Item 8 - Delegated Health and Social Care Budget 2023-24
North Lanarkshire Council · 22 March 2023
Back to Health and Social Care Integration Joint Board — 22 March 2023 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: 8 SUBJECT: 2023-24 Delegated Health and Social Care Budget TO: Integration Joint Board Lead Officer for Report: Ross McGuffie, Chief Officer Author(s) of Report Amanda Kilburn, Chief Finance Officer DATE: 22nd March 2023 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 describes the financial allocation and budgets made available to the Integration Joint Board (IJB) for 2023/24 by North Lanarkshire Council and NHS Lanarkshire. 2. ROUTE TO THE INTEGRATION JOINT BOARD 2.1 This paper has been: Prepared By; Chief Finance Officer Reviewed By; Chief Officer 3. RECOMMENDATIONS 3.1 The IJB is asked to agree the following recommendations: (1) Agree to accept the delegated social care budget for 2023/24 in section 9.4; (2) Agree to accept the delegated health budget for 2023/24 in section 10.4 subject to: the expected uplift of 2% reflecting the boards uplift for 2023/24; any final adjustments in relation to recurring budget adjustments at month 12; and any further funding allocated by the Scottish Government. (3) Approve a drawdown of reserves, if required, in order to fund any shortfall in funding for 2023/24 and (4) Approve increases to the IJB’s contingency reserves in 2023/24, through the appropriate utilisation of permitted financial flexibilities, in order to protect the financial resilience of the IJB. 4. VARIATIONS TO DIRECTIONS 5. BACKGROUND/SUMMARY OF KEY ISSUES 5.1 North Lanarkshire IJB is a legal entity in its own right created by Parliamentary Order, following ministerial approval of the Integration Scheme between North Lanarkshire Council and NHS Lanarkshire. It is accountable for the stewardship of public funds and ensuring that its business is conducted under public sector best practice governance arrangements, including ensuring that public money is safeguarded, properly accounted for, and used economically, efficiently, and effectively. Yes No N/A
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2 5.2 The budget delegated by our two partner bodies, is used by the IJB to commission services, which are delivered by North Lanarkshire Health and Social Care Partnership (HSCP). The principles of the funding allocated by the two partner organisations is set out in the Integration Scheme, however, utilisation of this funding is delegated to the IJB. 5.3 Under the terms of the Integration Scheme, partner organisations should make appropriate arrangements to fund pay awards, contractual uplifts, the impact of demographic changes and determine efficiency targets as part of their respective budget setting processes. 5.4 The role of the Chief Finance Officer (CFO) for the IJB includes both the adherence to professional standards as well as compliance with the Local Government (Scotland) Act 1973. For the IJB this includes the requirement to ensure a balanced budget is set. 6. CONCLUSIONS 6.1 This report sets out the implications of the Scottish Government budget for 2023/24 and provides an overview of the IJB’s budget allocation for 2023/24. 6.2 Over the medium term, significant uncertainty remains, and the IJB will require to continue to plan for a wide range of potential scenarios. During the past number of years, the IJB has taken a medium-term view of its financial position, agreeing transformation and savings plans which have ensured a balanced budget year on year. However, the impact of Covid-19 and the cost-of-living crisis, continues to provide uncertainty resulting in spikes in demand for services and the need for ongoing review and realignment of future transformation and savings plans. 6.3 In this context, it is more than likely that we will need to draw on the financial flexibilities available to the IJB to provide non-recurring support to balance the annual revenue budget position each year over the medium-term basis. 7. SCOTTISH GOVERNMENT BUDGET 2023/2024 7.1 On 15 December 2022, the Scottish Government published their budget for 2023/24. Included within the condition of the budget was the continued prioritisation of financial support for social care and integration, with a further £95m which recognises the recurring commitments on adult social care pay in commissioned services and inflationary uplift on Free Personal Nursing Care rates. This is offset by the non- recurring interim care money ending. Funding Scotland (£m) North Lanarkshire (£m) Living Wage to £10.90 100 6.042 Uprating of Free Personal Care 15 0.186 Interim Care -20 -1.183 Total 95 5.045 7.2 Following the announcement of the Scottish Government budget for 2023/24, the Director of Health Finance and Governance issued a letter to NHS Chairs, NHS Directors of Finance, Integration Authority Chief Officers, and Integration Authority Chief Finance Officers outlining the details of the funding settlement. A copy of this letter is attached in Appendix 1.
