Item 9 - Financial Monitoring Report 2022-23
North Lanarkshire Council · 16 November 2022
Back to IJB Performance, Finance and Audit Committee — 16 November 2022 and its agenda
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1 REPORT Item No: 9 1. PURPOSE OF REPORT 1.1 This paper is coming to the Performance, Finance and Audit (PFA) Committee: For approval For endorsement For noting 1.2 This report provides a summary of the financial position of the North Lanarkshire Health and Social Care Partnership (HSCP) for the period from 1 April 2022 to 31 August 2022 (Health Care Services) and 1 April 2022 to 16 September 2022 (Social Work and Housing Services). 2. ROUTE TO THE PERFORMANCE, FINANCE AND AUDIT COMMITTEE 2.1 This paper has been: Prepared By; Chief Financial Officer Reviewed By; Chief Officer 3. RECOMMENDATIONS 3.1 The PFA Committee is asked to agree the following recommendations: (1) Note the contents of the report; and (2) Note that the financial position in September is an estimated underspend of £7.212m (NHSL - £3.232m; NLC - £3.980m). This excludes the impact of further recruitment challenges and staff turnover and any potential new Scottish Government funding. 4. VARIATIONS TO DIRECTIONS 5. BACKGROUND/SUMMARY OF KEY ISSUES 5.1 This report is based on the financial monitoring reports received from the Director of Finance of NHS Lanarkshire (NHSL) and the Head of Financial Solutions of North Lanarkshire Council (NLC). The position detailed in these reports is therefore based on the information contained in each partner’s respective financial systems and includes accruals and adjustments in-line with their financial policies. 6. CONCLUSIONS 6.1 The financial position as at September 2022 is summarised as follows: there is a net underspend of £3.232m on the core budgets within Health Care Services SUBJECT: Financial Monitoring Report 2022/2023 TO: Performance, Finance and Audit Committee Lead Officer for Report: Ross McGuffie, Chief Officer North HSCP Author(s) of Report Amanda Kilburn, Chief Financial Officer North HSCP DATE: 16th November 2022 Yes No N/A
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2 there is a net underspend of £3.980m on the core budgets within Social Care and Housing Services The total underspend represents approximately 1% of the total financial envelope available. 6.2 The Covid-19 pandemic has created significant financial management and financial planning challenges for both partners and the IJB. These challenges have centred around the difficulties in predicting the costs associated with the recovery from the Covid-19 pandemic. 6.3 The 2022/2023 Covid-19 costs are being reported to the Scottish Government through the Lanarkshire Finance Performance Return on a monthly basis. There continues to be a significant degree of uncertainty in respect of the financial implications of the Covid-19 pandemic however the Scottish Government have advised IJBs that they will reclaim surplus Covid-19 reserves to be redistributed across the sector to meet current Covid-19 priorities. There is ongoing dialogue with the Scottish Government in respect of this potential reclaim. 6.4 The budget variance is analysed by care services at appendix 1 and the main factors contributing to the financial position are summarised at sections 8 and 9. 7. BUDGET ADJUSTMENTS 7.1 The reconciliation of the budget adjustments between April 2022 and September 2022 is attached at appendix 4 for information. 8. REASONS FOR MAJOR VARIANCES – HEALTH CARE SERVICES 8.1 Locality and Other Services 8.1.1 There is a net underspend of £1.028m. 8.1.2 The net underspend on pay costs totals £1.382m and is mainly due to vacancies across Nursing Services and Administration and Clerical staff within the localities totalling 65.43 FTE. There are incremental pay increases and unfunded enhancements across many services however these cost pressures are being offset in-year by the vacancies. 8.1.3 In respect of non-pay costs, there is a net overspend totalling £0.354m. The overspend is mainly due to payments in respect of Strathcarron Hospice (£0.237m). This cost is being managed on a non-recurring basis. A recurring funding solution requires to be identified. 8.2 Prescribing 8.2.1 A break-even position is reported at this stage. 8.2.2 The prescribing budget has reduced by £0.657m since 31 March 2022. The majority of the budget reduction relates to the savings target and a change in Scottish Government tariff prices. The budget reduction has been partly offset by a 2% inflation uplift. 8.2.3 Prescribing activity figures for the period from April 2022 to July 2022 have been received. Prescribing activity is 1% lower when compared to the same period last year. The cost per item is also lower due to a reduction in the tariff price.
