ITEM 12 Long Term Financial Plan 2024 2034
North Lanarkshire Council · 27 March 2024
Back to Health and Social Care Integration Joint Board — 27 March 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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1 REPORT Item No: 12 SUBJECT: Long Term Financial Plan 2024-2034 TO: Integration Joint Board Committee Lead Officer for Report: Ross McGuffie, NL HSCP Chief Officer Author(s) of Report Amanda Kilburn, Chief Finance Officer DATE: 27 March 2024 1. PURPOSE OF REPORT 1.1 This paper is coming to the Integration Joint Board (IJB) For approval For endorsement For noting 1.2 This report advises the IJB of the long-term financial outlook for North Lanarkshire IJB as set out in the attached Long Term Financial Plan 2024–2034. 2. ROUTE TO THE INTEGRATION JOINT BOARD 2.1 This paper has been: Prepared By: Chief Finance Officer ☒ Reviewed By: Chief Officer ☒ Endorsed By: ☐ 3. RECOMMENDATIONS 3.1 It is recommended that the IJB: (1) Acknowledge the assumptions and context of the financial plan; and (2) Approve the Long Term Financial Plan 2024-2034. 4. VARIATIONS TO DIRECTIONS Yes No N/A 5. BACKGROUND/SUMMARY OF KEY ISSUES 5.1 The Long Term Financial Plan (LTFP) outlines the financial outlook for the next ten years, highlighting the challenges facing the IJB in maintaining financial stability whilst achieving the strategic commissioning priorities. The LTFP therefore provides an overview of the financial planning assumptions in relation to projected cost pressures arising from demographic growth, legislative and policy developments, employee costs and inflation alongside potential partner funding contributions in future years. 5.2 This LTFP addresses the North Lanarkshire IJB 2022/23 Annual Audit Report Action Plan which recommends that the IJB should develop a longer term financial plan to demonstrate the longer term financial sustainability and help support longer term strategic planning and decision making.
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2 6. FINANCIAL OUTLOOK 6.1 Looking into 2024/25 and beyond, it is anticipated that the public sector in Scotland will continue to face a number of challenges in the years ahead. There is significant uncertainty over what the scale of this is likely to be and it is therefore important that the IJB plans for a range of potential outcomes, ensuring sufficient flexibility to manage in a sustainable manner over the coming years. 6.2 In addition, it is clear from North Lanarkshire Council and NHS Lanarkshire financial outlook, that both partners anticipate they will be subject to significant pressure over the coming years with a further period of constraint and reduction in core funding. In this context, there is a greater risk that future uplifts in funding to the IJB similar to that provided in previous years may not be deliverable. 7. FINANCIAL PLAN 2024/25 7.1 The Medium Term Financial Plan 2023/24–2025/26 (MTFP) was approved by the IJB in March 2023. Due to the continuing changing financial environment, the IJB’s financial planning arrangements remains subject to active review to update and refresh the assumptions as new financial information and certainty becomes available. The MTFP 2024/25 assumptions have therefore been carried forward and updated in the LTFP using the most up to date information available at time of writing. 7.3 The recurring pressures between the MTFP and the LTFP have increased by £2m to a total of £22.856m due to increased costs associated with the pay awards for staff employed by NLC. 7.4 The recurring savings target of £22.856m will be split equally between 2024/25 and 2025/26 as shown in the table below. Long Term Financial Plan Recurring Pressures 2024/25 2025/26 Total £m £m £m Management Actions 11.428 11.428 22.856 7.5 It is recognised that service redesign and savings plans take time to implement, therefore, to mitigate this risk to the IJB, contingency reserves may be needed to fund the gap until the full savings can be realised. Updates tracking savings achieved against target will be presented to the board throughout the year as identified savings options are implemented. 7.6 A review of all earmarked reserves was completed during January 2024 and approved by the PFA Committee on 21 February 2024. The outcome of the review increased contingency reserves by a total of £10.183m. This added to the present balance brings the current contingency reserves to circa £25m and will continue to allow the IJB to manage anticipated pressures until recurring savings targets are fully implemented. 8. FINANCIAL CHALLENGE 8.1 In view of the current scale of uncertainty, and in line with previous financial plans, potential outcomes have been considered over optimistic, envisaged, and pessimistic projected positions.
