Working relationships within controversial sustainability and transformation plans (STPs) has strengthened significantly in the last five months, but NHS finance leads believe the capital being streamed into projects is simply not enough to reduce funding issues across the Service.

According to the latest NHS financial temperature check from the Healthcare Financial Management Association (HFMA), half of the finance directors and chief finance officers surveyed believe STP relationships are strong enough to deliver cross-organisational change, up from just 20 percent six months ago.

However, despite the strengthened relationships within STPs, they remain skeptical about their ability to successfully reduce the NHS funding gap, with 89 percent of trust finance directors and 77 percent of chief financial officers at Clinical Commissioning Groups unconvinced that the plans can close the funding gap before 2021.

Nevertheless, the HFMA says the improvement in STP relationships is “positive news following a year in which NHS finance professionals have faced challenges head-on and worked hard to make efficiencies”.

Findings of its survey showed that most provider trusts (84 percent) and CCGs (63 percent) performed better in the 2016/17 financial year than they expected to, in part because of larger than expected contributions from the £1.8 billion STP fund received by some trusts.

For CCGs - which are on target for reporting a combined surplus in the region of £250 million for 2016/17 compared to a £16 million deficit the year before - the release of their 1 percent risk reserve funds boosted financial performance, the Association noted.

However, trusts reported a deficit of £791 million for the year and, while a huge improvement on the £2.45 billion shortfall in 2015/16, further efficiencies and cost cuts will be necessary to plug the remaining hole in funding.

“The efficiency challenge in 2017/18 is even tougher. Collectively, everyone in the NHS needs to find ways to be more resourceful, more innovative and more collaborative to address the financial challenge in front of us,” said Mark Orchard, President of HFMA.

"At one level it appears that some NHS organisations are managing to balance the books, but this also shows that the health service is struggling to meet demand, never mind transforming services for the future,” said Niall Dickson, chief executive of the NHS Confederation.

“What is needed is clear ring-fenced funding for transformation in the Budget statement later this year, to accelerate change while keeping the lights on today.”