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3 8.2.4 There continues to be significant risk in respect of prescribing activity and the costs, and it is highly likely that the uncertainty and volatility experienced throughout 2021/22 will continue for the foreseeable future. Prescribing costs will continue to be closely monitored. 8.3 Hosted Services Led By North Lanarkshire 8.3.1 The hosted services which are led by the North Lanarkshire HSCP are outlined at Appendix 2. There is a net underspend of £1.755m which includes the following significant variances: Mental Health and Learning Disability Services £0.344m underspend Children and Adolescents Mental Health Services £0.778m underspend Speech and Language Therapy £0.402m underspend 8.3.2 Within Mental Health and Learning Disability Services there is a net underspend on pay costs totalling £392k and a small overspend in Medical due to locum costs. Learning Disability Services, Medical, Rehab and Recovery and Perinatal and Infant Mental Health are awaiting further funding from Scottish Government, which will increase the overall underspend. Current vacancies within this area totals 58.72 FTE and are mostly within Old Age Psychiatry and Forensic Psychiatry. 8.3.3 Children and Adolescents Mental Health Services underspend is mainly within pay costs as the service currently has 44.27 FTE vacant posts within nursing and admin and clerical. 8.3.4 Speech and Language Therapy are also experiencing high vacancies totalling 27.34 FTE which equates to £0.355m of the reported underspend. 8.4 Hosted Services Led By South Lanarkshire 8.4.1 The hosted services which are led by the South Lanarkshire HSCP are outlined at Appendix 3. In-line with the hosted services agreement, a break-even position is reported. 8.5 Covid-19 Pandemic – Additional Health Care Costs 8.5.1 The additional health care costs which have been incurred in response to the Covid-19 pandemic continue to be reported to the Scottish Government through the Financial Performance Return. The year-to-date costs of £1.727m are included within the financial position reported and will be met by an existing IJB Covid-19 reserve. 8.6 Average Vacancy Factor 8.6.1 The vacancy position against the funded establishment at 31 August 2022 is summarised as follows: Establishment Actual Variance 2,811 FTE 2,636 FTE 175 FTE vacancies 100% 93.8% 6.2% 8.6.2 To help cover the current vacant posts, additional hours are worked through bankaide, overtime and excess part time hours, the cost of which is included within the financial position reported.