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3 8.2 Using the above range of scenarios, current projections for the life of the plan include a wide range of assumptions in respect of key cost pressures and demand. On the basis of this projected outlook, and subject to active review over the coming months and years, the Chief Finance Officer (CFO) recommends that the IJB progresses with a financial planning strategy based on the envisaged scenario. 8.3 The LTFP is based on a range of demand and cost pressures which could be faced by the IJB over the long term. These assumptions are informed by both the local and national context for which there remains significant and real uncertainty. 8.4 Detailed below are the main areas of cost pressures which will be subject to ongoing review: Future funding allocations Future pay settlements Cost of living crisis and inflation Contractual pressures and the living wage commitments Demand led services including deprivation and health issues Prescribing costs and availability 8.5 It is therefore essential that the IJB continues to focus on the longer term financial challenge and where appropriate generate reserves to help: Address future pressures on the assumption that the financial position is more than likely to remain challenging. To provide temporary funding to drive transformation. To build contingency reserves which will be crucial in ensuring the financial sustainability of the partnership in the medium term. 8.6 Looking beyond the financial year and into the term of the financial plan, it is inevitably more difficult to forecast. It is important the IJB adopts a plan, not just in the delivery of strategic outcomes and services, but also from a financial perspective to ensure risks to the financial sustainability of the IJB are identified early, even though there may be uncertainty over the specific timing, scale, and ultimate effect. 8.7 On this basis, the IJB should continue to plan for a range of potential outcomes, ensuring sufficient flexibility to manage in a sustainable manner. Looking to the future, a significant level of savings and redesign will be necessary to continue to deliver sustainable and modern services which meet the needs of service users and their families. 9. IMPLICATIONS 9.1 NATIONAL OUTCOMES People are able to look after and improve their own health and wellbeing and live in good health for longer ☐ People, including those with disabilities or long-term conditions, or who are frail, are able to live, as far as reasonably practicable, independently and at home or in a homely setting in their community ☐ People who use Health and Social Care Services have positive experiences of those services, and have dignity respected ☐ Health and Social Care Services are centred on helping to maintain or improve the quality of life of people who use those services ☐
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4 Health and Social Care Services contribute to reducing health inequalities ☐ People who use Health and Social Care Services are safe from harm ☐ People who work in Health and Social Care Services feel engaged with the work they do and are supported to continuously improve the information, support, care, and treatment they provide ☐ Resources are used effectively and efficiently in the provision of Health and Social Care Services ☒ 9.2 ASSOCIATED MEASURE(S) Each partner is required to remain within their approved budgetary provision. 9.3 FINANCIAL This paper has been reviewed by Finance: Yes No N/A 9.4 RISK ASSESSMENT/RISK MANAGEMENT The strategic financial risks detailed in the IJB Risk Register have also been updated and are included in a separate report to the IJB. Relevant Risk Register Details Current Risk Level Risk Owner Financial Challenges High Amanda Kilburn National Set-Aside Budget High Ross McGuffie Hosted Services Medium Ross McGuffie Prescribing Activity and Costs Very High Ross McGuffie Third and Voluntary Sector Low Ross McGuffie Ineffective Governance Arrangements Medium Ross McGuffie 9.5 ENGAGEMENT & PARTICIPATION Please tick the engagement and participation objectives that link(s) with this piece of work and provide further details on the engagement and participation that was undertaken. Objectives Further details ☒ Involve stakeholders in the development work aimed at achieving the national outcomes The Director of Finance of NHSL and the Head of Financial Solutions of NLC both continue to be consulted on the financial position of the NL IJB. □ Provide stakeholders with information on how to get involved □ Ensure a diverse range of engagement and participation and opportunities are in place to suit different needs □ Measure how well we involve community stakeholders in the planning, design, and delivery of our services ☒ Provide regular feedback on how stakeholder engagement and participation is shaping and influencing service development and delivery Financial information is shared with stakeholders on a regular basis and is provided to the PFA and IJB on a quarterly basis.
