Health and Sport Committee

Meeting date: Tuesday, May 30, 2017

Official Report 529KB pdf

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Draft Budget 2017-18

Good morning and welcome to the 15th meeting in 2017 of the Health and Sport Committee. I ask everyone in the room to ensure that their mobile phones are on silent; you can use them for social media, but please do not take photographs or film proceedings.

Agenda item 1 is an oral evidence-taking session on the draft budget 2017-18. I welcome to the committee Keith Redpath, chief officer, West Dunbartonshire health and social care partnership; Vicky Irons, chief officer, Angus health and social care partnership; Katy Lewis, chief finance officer, Dumfries and Galloway health and social care partnership; and, via videolink, Karl Williamson, chief officer, Shetland health and social care partnership. Can you see and hear us okay, Karl?

Yes, I can hear you. I should say that I am the chief financial officer, not the chief officer.

I am sorry—I should have said chief finance officer.

Thank you.

Thank you for joining us, Karl. When we want to bring you in, we will try to ask you questions directly so that you know when to answer. This is not an easy format for me, you or the rest of the committee to work with, but we will try to be as helpful as possible. If there are any problems at your end, please wave your hands frantically to let us know.

We will move to the first question.

Good morning. Meeting papers from West Dunbartonshire note:

“it will only be possible to release resources from the acute services to sustain funding for community services if the number of inpatient beds is reduced”.

In its inquiry on preventative spend, the committee heard evidence that creating a split between acute and community services creates a false dichotomy; it will neither decrease demand on the acute sector nor necessarily reduce costs, because staffing and overhead costs will not be reduced. Can you expand on that? Will you give us your views on whether the 2017-18 budget plans indicate a shift in the balance of care, whether such a shift is achievable and whether demand in the acute sector can be reduced to allow resources to be shifted to the community sector?

There is a lot in that question. We have made it fairly clear in our report that, having been at the integration process for some time now, we are not uncomfortable with our system of care. However, given the pressures on every part of the system, any fundamental shift needs to include resource shift, too, and the reality is that a shift in that balance will mean fewer hospital-based acute beds.

We are not trying to separate the elements and say that there are two systems; we are part of a single system, and all parts of that system need to work efficiently in order to deliver, but that shift will mean reducing the costs of and the resource consumed by acute and moving that resource to community. Notwithstanding the costs around staff in that respect, we all feel that the staff who come out of acute could provide some of the new services in the community. Because the resource would follow the service and the people, we would not be dependent on new resource; instead, we would be shifting that resource. Our community assets and resources are working very hard, so the capacity needs to come from somewhere and, given the policy intent, the acute sector is the obvious place for it to come from.

Would anyone else like to comment?

I am happy to give an Angus perspective. So far, we have seen some small signs of shifts in resources. For example, because of the community services that we have put in place, there is less of a reliance on some of our in-patient facilities in Angus, and the decrease in the use of care homes is commensurate with a number of developments providing more care at home.

The important point about our local partnerships, which look at the use of the acute sector and the cost of that care, is that we take a round-table partnership approach to planning for the future. It is clear to us that although the money might not be easy to shift, where we can work effectively together is on changing practice. We are seeing, through a multidisciplinary team approach, more of those who provide specialist care in the acute sector coming out to work hand in hand with primary care professionals in Angus, and that seems to have been effective in changing the balance of care as opposed to shifting the financial resource through the budget settlements.

The Dumfries and Galloway model is different from the model in a number of other partnerships in that we have not created that divide. Acute and primary care services are all delegated under the directorship of one chief officer, and that has allowed our partnership around the integration table to see the diversity of issues and the pressures on community and acute services.

We are keen to see investment in community services before there is a shift from acute services. Something that we have done quite effectively in Dumfries is to shift our mental health service provision; we have reduced the number of beds and increased the community services closer to home both in dementia care and in the overall care of individuals. With our acute services, we are starting on the pathway set out in that model with some of the investments that we have made, particularly the one-team approach that we are trying in the Dumfries and Nithsdale area. That is very much a multidisciplinary approach, and we are getting it much more established in communities.

Up in Shetland, we have seen good progress in shifting the balance of care through the use of an intermediate care team. However, we are finding it more difficult to shift the costs, because we have a small hospital with high fixed costs and there is not a lot of scope for closing further sections of it.

Picking up on what Alison Johnstone said, I think that a view is emerging that there is going to be no shift in finance or that any such shift is going to be negligible. Is that the case?

Our progress so far shows that there has been a shift. It is reasonably small—

Can you quantify it?

We were previously looking at resources around 39 per cent, and I think that over the past three years—I will double-check this—that figure has shifted to 41 per cent. It is a small shift, but it is very clear from all parties concerned that we need to see further shifts through the powers that we have in the commissioning plans. It comes back to my point about investing the resources in people. If we can change practice, the resources will follow through the new pathways of care that we are developing with acute sector colleagues.

Obviously, one group of people who we need to invest in are social care staff. When integration authorities responded to the committee’s survey last year, the information that we got back suggested that the cost of implementing the living wage for all adult social care workers exceeded the Scottish Government’s estimate of £37 million. The Scottish Government stated:

“The £10 million included for sleepovers will be reviewed in-year to consider its adequacy with a commitment to discuss and agree how any shortfall should be addressed.”