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4 8.7 Notional Set-Aside Allocation 8.7.1 The set-aside budget is a notional budget which represents the consumption of hospital resources by North Lanarkshire residents. Based on the 2020/2021 activity data from the Information Services Division (ISD) at the 2021/2022 prices, the budget was restated to £65.164m. 8.7.2 In respect of the financial year 2022/2023, the notional set-aside budget is restated to reflect the 2% inflationary uplift on the recurring baseline (£1.303m) and National Insurance uplift (£0.391m). The notional set-aside budget for 2022/2023 is therefore £66.858m. 8.7.3 In line with the accounting policy previously agreed, this notional set-aside budget will be included in the IJB Annual Accounts 2022/2023 as an estimate of expenditure. It is recognised that this will not necessarily reflect the actual usage of these hospital services by the IJB however it has been endorsed as an acceptable approach pending further updates from Information Services Division (ISD). 9. REASONS FOR MAJOR VARIANCES – SOCIAL CARE SERVICES 9.1 A net underspend of £3.980m is reported as at 16 September 2022. The main factors contributing to this year-to-date financial position are highlighted below. 9.2 Employee Costs 9.2.1 As previously highlighted, there are ongoing challenges in terms of recruitment and retention due to limited availability of the skills mix required within the workforce market. These are issues that are being faced by IJBs across Scotland, not only in North Lanarkshire. 9.2.2 Expenditure in Home Support Services has also increased as the service continues to support delayed discharges and demand. However, these additional employee costs are being offset by earmarked reserve funding and current underspends as a result of vacancies. A net underspend across employee costs of £2.366m is therefore reported. 9.3 Payments to Other Bodies 9.3.1 There is an underspend of £0.905m across payments to other bodies. The underspend is primarily due to the staff shortages and vacancies within the Care at Home sector who provide services to individuals via the Self-Directed Support commissioning framework. 9.3.2 There is also an underspend in package costs due to slippage in Self-Directed Support service start dates however, it is anticipated that these are in-year underspends only and the full budget will be required in 2023/2024. 9.4 Administration Costs 9.4.1 An underspend of £0.613m is reported in respect of administration costs. This is mainly due to an underspend across the carers budget. The anticipated underspend is reflective of the part-year implementation of contracts and additional funding from the Scottish Government for carers pressures in 2022/2023. As these pressures become evident within social care budgets, the funding will be moved to the relevant care package.
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5 9.5 Covid-19 Pandemic – Additional Social Care Costs 9.5.1 Covid-19 additional costs for 2022/2023 is estimated to be £2.106m. This forecast is related to continued support to care providers in relation to sustainability payments. In line with the current Scottish Government guidance, this is expected to continue until March 2023. 10. RESERVES 10.1 The current reserve balances as at September 2022 are as follows: 10.2 The 2022/2023 IJB Reserves Strategy is presented to the Performance, Finance and Audit Committee in an additional paper and gives full details of all year-to-date movement and reserves balances. 11. 2022/2023 PROJECTED OUTTURN 11.1 The Scottish Government are currently implementing a plan to recover uncommitted Covid-19 reserves and have also advised IJBs that some 2022/2023 funding will only be made available once all respective reserves have been depleted. This will increase pressure on current budgets and provides uncertainty for funding in future years. There is also increased winter period pressures when costs tend to escalate along with the uncertainty of future Covid-19 costs as we continue through the recovery stage. 