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5 ☒ Provide support to enable stakeholder representatives to participate meaningfully and confidently at meetings □ Develop participation guidelines to ensure a common understanding and set of expectations for both stakeholders and partnership staff ☒ Support engagement planning and participation in localities, taking account of other engagement activity and local plans across the Community Planning Partnership IJB Financial Plan and Reserves Strategy aligns and supports the IJB Strategic Commissioning Plan to ensure robust financial monitoring and scrutiny. 9.6 INEQUALITIES & FAIRER SCOTLAND DUTY Equality and Diversity Impact Assessment Completed & Fairer Scotland Impact Assessment Form Completed: Yes No N/A 10. BACKGROUND PAPERS None. 11. APPENDIX IJB Long Term Financial Plan 2024-2034 Appendix 1 Chief Finance Officer Members seeking further information, please contact Amanda Kilburn on 07816 126362.
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Appendix 1 North Lanarkshire Integration Joint Board Long Term Financial Plan 2024/25 to 2033/34
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2 Contents Page 1. Introduction 3 2. Executive Summary 3 3. Purpose 4 4. National Context 5 5. Local Context 5 6. Reserves Strategy 7 7. Financial Planning Assumptions 7 8. Financial Sustainability Approach 9 9. Key Risks and Uncertainties 10 10. Financial Plan for 2024/25 11 11. Estimated Impact of Cost and Demand Pressures for 2024/25 – 2033/34 12
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3 1. INTRODUCTION The North Lanarkshire Integration Joint Board (IJB) was established as a corporate body by Scottish Government and became operational in June 2015 with integrated delivery of health and social care services commencing on 1 April 2016. It is a joint venture between NHS Lanarkshire (NHSL) and North Lanarkshire Council (NLC). The IJB has responsibility for the strategic planning and commissioning of a wide range of services within North Lanarkshire. The North Lanarkshire University Health and Social Care Partnership (UHSCNL) is responsible for the operational delivery of the IJB strategic directions. This includes the service we are required to provide, the funding allocated and the monitoring of performance. The services include: Accident and emergency services provided in a hospital; Inpatient services related to general, respiratory and rehabilitation medicine; Palliative care services; Community health services including Lanarkshire wide hosted services; and Social care services. 2. EXECUTIVE SUMMARY The IJB Long Term Financial Plan 2024/25 – 2033/34 (LTFP) sets out the financial outlook for the next ten years, highlighting the challenges facing the IJB in maintaining financial stability whilst achieving the strategic commissioning priorities. The LTFP therefore provides an overview of the financial planning assumptions in relation to projected cost pressures arising from demographic growth, legislative and policy developments, employee costs and inflation alongside potential partner funding contributions in future years. The IJB is required to set a balanced budget. The aspiration to prepare a budget covering a longer term will support the development of strategic savings and ensure the available resources are allocated effectively across competing priorities. This aspiration however is dependent on the certainty of the financial settlements from the Scottish Government. Both partners have a proven track record of managing budgets effectively over many years. A clear strategy is required to ensure the IJB continues to remain financially sustainable over the life of this plan whilst committing to transforming services through the Strategic Commissioning Plan Programme of Work. To prepare this financial plan, a co-ordinated and strategic approach across the partnership has been adopted with both partners including the cost pressures in relation to their delegated functions. The likelihood of ongoing financial constraints is high and the IJB and both partners will need to make difficult decisions in the years to come. The whole system approach and working collaboratively with carers, third parties and independent providers is essential. This also requires to be supported by an effective communication strategy to ensure public confidence is maintained. A range of outcomes will continue to be analysed and the financial planning assumptions updated as the most likely scenarios emerge for future years. The Scottish Government aspiration to move to multi-year settlements in the future is welcome and would reduce the uncertainty which is currently impacting on strategic commissioning activity across the health and social care partnership.
