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Item 3 is on the budget process. Following our cross-cutting scrutiny of the budget allocated to people with drug and alcohol problems and their families, and last week's evidence session with three cabinet secretaries, the Cabinet Secretary for Health and Wellbeing is before us again—she loves us so much—to give oral evidence on the overall health and well-being budget.
The cabinet secretary is accompanied by Dr Kevin Woods, chief executive of NHS Scotland and director general health; Alex Smith, interim director of finance, health finance directorate; and Pam White—[Interruption.] I beg your pardon—that was one of my senior moments. It is Pam Whittle, Scottish Government director of public health and well-being.
You do not want me to talk about your senior moments?
No, you have done that too often. [Laughter.]
Thank you, convener, and I thank the committee for the interest that it has shown in the budget, both last week with its focus on the alcohol and drug budgets and this week more generally.
We have heard a blizzard of statistics, but I know that the committee is up to that.
The Audit Committee has said that a number of cost pressures on the NHS continue, including an ageing population; pharmaceutical costs, which tend to rise by more than the inflation rate—some say that the increases are between 6 and 8 per cent a year; the reduction in junior doctors' hours because of continuing implementation of the working time directive, which reduces their contact with patients; completion of agenda for change; the increasing cost of out-of-hours services; the phasing out of capital-to-revenue transfers; and the termination of capital asset sales for revenue.
As I said in my opening remarks, we face an extremely tight settlement. At no point during the course of this meeting am I going to try to deny the difficulties that that has caused. Within that tight settlement, we have shown that we want to invest as much as we possibly can in health. It is well known that the health service faces a number of cost pressures, not only next year and in the course of the next spending review but continually. Many of the pressures that you refer to are pressures that NHS boards and the NHS as a whole are already facing up to, and have been doing so for some time.
My last question was about the Government's view of NHS inflation as opposed to general inflation. We have real-terms increases based on expected United Kingdom inflation, but NHS inflation traditionally has been greater. Perhaps Alex Smith could answer my question.
There are two aspects to the baseline budget for health. About two thirds to three quarters of it is pay, as you have said. The other element is supply costs. Although you identified some areas of significant potential increase, there are, equally, some areas in which we do not expect the same level of increase in inflationary terms. Our experience has shown that the level of funding that we have identified as giving a 3.2 per cent uplift for boards can be accommodated, as can some other developments that have been identified in the budget. We have also set a significant efficiency savings target in the order of 2 per cent, to assist should there be any areas that we want to draw on to cover excesses. We believe, from our knowledge of inflation levels, that we can accommodate that in the uplift that we have given.
The other point to mention is the fact that NHS boards will be allowed to retain locally the efficiency savings that they make.
I want to focus on the pressures that NHS Highland will face. In the Highlands and other remote areas, there is a mix of affluence and poverty; therefore, deprivation has very different characteristics. It appears that that is not reflected in the settlement. For example, out-of-hours expenditure is six times higher in Argyll and Bute than in Glasgow. Furthermore, NHS Highland is faced with the threat of a £20 million cut, as recommended by the NHS Scotland national resource allocation committee, which is tantamount to a 5 per cent decrease. I also understand that the budget for territorial health boards will increase by only 0.5 per cent in real terms, although the drugs budget, as well as pay, is set to increase annually by about 10 to 12 per cent. Can you give me any reassurances to take back to NHS Highland about how it can cope with a very small increase in budget and 2 per cent efficiency cuts and provide a service to 30 islands that are not represented in the deprivation index? This is, potentially, the worst settlement for decades in the Highlands and the Western Isles.
The cabinet secretary has already told us that the efficiency savings will be retained by the boards.
I challenge Mary Scanlon's use of language. Efficiency savings are not cuts; they are savings that will be retained locally for reinvestment in front-line care. I thought that that was a principle with which Conservative politicians agreed, but perhaps things have moved on.
I ask for clarification on the NRAC proposals—Rhoda Grant may also want to ask about this. I seem to recall that NRAC's proposals are not set in stone. I do not want to put words in your mouth, cabinet secretary, but I presume that you have received responses from the health boards to those proposals and that there is room for some tweaking or changing of them. I am not saying that that is what you are going to do, but it is important that we know that the proposals are not set in stone.
The convener is absolutely correct. I have received the NRAC report, on which I have asked the Health and Sport Committee and health boards to submit their views. The final decision will be mine, but I have not taken that decision yet. I was careful to say at the outset that, if the NRAC proposals are to be implemented, they will be implemented on a phased basis. No health board will suffer a large cut in funding as a result. That is an important point.
Does Rhoda Grant want to come in at this point?
I have a supplementary question on the issue that Mary Scanlon raised—
I beg your pardon. I think that Mr Woods might want to respond first.