Has the funding provided by the Scottish Government for implementation of the living wage been sufficient, and has the £10 million for covering the costs associated with sleepovers been sufficient, too?

Because of the make-up of our market in West Dunbartonshire, we are still a direct provider of quite a significant number of services. That is certainly the case for older people, although less so for other adult services. The amount that we were provided with to implement the living wage was certainly sufficient; indeed, we did not require all of the allocation to meet it.

As for sleepovers, we have had a second tranche of funding for 2017-18. All of us would probably prefer it if money were invested in providing direct care rather than in people who are sleeping—even though they are available when service users need them—but that has given us the impetus to review the models of care that we have with various providers and ensure that we are making the best use of that funding. From a West Dunbartonshire perspective, because of the balance in our provision and because our directly employed staff are already paid above the minimum wage level, the cost implications for us have been less significant than they have been in other parts of Scotland.

I recognise the risk that was highlighted last year, and we had similar concerns raised with us. Not unlike West Dunbartonshire Council, though, we worked through all the implications and resolved the issues within the resources available.

Ours was one of the first partnerships to implement the living wage, and we did that through a tender process, with a cap of £16.50 an hour. The benchmarking from that means that we are sure that most of our big providers are now able to pay that living wage to staff, and we have seen some quite significant improvements in our ability to recruit and retain care staff. We had to invest a significant amount of our social care fund in 2015-16 in that specific issue because of issues around rurality and travel time, particularly in a locality such as Dumfries and Galloway, but we thought that that investment was worth while.

As for sleepovers, we have invested around £400,000 in increasing the rates and in moving to an hourly rather than a fixed overnight rate, and we think that we now have an agreement that meets our legal obligations.

We are the direct provider of the majority of services in Shetland, and we have already been paying the living wage. As a result, the Scottish Government funding has been adequate for Shetland.

Katy Lewis talked about a cap of £16.50 an hour. How does that operate?

We had a process in which all the providers were able to tender on the basis of the hourly rate that they required, and most of them came within a few pence of the £16.50.

Did you agree with them that £16.50 would be the hourly rate?

That was the rate that we as a team agreed locally would be used as an adequate benchmark for the tender process.

Did the providers know that when they tendered?

Yes, they knew that.

So everybody knew that the rate was £16.50.

We have done a lot of work on engaging with our providers locally on the costs of their provision, particularly on how that links with more rural packages, where we were getting signs that travel time was a really big issue for some providers.

I refer members to my entry in the register of members’ interests. As a local councillor in Dumfries and Galloway until 4 May, I was involved in the council’s budget-setting process.

I would like to ask the panel members whether the budgets for each of their IJB areas have been set for the forthcoming year.

09:45  

Ours has been set and agreed.

In West Dunbartonshire, we have an agreement on the council’s contribution. We are still in discussions with the health board about its contribution but, at the previous meeting on the variation in the national health service budget, we set the budget on the basis that we would continue to have discussions and that we would cover from reserves as necessary any pressure on that, which amounts to £0.25 million.

We have an agreed budget in Dumfries and Galloway.

Karl, is your budget agreed?

Yes. We agreed the budget, but there is a deficit on the NHS side.

So the budget has been agreed in some but not all areas. Have you identified all the savings that you require to make in the forthcoming year, or are there any gaps in the budgets?

With regard to West Dunbartonshire, there were no savings to be made on the council side. By that I mean that each council was allowed to reduce its allocations under the rules set out in Parliament; that meant that we had money left that we had not used recurrently from the 2016-17 allocations, and that went to the bottom line. We have not actually had to make any cuts. On the NHS side, we are looking at a 2 per cent turnover target to meet the requirements of the flat cash and, as I have said, we are still in discussion with the health board about £0.25 million.

Angus Council had a full set of efficiency plans considered by the IJB in April, and those plans were approved. We have a small £49,000 shortfall in efficiency savings to be identified through the NHS Tayside budget agreement. We also have a similar shortfall in the Angus Council settlement, but the efficiencies that we need to identify are more in the region of £200,000.

More significant to Angus and the Tayside partnerships across NHS Tayside is the estimated shortfall in the devolved budget for prescribing in Tayside. In that respect, Angus currently has a shortfall of more than £1 million.

In Dumfries and Galloway, we have a £5 million gap in identified savings, and to bridge that gap, we have agreed with our integration joint board a business transformation programme in which we are setting up various service redesign programmes that we will work through.

As chief finance officer, I have held over the past six to nine months a range of workshops with our integration joint board members to set out the scale of the expected challenge. Of course, there is also the whole of the acute service in Dumfries to bear in mind, and some of the pressures that sat primarily with NHS boards now sit within the totality of the integration joint board in Dumfries and Galloway. We recognise that we still have to make progress in closing that gap and that the partnership will have to make a range of difficult and challenging decisions as we move forward.

In Shetland, we have a balanced budget on the local authority side but a £2.5 million funding gap on the NHS side. That is about 6 per cent of the total IJB budget. We have identified savings amounting to £1.2 million, but £1.3 million remains unidentified, which is a challenging position.