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4 3. PURPOSE The adoption of the longer term approach for financial planning enables the IJB to plan the delivery of service changes across financial years through modernising services, investing in new technology, and in developing its partnerships to provide longer term benefits. This approach enables the required changes to services to be delivered in a more planned, holistic manner, mitigating the need for reactive cuts to services. With limited resources and increasing pressures on UHSCNL services it is clear we need to adapt and change to be more efficient, responsive, and sustainable. We therefore need to adopt a co-productive approach that fully involves communities in decisions ensuring an approach that supports and empowers them when a different model of service delivery is proposed. The strategic planning approach encompasses a longer term 10 year look forward that seeks to identify the challenges facing the partnership and the opportunities we have to address them. The current plan comes to an end in 2026 and will be refreshed at this stage. The LTFP makes a number of assumptions and will support the IJB to deliver the following outcomes: Align with the Strategic Commissioning Plan and Programme of Works to: o Continue to focus on prevention, early intervention and tackling inequalities; o Do the right thing first time; o Support people through a whole family approach; o Develop and support a workforce for the future; o Improve mental health and wellbeing; Work alongside partners to achieve common goals; Provide sustainable services to support transformation and local communities; and Maintain a balanced and transparent budget. Engaging with Partner Bodies Supporting Transformation Financial Planning Budget Setting Process Strategic Commissioning Plan
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5 4. NATIONAL CONTEXT IJB’s operate in a complex, challenging and changing environment where national issues can have an impact on what and how services are delivered along with the financial resources, they have available to meet this. The LTFP has considered a number of key issues, some of which are outwith the IJB’s control, and those internal issues which the IJB has the ability to influence. Both internal and external influences need to be considered with key variables modelled to guide the IJB decisions about the future. External Influences (outwith the IJB’s control) Increase in demand; Interest rate fluctuations; Level of funding from partners and Scottish Government; National pay agreements; Supply chain issues associated with the wider economy; Further financial and economic impacts and potential future pandemics; National Care Service. Internal Influences (within the IJB’s control) Community engagement, partnership working and co-production of service delivery models; Working to clear priorities as set out in the Strategic Commissioning Plan; Transformational change programmes to improve outcomes; Effective people planning and wellbeing; Use of robust performance data to drive improvement; Use of digital technologies to improve services and reduce cost; Effective risk management to keep risk levels within tolerance; and Effective financial planning to ensure best value for the resources available. 5. LOCAL CONTEXT North Lanarkshire IJB delivers and commissions a range of health and social care services to our local population. This is funded through budgets delegated from both NHSL and NLC. The resources available to the IJB in 2023/24 to take forward the commissioning intention in line with the Strategic Commissioning Plan, are circa £809m. Included in the above is a ‘Large Hospital Service’ (Notional Set Aside) budget totalling £74.58m. This budget is in respect of those functions delegated by the Health Board which are carried out in a hospital within the Health Board area. The Set Aside resource for delegated services provided in acute hospitals is determined by apportioning the hospital expenditure to individual patient episodes, separating out episodes for services delegated to the IJB from those that are not, and assigning these to the relevant IJB based on postcode. The IJB is responsible for the strategic planning of these services but not their operational delivery. Also included is £40.85m which represents a number of delegated services where South Lanarkshire IJB acts as the lead host on behalf of North Lanarkshire IJB. The value consumed by North Lanarkshire equates to 52% of South Lanarkshire IJB hosted budget.
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6 These budgets are resourced as shown and will become the base year for the LTFP less any non-recurring funding: There are multi-faceted factors that impact on this budget and the demand for health and social care services across North Lanarkshire which include: North Lanarkshire is the 4th largest area in Scotland. It is also the 5th most populated with a population of 341,400. Between 2002 and 2021, the 25 to 44 age group saw the largest percentage decrease (-10.7%), in contrast the 75 and over age group saw the largest percentage increase (+41.6%). Although the population is projected to increase by a net 0.3% by 2028, an increase of 21.8% is projected in the age group 75 years and over. 34% of North Lanarkshire’s data zones are within the 20% most deprived in Scotland, a growth of 2% from Scottish Index of Multiple Deprivations (SIMD) 2016 statistics. The number of people income deprived in North Lanarkshire is 50,897, a reduction of 3% from SIMD 2016 data. The number of employment deprived working age people has also fallen from 29,585, in SIMD 2016 data to 24,796 in SIMD 2020. Across North Lanarkshire 11% of the working age population is employed deprived. Whilst many older people are expected to enjoy better