I can respond afterwards.
Obviously, the outcome of implementing the new formula in the NRAC report will be that rural areas—such as Highland, the Borders and the Western Isles—will suffer. The cabinet secretary visited the Western Isles this week so she will know that the local health board is currently facing a deficit. In light of the NRAC report and the budget settlement, can she provide any comfort to the people in the Western Isles who may face a cut in health services as a result?
Let me make it absolutely clear again for the benefit of the committee—and, more important, for the benefit of the public—that no health board is facing a cut in funding. That is an extremely important point to stress. It is important not to confuse the NRAC proposals with the Western Isles NHS Board's financial situation. I am pleased to say that I had a good visit to the Western Isles on Monday this week. There are encouraging signs that the board is beginning to get on top of its budgetary problems. I was very pleased about that.
That is fine, cabinet secretary. We are clear now about the position on, and current status of, the NRAC proposals. Does Mr Woods want to say anything on the issue before we move on?
An important point that has not come out especially clearly in the discussion concerns the additional resources that boards will receive. It has already been pointed out that boards will receive a 3.2 per cent increase and that they will retain their 2 per cent efficiency savings. However, boards will also receive a share of other increases in spending that the cabinet secretary has highlighted. For instance, boards will get a share of the £90 million that will be set aside for access. It is worth remembering that £90 million is equivalent to about 1 per cent in additional resources. When we take account of those resources and the resources for tackling infection and alcohol misuse, the additional resources that will end up in board budgets will be somewhat higher than the 3.2 per cent increase and the 2 per cent efficiency savings that have been mentioned.
We will come later to the issue of how central funding will be allocated.
There are two areas that I want to cover. I think that we are trying to start with issues that affect the budget generally.
The 2 per cent efficiency savings that the NHS will be required to make will be retained locally and will be in addition to the 3.2 per cent increase for NHS boards and the additional moneys for reducing waiting times and tackling infection. It is important to be clear about that.
I am grateful for that clarification.
I am happy to answer that question in relation to the health budget. As Ross Finnie rightly said, table 21.02 shows that budget lines for general medical services, pharmaceutical services, general dental services and general ophthalmic services are all flat because they are subject to on-going pay negotiations or, in some cases, determinations from pay review bodies. We are not dealing with NHS payroll staff but independent contractors and, as in any negotiation, it is not a good idea to show your hand in advance. That is why the uplifts have not been shown in those budget lines. The 2004-05 budget deployed the same tactic, if I can call it that, and it makes perfect sense.
I did not use that phrase.
He was forbidden to use such phrases.
Yes, I was forbidden. The phrase "slush fund" came to mind but I would not dare.
Ross Finnie would never use a phrase like that.
So now you know what it is called, Mr Finnie.
Miscellaneous other services.
Ross Finnie also raised a point about NHS pensions.
I assume that I would find a similar line in the document.
It does not lie within the health budget but in another part of the budget. That line is flat because NHS pension arrangements are annually managed expenditure—AME—rather than DEL, so they are not set in the same way as a DEL budget.
In the smaller budgets, something like 2.5 per cent of the overall budget is identified in considerable detail. However, that leaves the larger budgets, which are difficult for the committee to scrutinise because there is very little detail. The fact that the bulk of the funding is now contained in a single budget line, under which the health boards will get £10.6 billion, makes the budget much less transparent. That gives rise to questions such as how the funding will link strategic objectives to outcomes and practice, and why there is no key outcome indicator for reducing health inequalities.
The key outcome indicator of improving healthy life expectancy covers the area to which Helen Eadie refers. We have taken care to ensure that all the spending lines across the budget contribute to meeting the Government's objectives and overall purpose.
I cannot speak for the constituencies of my colleagues from Glasgow and the west, but I can speak for my own constituency, where places such as Lochgelly, Cowdenbeath, Kinglassie and Benarty suffer from some of the greatest health inequalities. That is why I am concerned about spending being put into the global context of health and well-being.
I will answer those questions, before Dr Woods adds some points.
I would also like to know what the funding levels will be for the mental health fund, the children's services-women's aid fund, the homelessness task force, the furniture grant resource, the decommissioning of Glasgow's hostels, private landlord registration, the supporting people grant, the violence against women fund, delayed discharge and national accommodation for sex offenders.
The issue of delayed discharges is important to me, too. I have discussed it with all NHS boards in carrying out their annual reviews in the past few months. NHS boards and local authorities have an obligation to work together closely to tackle delayed discharges.
