Monitor highlights need for innovation as funding pressures grow

26 March 2014

The Health Committee publishes a report on its 2013 accountability hearing with Monitor.

The clear message from the Health Committee’s annual inquiry into the work of Monitor is that, under current funding regime, the NHS will only be able to deliver the care required from it by significant innovation in the provision of health care, but that insufficient change has yet been made.

The Committee concludes that:

  • The model of care provided by the health and care system is not changing quickly enough with the result that pressures continue to build, threatening the financial stability of individual providers, and therefore the quality of care provided;
  • These pressures are likely to be particularly marked in the acute sector as plans are prepared and implemented to achieve the resource transfer required by the introduction of the Better Care Fund from April 2015.

Provider regulation

Continuing this theme, the Committee argues that as the NHS financial situation tightens, the challenge for Monitor in supporting trusts in financial difficulty is likely to increase. The MPs emphasise the importance of addressing pressures within individual providers in the context of the local health economy. The requirement for major change in the care model can only be delivered if individual providers, and Monitor as their regulator, look beyond preserving existing structures and address the need to develop different structures to meet changing needs.

The Committee also welcomes the fact that, for a range of reasons, Trusts are no longer being required to achieve Foundation Trust status by a particular date, saying it supports “this change of approach which focuses on the requirement to improve the underlying reality rather than meet an artificial timescale”.


The Committee expresses concern that Monitor has not done enough to reform the system of tariff payments for providers, arguing that the current tariff arrangements often create perverse incentives for providers and inhibit necessary service change. It recommends that Monitor and NHS England should initiate a formal joint process for a prioritised review of the NHS tariff arrangements with the objective of identifying and eliminating perverse incentives and introducing new tariff structures which incentivise necessary service change.

Other issues

In a wide-ranging report, the Committee also says that:

  • Monitor, not CQC, should be given responsibility for financial regulation of social care providers, given its focus on financial performance in the health sector [paragraph 45]
  • Monitor needs to do more to explain the rules for competition and procurement [paragraphs 80-81]
  • Monitor has not yet developed a sufficient understanding of  providers in primary care and the third sector and needs to review its relationships in both these sectors [paragraph 86]
  • It shares concerns about the decision of the Competition Commission in the case of the proposed merger between Bournemouth and Poole Trusts, and recommends that Monitor and the incoming Competition and Markets Authority should work together to develop joint guidance which should be consistent with Monitor’s statutory duty to enable service integration [paragraphs 98-100]

Chair’s comments

Commenting on the report, the Chair of the Committee, Rt Hon Stephen Dorrell MP, said,

"The Committee has argued on many occasions that traditional methods need to change if the health and care system is to meet the demands of the modern world. More emphasis on prevention and community support, and proper use of digital technology, among many other changes, will allow tomorrow’s generation to enjoy not only a length of life but also a quality of life which has never been possible before. But the system has to change faster if these opportunities are to be realized;  the pace of change is often too slow and the obstacles to change are often too powerful.

"Monitor has a vital role to play in promoting change and removing obstacles to change. It must identify problems earlier, and act quicker to resolve them."

 Further information

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