health than their predecessors did at an equivalent age, they will still have significant health needs, living with potentially multiple and complex conditions. The impact of this will be a steadily increasing demand on our health and social care services, including home care support, care homes, increases in demand for community-based healthcare, equipment and adaptations and an increased demand for GP services and medication. There remains significant ongoing pressure in all health and social care systems across Scotland. High demand and patient acuity, coupled with increased flu and covid numbers in recent months has placed even greater demand on our system. In Lanarkshire, there is a genuine whole-system focus to our resilience response and there has been a tremendous effort across the whole system, including third and independent sectors, communities, carers, and public partners in the continued response to increased pressures and demand. North Lanarkshire IJB Funding Available 2023/24 24% North Lanarkshire Council £196.50m National Set Aside 74.58m 9% 62% South Hosted Services £40.85m NHS Lanarkshire £496.94m 5%
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7 6. RESERVES STRATEGY The IJB has the same legal status as a local authority and is therefore able to hold reserves under section 106 of the Local Government (Scotland) Act 1973. A reserves strategy was developed to provide security against unexpected cost pressures and to aid financial stability. The use of reserves must be prudent and controlled and are generally held for the following purposes: To create a working balance to help cushion the impact of uneven income flows; To create a contingency to cushion the impact of unexpected events or emergencies; To create a means of building up funds, to meet known or predicted liabilities; To fund non-recurring costs and to help with payment profiles straddling more than one year; and To enable the implementation of longer-term savings proposals. Following approval of the Reserves Strategy 2023/24 by the Performance, Finance and Audit Committee in February 2024, North Lanarkshire IJB reserves are summarised below: SUMMARY Balance at 31 January 2024 £m Ring-Fenced Reserves 10.036 Earmarked Reserves 30.854 Risk-Based Reserves 14.834 Contingency Reserves 11.053 TOTAL 66.777 7. FINANCIAL PLANNING ASSUMPTIONS Financial planning requires assumptions to be made about future demand and cost pressures which could be faced by the IJB and our partners. This LTFP focuses on the likely cost pressures that we can reasonably expect over the next ten years. These assumptions have been informed by the local and national context within which we operate. It is widely expected that the public sector in Scotland will continue to face a very challenging financial outlook for the foreseeable future. Whilst the provision of recurring investment and non-recurring reserves will help, there remains significant uncertainty over increasing cost pressures and what the scale of the likely reduction in available funding will be over the term of this plan. It therefore remains important that the IJB ensures sufficient flexibility to manage in a sustainable manner the position which emerges over the coming years, with the likely scenario that a significant level of further recurring savings will be required. Consequently, the IJB’s financial planning arrangements remains subject to active review using a scenario-based approach in recognition of the significant uncertainty over rising costs and the scale of variability in the potential funding available to the IJB in future years. The following key variables have been considered in preparing this 10 year plan: Antic ipated Scottish G overnment Funding Levels The Scottish Government financial settlement for both partners will significantly influence the funding contribution each partner can make to the IJB. The Scottish Government has historically provided one year funding settlements which has impacted on the ability to plan over the longer term with certainty. Single year settlements have required assumptions in the LTFP from year 2 to 10.
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8 For financial year 2024/25 another one year settlement was provided in December 2023, however there is still a commitment from Scottish Government to move to multi-year settlements in the future. Ass umptions on Infl ation Inc luding Pay Inc reases Consumer price index (CPI) and retail price index (RPI) inflationary increases are assumed for a range of contractual commitments and purchasing of supplies and materials. The UK has experienced unprecedented inflationary increases and fluctuations making future assumptions challenging in the current economic environment. A significant cost pressure relates to the National Care Home Rate Contract (NCHR) which is negotiated annually. The level of increase for future years is unknown but it is prudent to assume, based on past year trends and the on-going cost of living crisis that this is likely to increase significantly over the life of this plan. Health and social care services including independent home support are also commissioned. Increases in the Scottish Living Wage significantly impact on the cost of these services and service level agreements. Employee costs represent a large portion of IJB net budgets with any increase in pay awards impacting directly on current and future cost pressures. In relation to this plan, an estimated 3% has been assumed for staff employed in NLC, to reflect the 2024/25 pay award expected to be managed within IJB resources. In line with previous years, full funding is expected for pay uplifts to NHSL staff. In the event of an uplift greater than that estimated and no additional government support, the forecasted gap could potentially change materially. Consideration