Delayed discharge has been a success area, in that the number of delayed discharges is down from the high 3,000s to about 500. The work by successive Governments on that has been successful. With the transfer of the £29 million to local authorities, do you have a specific outcome agreement that will continue to exert downward pressure on the figure, which at present is 500? A saving of 3,000 beds for the health service is critical. To follow on from Helen Eadie's question, I do not know what is happening in Fife, but I am concerned that the figure there has risen to 120—that is for the quarter beyond that for which a national figure of 500 was reported. If the situation in Fife is reflected in what is going on in other areas, something must be happening out there to make the figures increase. Are you convinced that you have tight and secure outcome agreements with the local authorities to drive down the number of delayed discharges?
As Richard Simpson knows, the outcome agreements are being discussed and negotiated. However, I assure him that delayed discharge is a high priority. I encourage members not to take the view that the situation that has been described in Fife pertains throughout the country. I have been extremely impressed by performance on delayed discharge throughout the country. NHS boards continue to be under stringent targets to reduce delayed discharge further. I assure members that we will monitor the situation closely.
But it will not be up to the health boards, because you have transferred the money entirely to the local authorities, so it will be up to them to ensure that people are removed from hospitals.
I argue that local authorities and health boards have a shared responsibility for and interest in ensuring that the downward pressure on delayed discharge continues.
I will pick up on that point and on some of Helen Eadie's points. Delayed discharges are at their lowest-ever level. There is often a slight rise in the figure in-year, but it then reduces—we are seeing that pattern now. We are confident that we will end up where we have said we want to end up.
I have continuing concerns, but I will write to the cabinet secretary about them.
That is helpful.
It appears that much of the health budget—for example, project funding for access and infection control—is being held centrally. That contrasts with the situation in local government, where many funds have been freed up. Why is there such a difference between the thinking on health, where budgets are being held centrally, and that on local government, where a concordat has been drawn up to assess outcomes? Would it not be better to give the money to health boards and to draw up a similar concordat with them?
I argue, perhaps from a biased position, that the performance management regime that we have in the NHS is ahead of that in other parts of the public sector. Members will be familiar with the HEAT—health improvement, efficiency, access and treatment—system, which is an outcome-based approach. Health boards agree local delivery plans with the health directorates and focus on how they will align their spending to ensure certain outcomes. That is in line with the thinking that is developing about the relationship between central Government and local government.
I am trying to establish why the money will be allocated separately, rather than as part of health boards' main grant funding? Could it not have been included in that funding, with associated outcomes, instead of being kept centrally and given out through a different mechanism?
The mechanism that we have chosen is appropriate, as it reflects the importance that we have placed on meeting the waiting times target. However, the money will end up in health boards' budgets.
In the 2008-09 budget, the budget line on access support for the NHS will rise from £65 million to £155 million. Can you explain what process will be used to assess how much of that funding each health board will receive to help it meet the 18-week waiting target?
Dr Woods will address the question in detail.
In broad terms, boards will get something like their Arbuthnott share. We have specific discussions with boards about their demand and capacity plans for reaching the milestones that have been set. Members will be aware that recently the cabinet secretary announced important milestones for the first stages on the journey towards the 18-week maximum wait from start to finish. That discussion is just getting under way, and it will inform the precise allocations. We want all boards to get broadly their fair share of that resource.
The Arbuthnott share will be the starting point. Clearly, however, boards will find themselves in different circumstances. A national programme board will be established for the delivery of the 18-week waiting time target. It will provide the framework for discussions with boards about their particular capacity issues.
Will that method be used to decide how much each board should get on top of its Arbuthnott share?
Yes, but the Arbuthnott formula will be the starting point. The boards are in different circumstances. Some of them are closer to meeting, or are more able to meet, the milestones than others, and that will be taken into account. The starting point, I repeat, is their fair share based on Arbuthnott.
Will there be a penalty for boards that perform badly and a reward for those that perform well?
I am not dodging that question, but I would prefer to look at it from a different perspective. I suppose that this is a back-handed—or even open—compliment to the previous Administration: the performance of health boards over the past few years in meeting waiting times targets has been exceptional. The current in-patient waiting time target of 18 weeks has been delivered a year ahead of schedule, and all the access targets that fall due to be delivered at the end of this year will be delivered.
It has not been our practice to penalise boards; it has been our practice to get agreement about what they are going to achieve with the resources that they are allocated.
To go back to Rhoda Grant's questions, that is very much in line with the outcomes thinking that is developing around local authorities.
In response to Rhoda Grant and, I think, Michael Matheson, you referred to the HEAT framework. When we read the new national performance framework, we find that health is mentioned explicitly in only one of the seven purpose targets. Later on, however, it seems to account for a lot. In your new formula, it is difficult for us to see exactly what happened with previous indicators such as the HEAT framework. Can you clarify that for us?