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3 8. SUMMARY OF 2022/23 BUDGET POSITION 8.1 As reported throughout this financial year, the IJB will deliver an underspend on its core budget. The IJB projected underspend of £16.199m for 2022/23 financial year takes into account the ongoing challenges in terms of recruitment and retention across all service areas. These are issues that are being faced by IJBs across Scotland. 8.2 The landscape in relation to additional funding streams released throughout the year by Scottish Government to a number of priority areas is exceptionally complex with continued uncertainty around the scale and timing of future funding. The development of the Medium-Term Financial Plan 2023/26 and continued importance placed on risk-based and contingency reserves will help to mitigate this risk. 9. DELEGATED SOCIAL CARE BUDGET 2023/24 9.1 Similar to 2022/23 and as previously highlighted, demographic, and socio-economic factors continue to drive significant demand and cost pressures for 2023/24 relating to: Funding for 2023/24 pay award. Cost pressures arising from contractual arrangements which are subject to renewal. Financial impact of the negotiated application of the increased living wage across the sector. Increases associated with the National Care Home Rate (NCHR) contract. Ongoing pressures on home support service in relation to costs associated with shifting the balance of care, supporting people to live safely at home for as long as possible and facilitating prompt discharge from hospital. Increasing investment in self-directed support packages required to support adults and carers to achieve improved outcomes and live independently. 9.2 Using a range of informed assumptions, the CFO has estimated that the demand and cost growth for social care services in 2023/24 linked to the areas highlighted above, is likely to be in the region of a gross increase of circa £16m. 9.3 At its meeting of 23 February 2023, North Lanarkshire Council approved a recurring net uplift to the social care budget of £5.045m. This increase is in line with the conditions of the letter of the 15 December 2022 from the Director of Health Finance and Governance. 9.4 The following table provides a summary of the social care budget 2023/24: Social Care Budget 2023/24 £m Opening Budget 185.759 Delegated Services 2.421 2023/24 Recurring Uplift 5.045 Total 2023/24 Budget 193.225 9.5 The CFO recommendation to the IJB is, to note and accept the delegated social care budget offer from North Lanarkshire Council for 2023/24.
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4 10. DELEGATED HEALTH BUDGET 2023/24 10.1 Similar to social care, demographic and socio-economic factors continue to drive significant demand and cost pressures for our delegated health services in 2023/24 including: Pay inflation and the impact of agenda for change. Inflationary cost pressures across service level agreements on non-pay budgets. Prescribing cost, volume, and short supply impact. 10.2 Using a range of informed assumptions, the CFO has estimated that the demand and cost growth for health services (not including Set Aside) in 2022/23 linked to the areas highlighted above, is likely to be in the region of a gross increase of circa £10m. 10.3 The NHS Lanarkshire Health indicative budget offer for 2023/24, is based on an uplift of 2% and is in line with the letter of the 15 December 2022 from the Director of Health Finance and Governance. It is anticipated that a formal budget offer will be issued following NHS Lanarkshire board approval. 10.4 The following table provides a summary of the indicative health budget 2023/24: Health Budget 2023/24 £m Opening Budget 291.629 Set Aside Budget 66.858 2023/24 Recurring Uplift 5.833 2023/24 Set Aside Uplift 3.606 Total 2023/24 Budget 367.926 10.5 The CFO recommendation to the IJB is, to note and accept the delegated health budget offer from NHS Lanarkshire for 2023/24 subject to the expected 2% uplift and any final adjustments when the outturn for 2022/23 financial year has been finalised in relation to recurring budget adjustments at month 12, and any further funding allocated by Scottish Government. 11. FINANCIAL STRATEGY 2023/24 11.1 The Medium-Term Financial Plan (MTFP) 2023/26 reflects the economic outlook, adopting a strategic and sustainable approach linked to the delivery of priorities in our Strategic Commissioning Plan 2023/26. These strategic priorities will continue to provide a focus for future budget decisions, where the delivery of core services must be balanced with the resources available. Our MTFP and Reserves Strategy focuses on financial sustainability, acknowledging the uncertainty around key elements and the need to redirect resources to support the delivery of key priorities. 11.2 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 medium term with a further period of constraint and potential reduction in core funding. In this context, there is a greater risk that any future uplifts in funding to the IJB similar to that provided in previous years may not be deliverable.