is also given to the challenges of recruiting and whether pay settlements are keeping pace with industry standards. As future pay agreements are confirmed, these assumptions will be updated in the model. Ass umptions on Inc reased D emand for Ser vic es In c luding Presc ribing Health and social care services are experiencing increasing demand due to demographic growth, an ageing population, complexity of care needs, deprivation, and health issues. This increase has been factored into the financial plan over the 10 year period to ensure that costs are adjusted in line with forecast demand, however, close monitoring is required to ensure that demographic growth is in line with assumptions made. If investment in this area is insufficient over a number of years, this could destabilise services whilst an over- provision of growth would mean the resources available would not be effectively allocated in line with need and priority. The amount and cost of drugs prescribed usually increases year on year. The price of drugs is set nationally and influenced by factors such as supply and demand, currency movements and patents. Prescribing activity is a clinical decision made by a qualified health professional. At the time of writing, the current prescribing budget is projected to overspend by year end 2023/24. Based on this trend, a volume and price uplift has been included in future projections to mitigate against deteriorating health within our population and the continuing uncertainties experienced in supply and demand due to fluctuating market conditions. Inve stment in Local Priorities Inc luding IT Improves and U pgrades A range of local priorities are included in the LTFP including digital and IT technology improvements, investing in home support, tests of change pilots and continued recovery from the pandemic. Depending on when the cost commitment is expected to be incurred and expected duration, the cost pressures will be recognised in the year it is forecast to materialise. Identifying recurring funding solutions for all commitments will be necessary, however it is recognised that savings plans take time to implement therefore to mitigate this risk to the IJB, earmarked reserves will be needed to fund in the short to medium term until the full recurring funding solution can be realised.
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9 Savings D eliverable from Transformational C hange Opportunities to redesign services, remove duplication and achieve efficiency savings have been implemented over the last number of years and therefore, it is becoming increasingly challenging to deliver further savings on a recurring basis. However, in order to remain sustainable in future years, the IJB will need to make significant changes to its operating model, by continuing to explore new ways to deliver services that better meet the needs of the people in the community. The focus of a whole system approach is to reduce inequalities, build community capacity and resilience and thereby decrease demand for services in other parts of the system. Legislative and National Polic y D ec isions There are a range of legislative and policy developments which have and are continuing to be implemented across the partnership. These include the Carer’s Act, Alcohol and Drug Partnership, Primary Care and Mental Health developments. To date, additional funding has been made available by the Scottish Government to take these policies forward and it is assumed that the expenditure will be contained within the funding available. Recognising this, no variation in the cost projection is therefore considered, however, if future funding from Scottish Government is withheld or withdrawn, the financial forecast could change. National policy decisions such as the National Care Service bring further long term uncertainty to this plan. Developments in these national decisions will be followed closely to ensure implications for the IJB can be reflected in future planning assumptions as soon as possible. This is not an exhaustive list of variables which need to be reviewed, however, the assumptions identified above are considered to be the core issues which require to be included in this plan. Adjusting for these key variables will give the IJB a robust approach to ensuring the board remains financially and operationally sustainable, and in doing so ensures that it meets its statutory obligations, its policy aspirations, and the needs of our local communities. 8. FINANCIAL SUSTAINABILITY APPROACH The financial sustainability approach considers a range of interventions. The IJB ambitions are set out in the Strategic Commissioning Plan and further detailed in the Programme of Work. The following key principles underpin these strategies: Effic ienc y The IJB has a statutory duty to deliver best value in its use of public funds which requires the cost of services to be kept under review. Sources of income which are available to fund services should also be secured and maximised including external grant funding and service user contributions. Ser vic e Red esign and Innovation In line with the ambitions of the Strategic Commissioning Plan, service redesign and innovation involve changing the way in which services are planned and delivered, and working in partnership with stakeholders, our users, and carers to better support them to achieve their personal outcomes and aspirations. Redesign opportunities also need to take into consideration digital, telehealth, telecare, and e-health strategies. Shifting the B alanc e of C are A whole system approach to service redesign and savings options is critical to achieve a balanced budget in future years. One area of immense pressure is the management of delayed discharges which is an essential consideration going forward to deliver future cost reductions.