11.2 On the assumption that 2022/2023 funding will be made available when if needed and excluding the impact of further recruitment challenges and staff turnover, the projected outturn at year end is estimated to be an underspend of c£14m. 11.3 Subject to IJB approval, this underspend will be allocated to manage, on a non- recurring basis, ring-fenced commitments, additional future business plans and any funding gap which may be highlighted in the North Lanarkshire IJB Medium Term Financial Plan 2023-2026. 11.4 The total costs and funding available for 2022/2023 is being closely monitored by both partners and the IJB. 12. RISK 12.1 Risk management arrangements are in place for the IJB and each partner. The IJB risk register has been reviewed and updated. The reassessment of the strategic financial risks is included in a separate report to the IJB. The main risk associated with the in-scope budget is that either or both partners may overspend. However as detailed within this report the financial outturn for this year is projected to be an underspend. Opening Balance As At Transfers To / From Drawdown from Revised Balance As At £m £m £m £m NHSL Ring-Fenced Reserves 66.590 0.000 (15.774) 50.816 NHSL & NLC Earmarked Reserves 27.081 3.090 (0.812) 29.359 NHSL & NLC Risk-Based Reserves 22.000 (3.090) 0.000 18.910 NHSL Contingency Reserves 3.782 0.000 0.000 3.782 119.452 0.000 (16.586) 102.866 LEAD SUMMARY Total
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6 12.2 Although a non-recurring underspend is being reported, health and social care services continue to face demand pressures including home support, self-directed support, direct payments, independent care home placements, hospice care and health care services recovery plans. 12.3 The operational and financial impact of the response to the Covid-19 pandemic is being monitored by the IJB and both partners in line with their agreed emergency response arrangements and the recovery, redesign and remobilisation work to reinstate services. The whole system approach continues to be adopted by NHSL, NLC and South Lanarkshire Council. 12.4 Risk management arrangements are in place for the IJB and each partner. The respective risks are managed by both NHSL and NLC through their detailed budget management processes. In addition to these mitigating actions, the IJB Financial Plan 2022/2023 is closely monitored and the IJB Medium Term Financial Plan 2023 - 2026 is being compiled. 13. IMPLICATIONS 13.1 NATIONAL OUTCOMES The effective management of financial resources contributes to the achievement of the national outcomes. 13.2 ASSOCIATED MEASURE(S) Each partner is required to remain within their approved budgetary provision. The IJB Medium Term Financial Plan 2023 -2026 is currently being completed. 13.3 FINANCIAL This paper has been reviewed by Finance: Yes No N/A 13.4 RISK ASSESSMENT/RISK MANAGEMENT The financial risks are detailed at section 12. The strategic financial risks detailed in the IJB Risk Register have also been updated and are included in a separate report to the IJB. 13.5 PEOPLE None 13.6 STAKEHOLDER ENGAGEMENT 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 North Lanarkshire IJB. 13.7 INEQUALITIES & FAIRER SCOTLAND DUTY Equality and Diversity Impact Assessment Completed & Fairer Scotland Impact Assessment Form Completed: Yes No N/A
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7 13.8 CARBON MANAGEMENT IMPLICATIONS Yes No N/A 14. BACKGROUND PAPERS None. 15. APPENDICES North Lanarkshire Health and Social Care Partnership Budget Appendix 1 Hosted Services Led by North Lanarkshire Appendix 2 Hosted Services Led by South Lanarkshire Appendix 3 North Lanarkshire IJB Budget Reconciliation 2022/2023 Appendix 4 ........................................... Chief Finance Officer Members seeking further information about any aspect of this report, please contact Amanda Kilburn on telephone number 07816 126362.