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5 11.3 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, the likely scenario is that 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. 11.4 It is therefore essential that the IJB continues to focus on the medium-term financial challenges and where appropriate generate reserves to help: Address medium-term pressures on the assumption that the financial position is more than likely to become 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. 12. IMPLICATIONS 12.1 NATIONAL OUTCOMES The effective management of financial resources contributes to the achievement of the national outcomes. 12.2 ASSOCIATED MEASURE(S) Each partner is required to remain within their approved budgetary provision. 12.3 FINANCIAL This paper has been reviewed by Finance: Yes No N/A 12.4 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. 12.5 PEOPLE None 12.6 STAKEHOLDER ENGAGEMENT The Director of Finance of NHSL and the Head of Financial Solutions of NLC have both been consulted on the proposed IJB Reserves Strategy 2021/2022 for the North Lanarkshire IJB. 12.7 INEQUALITIES & FAIRER SCOTLAND DUTY Equality and Diversity Impact Assessment Completed & Fairer Scotland Impact Assessment Form Completed: Yes No N/A 12.8 CARBON MANAGEMENT IMPLICATIONS Yes No N/A 13. BACKGROUND PAPERS None.
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6 14. APPENDIX Director of Health Finance and Governance 2023/24 Budget Letter Appendix 1 Chief Finance Officer Members seeking further information, please contact Amanda Kilburn on 07816 126362.
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7 Directorate for Health Finance and Governance APPENDIX 1 Richard McCallum, Director T: 0131-244 3464 E: richard.mccallum@gov.scot Chief Executives, NHS Scotland Copy to: NHS Chairs NHS Directors of Finance Integration Authority Chief Officers Integration Authority Chief Finance Officers Issued via email 15th December 2022 Dear Chief Executives Scottish Government Budget 2023-24 Following the announcement of the Scottish Government’s Budget for 2023-24 by the Deputy First Minister in Parliament today, I am writing to provide details of the indicative funding settlement for Health Boards. A breakdown of this is provided in Annex A to this letter. The Deputy First Minister has set out this budget in the context of the current cost of living crisis and funding parameters set by the Chancellor of the Exchequer in November 2022. This budget sets out the next steps to deliver the Health and Social Care commitments outlined in the Programme for Government, taking into account the current economic environment and recent Emergency Budget Review. As in previous years, the position will be subject to any amendments agreed through the Scottish Parliament’s Budget Bill process, as well as recognising the further work that we will undertake with you specifically in relation to Covid-19 and pay funding arrangements. I will keep you up to date with any changes to our planning assumptions. Budget Uplift Compared to 2022-23 budgets, Boards will receive a total increase of 5.9% for 2023-24. This includes recurring funding for pay in 2022-23 and a baseline uplift of 2% for 2023-24. Within this total, those Boards furthest from NRAC parity will receive a share of £23.2 million, which will continue to maintain all Boards within 0.8% of parity. In terms of pay, given the challenging and uncertain outlook for inflation, the need to conclude some pay deals for the current year and the associated implications for spending baselines, the Government has not set out a public sector pay policy alongside the 2023-24 Budget and we will say more on 2023-24 pay (covering Agenda for Change and other staff groups) at an appropriate point in the new year. As part of Boards recurring adjustments for 2022-23, amounts have been included based on pay offers for Agenda for Change and Medical and Dental staffing in 2022-23. The Agenda for Change pay deal remains subject to