The witnesses seem to be talking about the council side and the health board side, but is the budget not supposed to be integrated? My perception of the process is that, instead of the IJBs setting the budget and determining how much money they require, councils are setting aside how much they are allocating and health boards are setting aside how much they are allocating. In fact, it sounds as if it goes further than that, with the health boards effectively deciding what savings they are making and the councils appearing to be making judgments on what could be saved from their own allocations. I thought that the budget was supposed to be integrated, so why are you talking about the council allocation, the health board allocation and the different gaps?

The reality is that that is how the funding for the integration authorities is set up. We have two sources of funding: the local authority and the health board. I know that, in previous evidence sessions, people have suggested that there be a single process, with the funding perhaps coming directly from Parliament, but that is not the reality.

When the partnerships were first set up, the due diligence work considered the amount of council funding and health board funding that had previously been used for the same purposes, so that people could satisfy themselves that the money that was allocated was fit for purpose. Once the funding comes to us, we are duty bound to ensure that, in a sense, it loses its identity; it gets pooled, and we are then able to use it more flexibly. However, the original allocations still come from councils and health boards.

The Government will argue, however, that you have the authority to determine how much you require to implement your strategic plan. Are you saying that, in practical terms, that is just a piece of theory that is not being used? As an IJB, you do not say that you need £X from the local authority and £X from the health board to deliver your strategic plan, which is therefore your budget. The Government would argue that the powers that it has given you allow you to do that, but you are saying that you just wait and see what the health board and the council give you, and you then decide how to allocate the funding. That is what is really happening in practical terms.

When we get our allocations, we can then consider how we best meet the priorities in our strategic plan. However, the initial allocations can come only from those two places. I am certainly not aware of a partnership anywhere else that has taken the approach of initially thinking about what its population needs and then going back to its funders—councils and boards—and saying, “This is what we need; please give us it.”

From the Angus perspective, I endorse Keith Redpath’s comments about what happens once the money is devolved. We are certainly using it with more flexibility locally, and we are investing significantly in social care out of the totality of the resources that are delegated to us.

One dynamic that exists in Angus—I am not sure whether it exists anywhere else—that requires us effectively to retain the description of a health resource and a local authority resource is the risk-sharing agreement regarding any overspends relating to the costs of health and social care that we entered into, through the integration scheme, with the NHS board and the local authority, for the first two years during which the IJB was operational. That requires us to maintain systems for recording and articulating spend against health services and local authority services, should we be required to draw on that risk-sharing agreement. However, there is a recognition that we want to move forward in the spirit of the guidance establishing IJBs, and to have a more integrated approach to negotiating budgets.

The question of who sets or negotiates the budget is interesting. From experience of the past couple of years, I say that the due diligence process has been very helpful in identifying an adequate and fair budget and in the negotiations for reaching a budget settlement.

There is no denying that, although we are an integration authority, we are partners with the local authority and the NHS board. Therefore, we are not immune to the efficiency programmes that they must put in place to provide sustainable care, and we have to be part and parcel of those. That has all been playing out during the negotiations for the initial year and for 2017-18.

In your written evidence, you seem to imply that you would prefer a system of direct funding from Government. You talk about the frustrations of having separate partners and you imply that something almost like a direct funding model might be better.

Some of the information that we have put forward has supported the approach that has been taken this year, which has been more to do with the national direction regarding the resources that will be directed towards IJBs. That has really helped local discussions, as the approach has been fairly unequivocal. Our preference would be to have more direction to enable us to adopt a fair starting position for those negotiations and then to move on to direct allocations to IJBs in the future if at all possible.

I am sorry to sound like Jeremy Paxman, but I will come back in at this point. How would we ensure democratic local accountability if everything was directly funded by the Scottish Government instead of through local authorities?

We would have to consider the make-up of the IJBs, but the current preference would be to continue along the lines of experience from last year with more national direction on the allocation that is to flow through the two bodies to the IJBs. We also said in our evidence that we would like the precedent that was set this year of allocating funds through the NHS boards to continue, but with clear directions.

Would all the panellists prefer the money to come directly from the Scottish Government? In answering that question, will you say whether you have a health or local government background?

I have a health and local government background. I have managed health and social work services across local government and the health service for the past 30 years. I have experience of exclusively managing social work services in councils. I then moved into the health service and then into a joint position. My IJB has not reached a view on direct funding, so I will give a personal view.

I share Vicky Irons’s view that clarity on what the new money that is being invested can and cannot be used for is incredibly helpful, particularly in a time of financial challenge for the whole of the public sector. Although we are bodies corporate in substance, the reality is that the IJB directs councils and health boards on what it wants the money to be spent on. Over time, there is the potential for IJBs to become the direct employers of the staff.

Direct funding is one solution. If people perceive the current method of allocating funding through local government and health boards to be problematic, that would be the most obvious solution. However, the current method can work. We have run an integrated service since 2010, and the budget negotiation process that we have gone through in the past couple of years has not necessarily been any more difficult than it was previously. We have had the time to work through a number of issues. There will always be a bit of negotiation, but people should come to that with common sense and understanding. I come from an area that has been broadly supportive of integration and what that is trying to achieve, and that has not been a particularly difficult matter for us.

It is quite well documented that, over the years, we have asked for greater alignment between council and NHS budgets and processes so that there are no inevitable delays.

I have a health background. I declare an interest as director of finance in NHS Dumfries and Galloway. I therefore have a dual role.