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8 North Lanarkshire Health and Social Care Partnership Budget Appendix 1 Expenditure Annual Budget Budget Actual General Ring-Fenced Total 2022/2023 August 2022 August 2022 August 2022 August 2022 August 2022 £m £m £m £m £m £m Health Care Services Locality and Other Services 48.216 20.197 19.169 1.028 0.000 1.028 Addiction Services 3.094 1.310 0.953 0.357 0.000 0.357 Medical and Nursing Directorate 4.479 1.857 1.802 0.055 0.000 0.055 Prescribing 69.582 28.993 28.993 0.000 0.000 0.000 Out of Area Services 4.571 1.905 1.905 0.000 0.000 0.000 Area Wide Services 10.432 3.858 3.821 0.037 0.000 0.037 Hosted Services 158.307 62.327 60.572 1.755 0.000 1.755 Family Health Services 107.097 47.089 47.089 0.000 0.000 0.000 Set-Aside Budget 66.858 27.858 27.858 0.000 0.000 0.000 Covid-19 1.727 1.503 1.503 0.000 0.000 0.000 Total Expenditure - NHSL 474.364 196.897 193.665 3.232 0.000 3.232 Social Care Services Social Care Services Gross Expenditure 241.772 89.862 85.928 3.933 0.000 3.933 Social Care Services Gross Income (Including Covid-19 Income) (2.829) (7.959) (8.006) 0.047 0.000 0.047 Social Care Services Net Expenditure 238.943 81.902 77.922 3.980 0.000 3.980 Housing Revenue Account Expenditure 1.870 0.883 0.883 0.000 0.000 0.000 Transport Services Expenditure 0.551 0.169 0.169 0.000 0.000 0.000 Social Care, Housing and Transport Services Net Expenditure 241.364 82.955 78.975 3.980 0.000 3.980 Social Care and Housing Services Sub-Total 241.364 82.955 78.975 3.980 0.000 3.980 Total Expenditure - NHSL and NLC 715.727 279.852 272.640 7.213 0.000 7.213 Funded By: Annual Budget 2022/2023 £m NHS Lanarkshire Funding (457.778) Social Care Funding (22.964) Resource Transfer (23.421) Commissioned Services (6.799) Scottish Government Funding - Covid-19 and Remobilisation (1.727) Transfer from Reserves (Approved) (14.859) Total Funding - NHSL (527.548) NLC Funding - Social Care Services (185.759) NLC Funding - Housing Services (1.870) NLC Funding - Transport Services (0.551) Transfer from Reserves (Approved) 0.000 Total Funding - NLC (188.180) Total Funding - NHSL and NLC (715.727) Year To Date Year To Date Variance 2022/2023
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9 Hosted Services Appendix 2 Led by the North Partnership Annual YTD September 2022 YTD September 2022 YTD September 2022 Annual YTD September 2022 YTD September 2022 YTD September 2022 Annual YTD September 2022 YTD September 2022 YTD September 2022 Budget Budget Actual Variance Budget Budget Actual Variance Budget Budget Actual Variance 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 £m £m £m £m £m £m £m £m £m £m £m £m Sexual Health Services 2.789 1.189 1.150 0.039 1.422 0.606 0.567 0.039 1.367 0.583 0.583 0.000 Continence Services 2.361 0.984 0.998 (0.014) 1.204 0.502 0.516 (0.014) 1.157 0.482 0.482 0.000 Immunisation Services 1.898 0.506 0.586 (0.080) 0.968 0.258 0.338 (0.080) 0.930 0.248 0.248 0.000 Speech and Language Therapy Services 6.083 2.540 2.138 0.402 3.102 1.295 0.893 0.402 2.981 1.245 1.245 0.000 Children and Adolescents Mental Health Services 16.447 4.604 3.826 0.778 8.388 2.348 1.570 0.778 8.059 2.256 2.256 0.000 Childrens Services 11.565 4.822 4.761 0.061 5.898 2.459 2.398 0.061 5.667 2.363 2.363 0.000 Integrated Equipment and Adaptations Store 0.567 0.236 0.229 0.007 0.289 0.120 0.113 0.007 0.278 0.116 0.116 0.000 Dietetics Services 3.738 1.563 1.522 0.041 1.906 0.797 0.756 0.041 1.832 0.766 0.766 0.000 Podiatry Services 4.316 1.809 1.753 0.056 2.201 0.923 0.867 0.056 2.115 0.886 0.886 0.000 Prisoner Healthcare Services 1.698 0.708 0.709 (0.001) 0.866 0.361 0.362 (0.001) 0.832 0.347 0.347 0.000 Blood Borne Viruses Services 1.529 0.636 0.574 0.062 0.780 0.324 0.262 0.062 0.749 0.312 0.312 0.000 Hospital at Home 2.225 0.922 0.862 0.060 1.135 0.470 0.410 0.060 1.090 0.452 0.452 0.000 Mental Health and Learning Disability Services 71.909 29.646 29.302 0.344 36.674 15.119 14.775 0.344 35.235 14.527 14.527 0.000 TOTAL 127.125 50.165 48.410 1.755 64.834 25.584 23.829 1.755 62.291 24.581 24.581 0.000 North Share of South Hosted Services 31.182 12.162 12.162 0.000 Hosted Services Total 158.307 62.327 60.572 1.755 TOTAL South Lanarkshire IJB - 49% ShareNorth Lanarkshire IJB - 51% Share