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8 agreement, and we will work with Directors of Finance to finalise this position once the outcome is known. I will write to Boards in 2023 to confirm finalised baseline budgets following the conclusion of this work. Health & Social Care Levy Funding I can confirm that the £69.1 million allocated in 2022-23 to support Boards with the costs of the additional National Insurance levy in 2022-23 will remain with Boards. Following the change in policy by UK Government, this funding is not ringfenced and it is to be determined locally how this resource is utilised. Covid-19 Funding Whilst the scale of Covid-19 costs has reduced significantly in 2022-23 and projected to reduce further in 2023-24, we recognise that there are specific legacy costs that will require additional funding support in the new financial year. This includes funding for: - Vaccinations staffing and delivery; - Test & Protect activities including Regional Testing facilities; - Additional PPE requirements; and - Some specific Public Health measures. Following today’s budget we will seek to provide early clarity as to the total funding to be provided to support these costs. However, beyond the above, NHS Boards and Integration Authorities should expect to meet remaining costs from baseline funding and should continue to drive these costs down as far as possible. Policy Funding In addition to the baseline uplift outlined, funding aligned to policy commitments and recovery of health and social care services will be allocated to Boards and Integration Authorities in 2023-24. It is our intention to provide early indication of allocations, where possible, and to align this to the planning guidance that will be issued in relation to Annual Delivery Plans, setting out the priorities for health and social care in the coming year. Recognising the level of funding that is provided through in-year non-recurring allocations, and to maximise flexibility in delivery, we intend to review funding arrangements ahead of 2023-24. As part of this work, we will seek to bundle and baseline funding where this is appropriate. We will work closely with both Territorial and National Boards to establish a suitable approach. Health and Social Care Integration In line with previous years, 2023-24 NHS payments to Integration Authorities for delegated health functions must deliver an uplift of 2% over 2022-23 agreed recurring budgets and make appropriate provision for 2022-23 pay. The Health and Social Care Portfolio will transfer net additional funding of £95 million to Local Government to support social care and integration, which recognises the recurring commitments on adult social care pay in commissioned services (£100 million) and inflationary uplift on Free Personal Nursing Care rates (£15 million). This is offset by non-recurring Interim Care money ending (£20 million).
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9 The overall transfer to Local Government includes additional funding of £100 million to deliver a £10.90 minimum pay settlement for adult social care workers in commissioned services, in line with Real Living Wage Foundation rate. The funding allocated to Integration Authorities should be additional and not substitutional to each Council’s 2022-23 recurring budgets for services delegated to IJBs and, therefore, Local Authority social care budgets for allocation to Integration Authorities must be at least £95 million greater than 2022-23 recurring budgets. Capital Funding The Health Capital settlement for 2023-24 is in line with the expectations of the Capital Spending Review. Therefore I can confirm that Boards’ Capital Resource Limit will be in line with that for 2022-23, plus additional funding will be provided for legally committed projects. The capital programme and commitments is subject to ongoing review by the National Infrastructure Board and the Capital Investment Group, and Boards will be advised at the earliest opportunity on any further allocations for projects in development during 2023-24. 