We want to ensure that the timelines are as early as possible in the year. We have seen later timelines for agreeing the budget, and that makes our jobs in agreeing a financial planning piece more difficult.

I also make a plea for longer-term financial direction, even if it is only indicative. The ambition is that we will not plan on annual cycles. Some of the service changes and resource shifts will inevitably take a longer time, but greater certainty about resources over, for example, a three-to-five-year timeline that links with the timeline for the strategic plan would be welcomed.

I, too, have a dual role: I am head of finance at NHS Shetland and chief financial officer of the IJB.

From the IJB side, direct funding would be welcome because it would safeguard the IJB budget and drive the shift in the balance of care but, from the NHS side, it would probably not be as helpful. As I said, we have fixed costs in the acute hospital. If we have to protect the IJB budgets, that will put the savings disproportionately on to the acute services, which are already almost at a minimum. Direct funding would be helpful from the IJB side, but perhaps not so helpful from the NHS side.

10:00  

From what has been said, it seems that the creation of IJBs is a process rather than an event. What are the limits of the current funding model in achieving the autonomy and independence that we all recognise IJBs require if they are truly to deliver on their aims?

Who wants to go first?

I guess that it is a question of having good partnership working and being mindful that each organisation has its own efficiency targets to meet. I do not think that I can say more than that at this point.

Is it a limitation that partnership working will always come down to the individual partners involved, which means that there is likely to be variance?

I know from the experience that we have had in Dumfries and Galloway that the success of our partnership to date has been based on effective relationships between our local authority and NHS partners. That is not going to go away as a result of what happens with the arrangements in the IJB.

We need to look at where the integration joint board sits in the current climate. In health, there has been a great shift towards looking at regional planning and how that is going to work. We need to be clear about where the decision making is done. Colin Smyth asked how we ensure that decision making is done in a locally democratic way. In Dumfries and Galloway, we have tried to delegate as much of our budgets as possible to our localities. We have reinforced our locality structure to get locality management. An important aim is communities having ownership of some of the service changes that we are making. For me, that is an extremely important strand of what we are trying to achieve.

I share Tom Arthur’s view that the creation of IJBs is a process rather than an event. As I said earlier, we have been working on integration for a long time, albeit that the governance around that, along with other bits and pieces, changed in 2015, when the new legislation came in. We have been working on integration formally since 2010, although we have had integrated community care management arrangements since 2008, so we have been addressing the issue for a long time, and we have been able to work through many aspects of it.

I was the community health partnership director in West Dunbartonshire from 2005, and I now have a smaller management team to manage the totality of the IJB’s business, which includes all of what was community health and all of what was social work. We have been making £0.5 million of savings in management costs alone for the past seven years, and there will be opportunities for others in that area. We have been through a process of establishing the trust and the relationships that are vital to making the system work. We would certainly advocate that, as Tom Arthur suggests, the model will evolve and develop as we go forward.

On the idea of moving to a direct funding model, the issue of democratic accountability has already been raised. What other challenges do you envisage would be faced in moving to such a model?

There are quite well-established resource allocation formulas for how health boards and local authorities receive their funding, so it would be necessary almost to start again with that, and the issue of equity and fairness would have to be addressed, which would be incredibly challenging.

I want to build on a comment that I think that Keith Redpath made and the comments about integration authorities becoming more independent bodies. There are a range of other things that we would need to consider, including the employment status of the people who work in the health and social care partnership.

At the risk of being slightly contradictory, I want to build on the comments of Katy Lewis about Dumfries and Galloway and say that, to date, our effort has absolutely been invested in building good, strong local partnerships through the localities, building relationships with the people who actually provide care and integrating that at the point of delivery.

I guess that there has been less focus on trying to create total independence of the new integration authority. That is the result of a range of issues, not the least of which is that we are part of the local authority and the local NHS board and have a series of interdependencies as a result. Many of the corporate services that we use are provided by the parent bodies.

Regionalisation was mentioned. Our experience over the first year of operation and into this year has shown that we have interdependencies to create beyond our own boundaries. There is now a greater requirement for IJBs to work regionally on the pressure points that we have. Our focus is therefore on building on our local partnerships and then creating the wider regional partnerships that we need to sustain ourselves.

Is it fair to say that the potential for integration is limited by the capacity for partnership between local authorities and health boards?

Certainly from my perspective, the effectiveness or capability of the approach is underpinned by good local partnership. I guess that the flipside is that the potential for integration is about the quality of local relationships. It is not necessarily about the systems; it is more about relationships, leadership and good local partnership.

The focus should therefore be on ensuring that we can get partnerships to work as effectively as possible, rather than on moving to a direct funding model.

I agree.

I thank the panel for coming. I want to get a bit more clarity on a couple of things, and you might or might not be able to help me. The first point is about the overall level of the budgets. I have seen comments in your written submissions about health boards being instructed to give you a flat allocation in 2017-18, in cash terms. However, if we look at NHS Scotland budgets for 2016-17 and 2017-18, we see that, in cash terms, the total budget is up by £270 million or 2.1 per cent and, in real terms, it is up by £80 million or 0.6 per cent. The health boards are getting increases in cash terms and real terms, but you have commented that they are being told to give you the same allocation in cash terms. Are both points correct? If so, where is the rest of the money? Are health boards hanging on to it, for something else? What is the context?