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10 New ways of working in this area is continuing and proving successful under ‘Operation Flow’ which brings together not only health and social care services but also acute services as the whole system works towards shifting the balance of care where possible, from hospital based to community without unnecessary delay. This however is dependent on capacity being available in community care which is currently proving challenging. Ser vic e Prio ritisation and Reduc tion It is important to note that some services delivered across the health and social care partnership are difficult to transform or reduce as our users are dependent on these services to support their daily living. The scale of the financial challenge will require the IJB to consider prioritising, reducing, or even stopping some services to stay within the funding available. As demand is expected to continue to increase, it is likely that a reduction in service levels will be required to ensure a balanced budget. Presc ribing Effic ienc ies and Medic ines Manageme nt Mitigating the risk of the rising costs of primary care medicines will remain an important focus for the IJB. A range of measures locally and regionally are in place ranging from reducing waste and inefficiencies to changing prescribing practices and culture to help control prescribing volumes, thereby reducing costs. Work is also underway implementing a range of alternatives to prescribing medicines and engaging our users in self-management and prevention measures. Realistic C are and Realistic Medic ine Our users have a key role in deciding what care and treatment best meets their needs. It is therefore important that individuals are better informed about what they can realistically expect from health and social care services. Limited resources should be directed to achieve realistic goals and manage expectations of what future services can deliver. Early Inter vention and Prevention There is a strong body of evidence that early intervention and prevention is cost effective. Increased emphasis on prevention is an important element of the transformation of services. Recovery approaches which are peer led also provide unique and personalised support opportunities for self-management and community capacity building. Providing our users with the correct service at the right time, first time is critical in avoiding unnecessary and prolonged interventions. 9. KEY RISKS AND UNCERTAINTIES Given the current political climate and the associated economic uncertainty, it is important to note that projections made within this LTFP may potentially be subject to significant variation. The assumptions applied to income and expenditure models are based on the best information available at the time of writing. These include but are not limited to: Future funding levels from our partner organisations and Scottish Government. Our ability to recruit and retain quality staff to continue to deliver services and manage increasing demand. Continued increasing costs and raising inflation including future pay awards. Unexpected shortage of supplies and materials. Increasing level of complex care packages materialising that are currently unknown. Volatility of the external care market and the support required in order to provide stability.
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11 Changing political factors which influence the UK and Scottish Government priorities and policy initiatives. Introduction and impact of the National Care Service. The IJB maintains a strategic risk register and both partners maintain operational risk registers. Strategic and operational risks are regularly monitored and updated by the board and senior management to mitigate against key risks and uncertainties. 10. FINANCIAL PLAN FOR 2024/25 Using a range of scenarios, current projections for the period highlight potential cost pressures ranging from £36.269m to £40.597m in 2024/25. Based on these projections, and subject to clarification over the coming months, the Chief Finance Officer (CFO) recommends that the IJB progress with a financial planning strategy based on the envisaged scenario: E stimated C ost Press ures in t he Short Term Contractual Pressures 13.082 Demand Pressures 4.897 Pay Pressures 8.353 Local Cost Pressures 4.458 Prescribing 7.097 Total Pressures 37 . 