2023-24 Financial Planning As previously confirmed, where Boards are indicating that financial support is required in 2022-23, we have asked Boards to submit financial recovery plans in the new year, setting out a return to financial balance in the next three years. I expect that Boards are taking proactive steps to develop these plans. We will be requesting that financial plans for 2023-24 are submitted in the new year and will be issuing guidance to this effect shortly. As noted in my letter on 12 September, all Boards are expected to be engaging with the Sustainability and Value (S&V) programme, reflecting this work at a local level to support delivery of a cost reduction target of 3% per annum and productivity and related improvements in line with the four aims. The S&V board is now meeting regularly as are the working groups taking forward specific ideas. Value propositions have been set out to bring various elements of this work together which will be shared in due course. Longer term work is required as we move out of recovery, towards transformation and renewal of our health services to deliver world-class, safe, person-centred, and sustainable healthcare for the people of Scotland. This will build on and prioritise specific areas of work in a joined-up way, whilst working in parallel to develop longer term transformation and renewal of our health services. It is clear that there is significant financial challenge in 2023-24 and we will continue to work closely with Chief Executives to address this. I thank you again for your support to date and your continued engagement moving into the next financial year. Yours sincerely Richard McCallum Director of Health Finance and Governance
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10 Annex A – Board Funding Uplifts 2022-23 Allocation Recurring Allocations* 22-23 Pay** Total 2022-23 Allocation Uplift*** 2023-24 Total Allocation Uplift from 2022- 23 NRAC Funding Distance from NRAC Parity HSC Levy Funding (retained by Boards) **** Uplift from 2022-23 (inclusive of HSC Levy) NHS Territorial Boards £m £m £m £m £m £m % £m % Ayrshire and Arran 806.8 (0.6) 27.4 833.5 16.7 850.2 5.4% 0.0 -0.4% 4.4 6.0% Borders 234.8 (0.1) 8.0 242.6 6.0 248.6 5.9% 1.1 -0.8% 1.3 6.5% Dumfries and Galloway 334.1 (0.2) 11.3 345.3 6.9 352.2 5.4% 0.0 1.9% 1.8 6.0% Fife 749.4 (0.5) 25.5 774.3 16.5 790.8 5.5% 1.0 -0.8% 4.0 6.1% Forth Valley 598.1 (0.3) 20.3 618.1 13.0 631.1 5.5% 0.6 -0.8% 3.2 6.1% Grampian 1,072.2 (0.9) 36.4 1,107.7 22.2 1,129.9 5.4% 0.0 -0.4% 5.8 6.0% Greater Glasgow and Clyde 2,504.0 (1.4) 85.0 2,587.6 51.8 2,639.4 5.4% 0.0 1.7% 13.6 6.0% Highland 725.6 (0.5) 27.8 752.9 15.3 768.2 5.9% 0.2 -0.8% 3.9 6.4% Lanarkshire 1,346.8 (0.8) 45.7 1,391.8 32.3 1,424.1 5.7% 4.5 -0.8% 7.3 6.3% Lothian 1,639.3 (1.3) 55.7 1,693.7 49.6 1,743.3 6.3% 15.7 -0.8% 8.9 6.9% Orkney 57.1 (0.1) 1.9 59.0 1.2 60.2 5.5% 0.1 -0.8% 0.3 6.0% Shetland 57.0 0.0 1.9 59.0 1.2 60.1 5.5% 0.0 2.3% 0.3 6.1% Tayside 856.5 8.7 29.1 894.3 17.9 912.2 6.5% 0.0 -0.7% 4.7 7.1% Western Isles 84.5 (0.0) 2.9 87.3 1.7 89.0 5.4% 0.0 11.5% 0.5 6.0%
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11 Territorials Total 23.2 60.0 6.3% NHS National Boards National Waiting Times Centre 0.9 12.8% Scottish Ambulance Service 2.0 10.0% The State Hospital 0.3 7.0% NHS 24 0.7 16.7% NHS Education for Scotland 2.8 5.7% NHS National Services Scotland 1.5 7.0% Healthcare Improvement Scotland 0.2 11.0% Public Health Scotland 0.7 10.8% Nationals Total9.1 8.3% Total NHS Boards69.1 6.5% * Includes recurring allocations from 2021- 22 ** Includes estimated funding for Agenda for Change and Medical & Dental pay uplift in 2022-23. *** Includes NRAC parity adjustments. **** Included in Boards 2022-23 Baseline Budgets St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot 1,066.1 2.0 379.0 11,447.1 252.2 11,699.2 5.7% 68.1 0.0 6.2 74.3 1.5 75.8 11.3% 305.9 5.6 16.2 327.7 6.6 334.2 9.3% 40.0 0.0 1.7 41.7 0.8 42.5 6.3% 78.4 5.5 5.0 88.9 1.8 90.7 15.7% 492.3 1.4 13.8 507.5 10.1 517.6 5.1% 355.3 5.6 10.4 371.2 7.4 378.6 6.6% 30.4 1.1 1.4 32.9 0.7 33.6 10.4% 52.1 0.2 3.5 55.8 1.1 56.9 9.3% 1,422.6 19.5 58.0 1,500.1 30.0 1,530.1 7.6% 12,488.7 21.5 437.0 12,947.2 282.2 13,229.3 5.9%