On the overall numbers for health, £100 million from the health budget was directed into social care, as part of the settlement. In Dumfries and Galloway, £3 million of the funding that the health board received—part of the £270 million that you mentioned—has already gone across to the integration joint board, as part of the partnership. That is not counted in the number that we use when we talk about the cash-flat settlement, which left NHS boards with a relatively small uplift of around 0.4 per cent. That is part of the challenge around the level of savings.

You are saying that the money that you are getting is the local authority money that we talked about, health board money, which is flat cash, plus the extra £100 million, on top of that.

Yes. Integration joint boards got the flat cash and a share of the £100 million—

Has the £100 million come through the health boards or directly to you?

It has come through the health boards.

Okay. I am looking at the numbers for Dumfries and Galloway, which have gone up by £6 million between 2016-17 and 2017-18. You said that £3 million of that £6 million went to you, as part of the £100 million that went to IJBs.

It will be a combination of the full-year impact of the social care fund from 2015-16, the £3 million and any other ring-fenced funding that we have had through the integrated care fund and how that has played into the budget position.

So the model is even more complicated than it first appears to be.

Yes.

You have money from local authorities, money from health boards in flat-cash terms and, on top of that, other pockets of money coming through the health boards that are allocated specifically to the IJBs.

Yes.

Tom Arthur and Colin Smyth asked how the process will evolve. It sounds as if it is already creaking under the complexity, with add-ons and other bits and pieces being bolted on. I assume that the process will evolve, but is there a danger that it will become just too complicated?

I do not think so. It might appear so at first glance, but we are involved in it and we should at least understand how it works.

As we have said, we need to be clear about the specific additional allocations. I might be wrong—my colleague Katy Lewis can keep me right on this—but my recollection is that the £250 million for social care in 2016-17 was over and above any uplift that went to health boards, whereas the £107 million for 2017-18 is part of the health boards’ total uplift. That is a slight additional complication but, as I said, we understand it.

I suppose that it goes back to your question about why it looks as though there is so little and what is happening to the extra money. In my health board, by the time the share of the £107 million flowed through to NHS Greater Glasgow and Clyde, I think that something in the single figures of millions was left of the uplift to cover all inflationary pressures.

My next question is on the concept of set-aside. We have talked about what you call large hospitals. My understanding of the definition is that a large hospital is one that covers more than one local authority or more than one IJB area. Am I correct? Is that how it is defined?

Not necessarily.

Okay, so a large hospital could be allocated to one IJB or it could cover several. From reading through our papers, it seems that the concept for how that money works—again, you can correct me if I am wrong—is that the hospitals need money to provide services that the IJBs need and the IJBs fund those through a transfer of resources. The health board has the money to start with but, rather than giving it to the IJB only for it to return the money to the hospital, the health board keeps the money and gives it directly to the hospital. Part of the hospital’s funding comes through that set-aside process and part of it comes directly from the health board. Is that how the process works?

I suppose that it is fair to say that the set-aside piece for the first year of operation has been almost like a notional allocation. The health boards, in conjunction with the IJBs, have worked out the amount of resource to be allocated to the partnerships through their costing mechanisms, based on the services that are directed through the integration scheme, and with a view to looking at how that can impact on acute services. In Dumfries, we do not have set-aside budgets because we have all of our acute hospitals budget within that.

A piece of work is going on with the policy team in the Government and the chief finance officers network to look at how we can make that a bit more real. It is probably fair to say that, in the first year, it has not felt real to Vicky Irons or Keith Redpath, given how it impacts on the overall resources that the integration joint boards have, but the idea is to give the IJBs influence so that they can make an impact on the delivery of acute services in their regions.

That makes sense, because the whole point is to move the resources from acute services to the social care side. We started by discussing that. However, as you make that more real, it will throw up another problem. If people who are trying to manage a hospital are not sure where their money is coming from and they have to negotiate with several IJBs, it will become even more complicated, especially given that hospitals have big, fixed costs. Has any thought been given to how that is going to play out?

Ivan, can I bring in Karl Williamson on that?

Of course.

In Shetland, the set-aside budget was passed to the IJB at the start of the year as part of the delegated budget. Because we have just one local authority and one hospital, we put in the full cost centres that relate to emergency care, so the moneys for accident and emergency, ward 3 and the medical doctors and consultants all went into the IJB. That allows the IJB to consider the whole system. If there were any funding decisions that impacted on the hospital, they would have to be carefully discussed by the health board and the IJB. That is where partnership working comes in. You would not expect funding to be removed without the proper process to ensure that the balance of care was being moved in the correct manner.

10:15  

I understand that in Shetland and in Dumfries and Galloway, where you have that one-to-one alignment, you can sit down with one another and figure it out. I am more concerned about what happens in cases where there is a large hospital servicing several IJBs, how that is supposed to work when you start having real control over that budget and over deciding what you are or are not going to put into the acute hospitals, and how acute hospitals are supposed to manage themselves in that environment.