886 Financ ial Strategy to Address C ost Press ures for 20 24 /25 The IJB will address the estimated recurring funding pressures highlighted above using a combination of actions as shown below: Additional funding to uplift the living wage, including the associated cost within the National Care Home Rate Contract for 2024/25. Realigning unallocated budgets to fund a portion of the NLC pay pressure. Use of agreed reserves to fund additional cost pressures within prescribing and demand as highlighted in the financial plans. On-going analysis and review of all remaining reserves to identify those no longer required. Reducing costs in pressure points through a mixture of efficiencies, redesign, and management actions. Regular tracking and reporting of savings targets to ensure plans are implemented within the agreed timeframe. Agree a two year plan to fully fund cost pressures on a recurring basis*. *It is recognised that service redesign and savings plans take time to implement therefore, to mitigate this risk to the IJB, contingency reserves may be needed to fund the gap until the full savings can be realised. Updates tracking savings achieved against target will be presented to the board throughout the year as identified savings options are implemented. Type of Pressure on Base Budget - Envisaged Outlook 2024 /25 £m
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12 North Lanarkshire I JB 2024 /25 Financial Plan 2024 /25 Total Total Pressures - Envisaged Outlook 37 . 886 Financial Strategy to Address Funding Pressures: 2024 /25 £m Use of Reserves -4.467 In Year Re-Profiling of Cost Pressures -0.050 Reduction in Employers Superannuation Contribution -8.170 Additional Funding Including Living Wage Uplift -13.771 Management Actions -11.428 Total Financial Strategy - 37 . 886 11. ESTIMATED IMPACT OF COST AND DEMAND PRESSURES FOR 2024/25 – 2033/34 The table below gives an estimated impact of cost and demand pressures arising from employee costs, inflationary cost pressures, demographic growth and demand, local cost pressures and legislative and policy developments for the next ten years. Unlike the Medium Term Financial Plan, it does not include a financial strategy to address these cost and demand pressures or any mitigation to reduce the gross cost through budget uplifts; recurring savings plans or funding from other sources. Type of Pressure on Base Budget - Optimistic Outlook 2024 /25 2025 /26 2026 /27 2027 /28 2028 /29 2029 /30 2030 /31 2031 /32 2032 /33 2033 /34 £m £m £m £m £m £m £m £m £m £m Contractual Pressures 12.999 8.510 8.761 9.018 9.284 9.557 9.839 10.128 10.427 10.734 Demand Pressures 4.197 4.323 4.453 4.586 4.724 4.866 5.012 5.162 5.317 5.476 Pay Pressures 8.353 8.520 8.690 8.864 9.041 9.222 9.407 9.595 9.787 9.982 Local Cost Pressures 4.458 0.882 0.882 1.782 1.782 1.782 1.782 1.782 1.782 1.782 Prescribing 6.262 6.450 6.643 6.843 7.048 7.259 7.477 7.702 7.933 8.171 Total Pressures 36 .269 28 .685 29 .429 31 .093 31 .879 32 .686 33 .516 34 .369 35 .245 36 .145 Type of Pressure on Base Budget - Envisaged Outlook 2024 /25 2025 /26 2026 /27 2027 /28 2028 /29 2029 /30 2030 /31 2031 /32 2032 /33 2033 /34 £m £m £m £m £m £m £m £m £m £m Contractual Pressures 13.082 8.651 9.081 9.535 10.014 10.520 11.054 11.606 12.202 12.833 Demand Pressures 4.897 5.068 5.245 5.429 5.619 5.816 6.019 6.230 6.448 6.674 Pay Pressures 8.353 8.520 8.776 9.039 9.310 9.589 9.877 10.173 10.478 10.793 Local Cost Pressures 4.458 0.882 0.882 1.782 1.782 1.782 1.782 1.782 1.782 1.782 Prescribing 7.097 7.338 7.588 7.846 8.113 8.388 8.674 8.968 9.273 9.589 Total Pressures 37 .886 30 .459 31 .571 33 .630 34 .837 36 .095 37 .406 38 .759 40 .184 41 .670 Type of Pressure on Base Budget - Pessimistic Outlook 2024 /25 2025 /26 2026 /27 2027 /28 2028 /29 2029 /30 2030 /31 2031 /32 2032 /33 2033 /34 £m £m £m £m £m £m £m £m £m £m Contractual Pressures 14.258 9.549 10.081 10.646 11.248 11.888 12.570 13.295 14.068 14.891 Demand Pressures 5.596 5.598 5.601 5.603 5.605 5.829 6.062 6.305 6.557 6.819 Pay Pressures 8.353 8.603 8.862 9.127 9.401 9.683 9.974 10.273 10.581 10.899 Local Cost Pressures 4.458 0.882 0.882 1.782 1.782 1.782 1.782 1.782 1.782 1.782 Prescribing 7.932 8.233 8.546 8.871 9.208 9.558 9.921 10.298 10.690 11.096 Total Pressures 40 .597 32 .866 33 .971 36 .030 37 .244 38 .741 40 .309 41 .953 43 .678 45 .487 As previously stated, due to the continuing changing financial environment we are facing, the reliance which can be placed on the financial costings decreases the further into the future the projections relate to. The CFO will continue to update and refresh the assumptions as new financial information, including future funding and savings plans becomes available.