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10 Hosted Services Appendix 3 Led by the South Partnership Annual YTD September 2022 YTD September 2022 YTD September 2022 Annual YTD September 2022 YTD September 2022 YTD September 2022 Annual YTD September 2022 YTD September 2022 YTD September 2022 Budget Budget Actual Variance Budget Budget Actual Variance Budget Budget Actual Variance 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 2022/2023 £m £m £m £m £m £m £m £m £m £m £m £m Community Dental Services 6.906 2.959 2.737 0.222 3.522 1.509 1.509 0.000 3.384 1.450 1.228 0.222 Brain Injury Unit 1.639 0.673 0.742 (0.069) 0.836 0.343 0.343 0.000 0.803 0.330 0.399 (0.069) Out of Hours Services 8.962 3.603 3.569 0.034 4.571 1.838 1.838 0.000 4.391 1.765 1.731 0.034 Palliative Care Services 7.111 2.992 2.974 0.018 3.627 1.526 1.526 0.000 3.484 1.466 1.448 0.018 Physiotherapy Services 10.192 4.260 3.943 0.317 5.198 2.173 2.173 0.000 4.994 2.087 1.770 0.317 Primary Care Services 0.748 0.315 0.290 0.025 0.381 0.161 0.161 0.000 0.367 0.154 0.129 0.025 Occupational Therapy Services 7.802 3.293 3.293 0.000 3.979 1.679 1.679 0.000 3.823 1.614 1.614 0.000 Diabetic Services 4.936 2.741 2.701 0.040 2.517 1.398 1.398 0.000 2.419 1.343 1.303 0.040 Sub Total 48.296 20.836 20.249 0.587 24.631 10.626 10.626 0.000 23.665 10.210 9.623 0.587 Ring Fenced Funding Primary Care Improvement Fund 12.846 3.012 3.012 0.000 6.551 1.536 1.536 0.000 6.295 1.476 1.476 0.000 Primary Care Transformation Fund 0.000 0.000 (0.015) 0.015 0.000 0.000 0.000 0.000 0.000 0.000 (0.015) 0.015 Sub Total 12.846 3.012 2.997 0.015 6.551 1.536 1.536 0.000 6.295 1.476 1.461 0.015 TOTAL 61.142 23.848 23.246 0.602 31.182 12.162 12.162 0.000 29.960 11.686 11.084 0.602 South Share of North Hosted Services 62.291 24.581 24.581 0.000 Hosted Services Total 123.433 48.429 47.827 0.602 TOTAL South Lanarkshire IJB - 49% ShareNorth Lanarkshire IJB - 51% Share
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11 North Lanarkshire IJB Budget Reconciliation 2022/2023 Appendix 4 2022/23 NHSL Financial Allocation to North Lanarkshire HSCP £m 2022/23 NLC Financial Allocation to North Lanarkshire HSCP £m 2022/22 North Lanarkshire HSCP Financial Allocation 506.931 2022/22 North Lanarkshire HSCP Financial Allocation 132.575 Add: Set-Aside Budget 66.858 NLC Funding - Housing Services 1.870 Less: Budget Adjustments NLC Funding - Transport Services 0.551 Social Care Fund -22.964 Add: Budget Adjustments Resource Transfer -23.421 Social Care Fund 22.964 Commissioned Services -6.799 Resource Transfer 23.421 NHSL Financial Allocation at 31 May 2022 520.605 Commissioned Services 6.799 NLC Financial Allocation at 16 September 2022 188.180 Additions: Draw Down from Reserves 1.949 Increase to Employers NI 1.262 NES Trainee 1.021 Other Budget Adjustments 0.425 NHSL Financial Allocation at 30 June 2022 525.262 Additions: Draw Down from Reserves 0.460 Junior Medical Income -0.040 Other Budget Adjustments 0.023 NHSL Financial Allocation at 31 July 2022 525.705 Additions: Draw Down from Reserves 0.453 Child Death Review Funding 22-23 0.024 Increase to Hosted Services Led by South 1.146 Other Budget Adjustments 0.220 NHSL Financial Allocation at 31 August 2022 527.548 Budget Adjustments Posted in Month 4 Budget Adjustments Posted in Month 3 Budget Adjustments Posted in Month 5