From the Tayside perspective, I endorse the comments that have been made about the reality in the first year. The first year has been more of an exercise to describe the large hospital set-aside. We articulated in our submission that we see building financial planning relationships regarding large hospitals as being a major area this year. In Tayside, we work largely with Ninewells hospital, which covers three of the Tayside IJBs but also has an impact on an IJBs in Fife, because of the flow of patients. We are approaching that this year through a round-table approach to planning, so it is probably not dissimilar to what colleagues from Shetland and from Dumfries and Galloway have articulated about whole-system planning for different components of care. Of course, we then have to back up the jointly agreed plans with the financial and planning mechanisms that are set out in large hospital guidance.

The major focus for us at the moment in Tayside is on unscheduled care and trying to change the pattern of demand and the costs of care associated with it, so that will flow through into our large hospital guidance and our strategic plans that will emerge over the next year.

The legislation requires the chief officers and the partnerships to collaborate and co-operate where there is more than one IJB in a health board area. In Glasgow, we have been doing that and we will continue to do it. We are currently developing our commissioning intentions, so we have worked collectively as a group of six to bring those intentions together and ensure that what one IJB is saying is absolutely consistent with what the rest of us are saying. That should allow us to make a co-ordinated ask of the acute system, rather than ask it to deal with six different arrangements.

I have a question about staffing costs. The starting point for this question is to establish who directly employs the various personnel who operate the functions that the IJB controls. Is it the IJB, the health board or the local authority, or is it a mixture?

People who were employed by the health board to provide the services that have been delegated to us, such as NHS health visitors, district nurses or physiotherapists, will continue to be employed by the health board. In the same way, people who have been employed by the local authority as home carers or social workers will continue to be employed by the local authority. There remain two employers. As I said in response to an earlier question, the legislation is drafted so that we remain with two employers, but that is open to change at some point in the future and it is open for the IJB to become an employer. It is a bit like what has been done in Highland, where the single agency model involved a transfer under the Transfer of Undertakings (Protection of Employment) Regulations of all the adult care council staff into the health board, and vice versa for health visitors and specialist children’s services, which went to the council. This has been one of those areas where it helps to have co-ordination on simple things like public holidays or admin staff grades, where there are some inconsistencies.

I think that occupational therapists are the only professional group that has historically had employment in the NHS and in councils, although in reality the two groups have done quite different jobs.

The reality at the moment is that people are employed by one body or the other; the only employee of the IJB, technically, is the chief officer—in effect we are seconded to the IJB.

Thank you for clarifying that. An adult social care worker or hospital worker in Dumfries and Galloway, for example, who is doing work that is delegated to the integration authority will nevertheless be employed by either the council or the health board. Who bears the staffing cost? Does it come into your budget, notwithstanding that you are not the employer?

Yes.

Yes.

Is that true across the board?

Yes.

I thank the panel for coming along this morning. I am not sure when the IAs are expected to produce their annual financial statements. Will you enlighten me?

Ours is due to go to our IJB at the end of June.

Ours will go to our audit committee in the middle of June.

Similarly, we are preparing ours at the moment and it will go to our IJB at the end of June. We are also preparing the annual report for the IJB.

The draft accounts will go to the IJB audit committee and the IJB at the end of June.

Thank you. The Scottish Government’s advice note to IJBs on their annual financial statements said:

“Regulations require that the Report includes financial information on the amount spent on achieving the national health and wellbeing outcomes and the amount spent on care groups, localities and service type.”

How will your annual financial statements address those issues?

Are you asking how we link the finances to outcomes?

Yes.

Our financial systems do not have the sophistication to provide the level of detail that is required. The financial statement is a fairly indicative cost-book analysis; it splits our costs across the various parameters of care—acute, primary and locality care.

My partnership has been having quite a big discussion about how we move the focus away from some of the performance indicators that we can count—some of the national stuff around the treatment time guarantee and accident and emergency waiting times—and link things more closely with the nine national outcomes. The performance suite that we have been pulling together starts to set up how we will do that, with more long-term, qualitative indicators.

The work that the partnership has been doing indicates that it will probably take a three to five-year planning cycle before we get information that really starts to show how performance is moving. We talked about the ambition to shift the balance of care; we really want a measure that enables us to see whether, over time, the integration joint board is making an impact on outcomes for patients. That is certainly our ambition, but it is still very early days—we have just had our first year of operation.

From an Angus perspective, the prescribed national outcomes underpin the overall strategic plan that we have set out and our approach to that plan, which is further rationalised into four domains of change and development. Locally, we have concentrated on getting our financial plans to map the intentions that are set out in the strategic plan—the financial plans will follow those intentions but at this point will not necessarily be easily definable against each of the national outcomes. I think that other areas will find it quite difficult at the moment to map financial resources against individual outcomes.

The main thrust has been to align our financial plans with the strategic outcomes that have been set out for our IJB, so the plan that will be put to our IJB in June will not only be a financial statement of expenditure and how the budgets have been used but show whether investment of those budgets has achieved any change against our strategic plan.

I am sorry—I am a bit confused. Does the strategic plan include the national health and wellbeing outcomes?

It does, but within that we have four domains of development, which we largely map the financial resources against. The strategic plan incorporates the national health and wellbeing outcomes, but it has proved quite difficult to drill down to match the financial resources precisely with the nine national outcomes. I do not know whether the situation is the same elsewhere; I gather that it is similar across Scotland.

We are in the same position as Vicky Irons. We are going to try to combine the performance report with the financial statements to see whether we can begin to link the finances to the outcomes, but as far as detailed mapping between the finances and the national outcomes is concerned, we still do not have a sufficient level of detail. It is work in progress.

