and Performance Group, known as SPPG, subsequently approved £6.9 million in savings from the Trust’s original Phase 2 submission. Further work identified an additional £5.6 million, bringing the total identified savings to £42.4 million.

Where the savings are expected to come from

The largest element is a £7.8 million reduction in temporary staffing costs. The Trust plans to reduce its reliance on nursing agency and medical locum staff by converting posts to permanent appointments where possible.

  • £7.8 million: temporary staffing reductions.
  • £7.4 million: workforce and vacancy control measures.
  • £4.5 million: facilities management savings.
  • £8.1 million: corporate savings and financial adjustments.
  • £4.2 million: operational efficiencies across directorates.

The facilities management measures include reducing non-urgent maintenance spending while protecting high-risk statutory maintenance. The plan also includes support-service efficiencies, service redesign, procurement savings and revised charges for services such as car parking, catering and accommodation.

Together, those five areas account for approximately £32 million of the £42.4 million plan. Other proposed savings involve medicines optimisation, diagnostic reform, older people’s services, children’s services, high-cost care arrangements, income generation and digital and artificial-intelligence-enabled efficiencies linked to Encompass.

Remaining gap and independent review

The plan still leaves a £5.1 million shortfall against the full requirement. The Trust says this is equivalent to about 0.4 per cent of its budget and that it is continuing to work with SPPG to identify regional and local opportunities to close the gap.

It has also appointed PA Consulting to independently review and stress-test the financial plan. The review is intended to draw on the consultancy’s experience across NHS and other Health and Social Care organisations and to identify further opportunities.

Ms Marks said the £42.4 million currently identified was the maximum credible and deliverable level of savings within the financial year. She said the Trust had tried to minimise the effect on frontline services, patient care and workforce quality, but warned that savings beyond this point were increasingly likely to have direct consequences for service provision, staffing or patient access.

Trust board chair Eileen Mullan backed the proposals, while acknowledging the scale of delivering 4 per cent cash-releasing efficiencies each year. She said the Trust had a statutory duty to break even while continuing to deliver safe care, and recognised that any discussion about savings could cause concern.

The Trust says the plan represents the outcome of months of work and will continue to be monitored, including the risk that some savings may not be delivered as planned.