I share my colleagues’ sentiments. Our approach is slightly different in that our financial statement is a technical piece of auditing and accounting work. We would look to take information from that and build it into the public report on performance in the way that others have described. I think that it will be an evolutionary process—it is one that we will get better at the more we do it. Through the chief finance officers network, we could probably all learn from one another with regard to how we develop that over time.

It sounds like you are very focused on figures and balancing the books as opposed to matching the numbers with the national outcomes. Is that because this is something new or because you have not had adequate guidance? Why have the figures not already been linked to the outcomes? Why will it be three to five years before we get that information?

It is a new legislative requirement. This will be first time that we have all had to go through the process, so I suppose that it is inevitable that there will be good and bad.

Some of the difficulties with matching have been explained—certain expenditure might match a number of the nine national outcomes. There is no doubt that we have been focused on balancing the books and making the most of the money, but doing the best that we can with the money is not inconsistent with achieving the national outcomes, because that is what integration is there to do.

I apologise, because I have used this anecdote previously. A long time ago, when I worked in another part of Scotland and money was a bit tight, I spent three or four years defining what the social work department did. The health board said what it did, and nobody cared about the person in the middle. For me, that is the biggest difference with integration—it is all about the person in the middle, and doing the most that we can with the totality of what we have. That involves managing the money and the resources to best effect across the piece, and keeping the focus on individuals who need services. That is what we are about.

How do you evidence that?

I do quarterly performance reporting to my IJB on some of the indicators that feed into some of the outcomes. We have just concluded our first full year, but we had nine months of using the new system in the previous year, and it has been an iterative process for us. We want to provide that evidence, and we want people to scrutinise it to see whether we are making a difference.

From an Angus perspective, not dissimilarly to Keith Redpath’s organisation, we submit a quarterly performance report to the IJB, which aligns use of the financial resources with the strategic intent that is set out in the strategic plan. That is still work in progress. A major focus for us is to ensure that we invest the money wisely, to achieve the objectives that we have been set up to achieve.

10:30  

Is work going on to produce a standardised, auditable set of reporting mechanisms, to enable us to compare different health and social care partnerships?

There is certainly a national requirement to produce an annual report, but I think that interim reporting is at local discretion—my colleagues might know otherwise.

So the answer is no.

There is a standardised approach to the annual report but not to interim reporting.

The nature of the national outcomes is such that they cannot be counted easily. Qualitative measures such as patient experience are such that there is, by default, a longer-term aspect to evidencing shifts in culture and changes in the use of services. I talked about a three to five-year timescale, which very much links with the outcomes that our partnership has set out in its strategic plan. At every integration joint board meeting, we have a financial update and a performance update, so that we focus on both measures equally and link our resource allocation with where we want our performance on the outcomes in the strategic plan to improve.

How readily available is the quarterly and annual information?

All our information is published on our local website. I am happy to share our performance reporting with the committee, if you want to see it.

Likewise, our performance reports are in our IJB papers, which are publicly available on our website.

The same goes for ours.

Ours are published on the website. In the quarterly performance report, we report against the nine national outcomes. Like Katy Lewis’s partnership, we consider the performance report and the finance report together at each meeting. The performance report tells us how well we are performing against the national outcomes, and if we are staying within our financial plan, I guess that we are striking the right balance and implementing our strategic plan correctly.

Do you then report back to the Scottish Government? Does it—or should it—produce comparative data?

The health and social care delivery plan outcomes that we need to report have been set out, but those are much more the traditional outcomes that you will be used to seeing from the NHS. We can take the issue back, because I am not sure what the intention is in that regard.

Earlier, Keith Redpath talked about cuts, Vicky Irons and Karl Williamson talked about savings and Katy Lewis talked about efficiencies. If I got hold of the dictionary or thesaurus that is handed out to IJB managers and looked up “cuts”, “efficiencies” and “savings”, would I find the same explanation for each word? Are they the same thing in the lexicon of IJB managers?

Not always.

Not always.

I imagine that, if your office bought 10 boxes of paper clips last year and you have eight left, there is an efficiency to be made. I understand that. However, in the big scheme of things, when you are asked to find significant sums of money—the big numbers—are those cuts, efficiencies or savings?

I can talk only about our approach to efficiencies—

So yours are “efficiencies”.

Well, yes, because they are created to achieve a reduction in spend and, sometimes, a more efficient way of working. For example, this year we have been through a major redesign programme for care that is provided to people at home, which has involved different shift patterns and ways of working, to increase the capacity of the existing workforce.

You would be doing that irrespective of the financial situation, because it is a better thing for you to do, would you?

And it is an absolute requirement, if we are to keep up with demand.

That is one example. What other examples do you have of efficiencies that are driven by financial need?

Well, I guess that there are a range of—in your words—cost-cutting exercises, which are, literally, about reducing expenditure.

Would you describe those as “cuts”?

I guess that they are more efficient ways of working, so I do not tend to use the language around “cuts”.

I understand. I am very well aware of that, but Keith Redpath used the word “cuts” earlier. That was quite refreshing, because it is the first time that I have heard an IJB manager say that. Mr Redpath, with your long experience, are you having to implement cuts?

Having used the term, I cannot back down from it now. However, when it comes to it, we need to frankly call it what it is.

Hallelujah!

From my perspective, maintaining flat cash is a much better position to have, and it means a more protected position than that in other parts of the public sector in Scotland. However, the question is whether it is flat cash across the year. Most of our controlled budget is for staff. If I have to maintain flat cash but the pay bill goes up, the only way I can manage that is to have a 2 per cent efficiency saving or slippage target, as I said earlier. Ultimately, that means that I will probably have to employ fewer staff at the end of the year than I did at the start of the year. There may be some aspects of efficiency and doing things a bit better that mitigate some of that, but the reality is that most people would recognise that as a potential cut to the level of service. That is why I used the term “cuts”.

Thank you.

I suppose that we will be doing a combination of things. We will be buying things more cheaply and doing things more efficiently, which is what would be classified as an efficiency. We will be doing a range of service redesigns that will change how we deliver services.

Why would you not be buying things more cheaply and doing things more efficiently anyway?

We do. We endeavour to do that. We will always be looking at that as a way to make savings as we move forward. As I said, we will undertake service redesigns to meet the demands. We have been doing work to reduce delayed discharges and doing other work in our hospitals. We will change our services to meet the demands. There will be some things that we do that you might want to describe as cuts or budget reductions.

Go on, just say it.

We might just stop doing some things. For example, we might stop prescribing something. We are looking at whether we have a balance in terms of value for money for some things. As a chief finance officer, I am aware that we have to look at our resources across the piece and look at the population that we are providing the services to. There is no doubt that some difficult decisions will have to be made within partnerships. We have not shied away from that.

We are also trying to redesign services to do more with less, such as moving from residential beds to services in the community. The difficulty is to convince the public that we are maintaining the level of service if we are reducing costs. Ultimately, as budgets keep getting reduced, we might get to the position where we need to make cuts and reduce services. In Shetland, that might mean moving more medical procedures to the mainland and moving towards more regional models. At the moment, we are trying to drive efficiencies. Ultimately, though, we could come to the stage where what we do would probably be classed as cuts.

I wonder whether the delay in agreeing budgets has any implications for day-to-day budgeting for people on the front line—or do they largely just get on with it and let you guys worry about that?

Yes.

Yes.

Good morning to the panel. I want to explore the convener’s question on cuts and efficiencies a little further. Having worked in the social care sector for the best part of 15 years, I understand that efficiencies do not always mean cuts. I remember being told to box clever in terms of travel and told that people should more frequently take part in meetings in the way that Karl Williamson is doing today from Shetland, which is an efficiency and reduces a significant burden for any organisation’s budget. However, we can move to the point where making efficiencies means that the things that we used to deliver are no longer delivered. That is a cut; it is when the service user at the business end of what we are doing no longer gets the value of that service.

We could debate the semantics, but I want to explore the quiet death of services when it is nobody’s fault. I will give an example. The 20 per cent reduction in funding for drug and alcohol partnerships that came through in the budget 18 months ago has been perpetuated in this year’s budget. In effect, that 20 per cent cut was passed on to IJBs, which were told to find a way to continue doing what they were doing, but with less money. To their credit, some authorities, health boards and IJBs have managed to do that, but in Edinburgh, for example, there has been a net reduction of £1.3 million a year in funding for drug and alcohol services, and some services have ended as a result of that.

Why do some authorities manage to continue such services when others do not? Why is no fuss made about it when that happens? It seems to me that that is the point at which it is nobody’s fault—we lose services, but nobody seems to be to blame for that.

My recollection is that, last year, there was a change in the way in which such expenditure was accounted for. As you say, there was a significant reduction in funding for drug and alcohol partnerships, along with a desire for their work to continue. My health board ensured that it did. We made some efficiencies at local level. We discussed how to do that with our main voluntary sector providers and with our own staff. My recollection of our share of the cut is that it would have been a hit of about £300,000 on a budget of £3 million or £4 million. We made a number of changes that resulted in £100,000 being taken out of the budget. We did that by working in conjunction with our two major providers and by cutting our own direct provision.

As the chair of the alcohol and drug partnership in my area, I know that that was certainly not hidden. We did that in a very open and transparent way. In an ideal world, people would have liked it not to have happened, but we were able to do it in such a way that we and the providers continued to provide the most significant services.

I am grateful for that. The issue of ADP funding is one that has been raised persistently in Parliament by the convener and me, and others, because we are not keen to give up on it without a fight. We have looked to health boards and IJBs for support in that fight. Some health boards have managed to do as Keith Redpath’s has done, but some have said that there is nothing that they can do and have just reduced the funding.

My frustration is that that has happened and it seems that we are just expected to accommodate it, even though we can see a correlation between the reduction in services and a spike in HIV infection in Glasgow. There is a causal link between the two, although we do not yet have empirical evidence on how causal the link is. Services that were keeping people safe are no longer doing so to the extent that they were.

I just wanted to put that point on the record.

We will finish there, as we have gone a bit over time.

I thank all the witnesses very much for their evidence. I understand that Keith Redpath is retiring in the summer, so we put on record our thanks to him for his contribution on health and social care over a long period of time.

Thank you, convener.

10:44 Meeting suspended.  

10:48 On resuming—