Yes, of course. The HEAT framework will continue. We are now in the process of revising the HEAT set of targets as part of the development of the action plan, of which members are aware. Much of that work is due for completion at the end of this year, so this is an appropriate time to revise the targets. Part of that process of revising the HEAT targets will involve ensuring that they align with the Government's priorities going forward and that they are aligned with the performance outcome framework for local authorities—particularly with regard to the key performance indicators that have been discussed. That work is under way now. It is important to stress, however, that the HEAT framework, which I think is an extremely robust performance management system, will continue, although the targets will be revised in the light of circumstances.
I note that the voluntary sector budgets are being merged. Will there be outcomes in the new framework to assure funding and support for the voluntary sector?
The outcomes framework is still under discussion, so it would be wrong for me to go into detail on that. In the national health service and in the area of health in general, the contribution of the voluntary sector in Scotland is immense. I assure Rhoda Grant and other members that we value that contribution and want to ensure that it is continued and enhanced.
I want to ask two questions about primary care. In your introductory statement, you mentioned £30 million more for flexible access to primary care. Will you flesh out how you anticipate spending that money? Do you intend to augment the services that are provided by general practitioners and their staff in primary care, or do you envisage the money going to a more broadly based organisation such as NHS 24?
You have made a number of points. Before I respond, let me say that I value hugely the people who work in the primary care sector—that takes in a range of professionals. They do one of the most difficult and challenging jobs in the NHS, but they do it extremely well.
I want to move on to mental health, which I understand is still a Government priority—although it is a wee bit difficult to find it in the budget. You mentioned the HEAT targets. I have discovered in the past two days that a lot of new targets have been set—34 national indicators were published after the budget was published. Why were those indicators published after the budget was published?
I love Mary Scanlon's questions; they are always in several parts. I hope that you have managed to take notes on all those questions.
I will do my best to answer them all. I am sure that Mary Scanlon will tell me if I miss any of them.
Given that local authorities are facing a tight settlement this year, what sanctions will you use if they reduce their spending on mental health services? Given that the MHSG and supporting people grant have been abolished, how can we be assured that local authorities will continue, if not increase, spending on mental health?
I understand why Mary Scanlon is asking that. I understand the difficulty. We are trying to create a new, positive relationship with local government that is based on shared outcomes. As I did earlier, I will resist drifting into discussions about sanctions because, at the outset of that new relationship, that is not an appropriate road to go down. However, I will say that the outcome frameworks will be carefully negotiated. The Cabinet Secretary for Finance and Sustainable Growth has talked about performance management, about the duties on local authorities to report and about the regular meetings between local authorities and ministers—and indeed the whole Cabinet.
I am sure that the two doctors here will know about the measurement of positive well-being, but would I be right in saying that the 20th indicator applies to the general population as opposed to people with mental health problems only? I know that a random sample of the population of Scotland will be measured, but is what is being measured optimism, self-esteem and positivity? Is that one of the targets?
I ask Dr Woods to answer that question.
There is an important general point to make about the indicators on page 47 of the spending review document. They are indictors by which the Government wishes to assess progress. We want everyone in the public sector throughout Scotland—not just the health service—to contribute to that progress. Yesterday, I was at an interesting discussion that brought together public sector leaders from throughout Scotland. They find our approach extremely helpful because it provides clarity about the direction in which we want to go. That indicator will tell us whether we are achieving better mental health for the Scottish population.
I understand. I just wanted clarity that the indicator applies to all of us, throughout Scotland—
Yes, it does—including you.
Even me—that will ratchet up the average score a few points. The indicator is not specifically directed at those with mental health issues. That was the clarity I was seeking.
That is right.
I am pleased to hear that the mental well-being of the Health and Sport Committee is of concern to you.
It is, convener.
I want to follow up on the target of a 10 per cent reduction in the prescribing of anti-depressants. The UK has announced an additional £170 million for psychological services. Without pre-empting you, I wonder whether you will hold the boards to providing psychological services. One of the big problems in primary and secondary care is the lack of access to alternatives to anti-depressants. Without such provision, such a target will be a major difficulty.
I absolutely agree. The reduction in the prescribing of anti-depressants cannot be seen in isolation. It can be achieved only if the alternatives are there. I do not want to pre-empt announcements on the revised HEAT targets and the new action plan, but there will be more detail in that.
One of the things that we have been pursuing in the annual reviews—we have a specific follow-up to some of the annual reviews—is the way in which boards are using resources to support expansion of psychological therapies. That is very much in our sights.
Under "Improving Health and Better Public Health" in table 21.02, there are several specific allocations for alcohol misuse, cervical cancer vaccination, health improvement and health inequalities, hepatitis C, and specialist children's services. Those allocations are all welcome, particularly the continuation of the Labour Government's commitment to cervical cancer vaccination, which will have a long-term benefit in reducing cervical cancer deaths. Specific details are provided for £92.9 million of the spend of £169.4 million, which is about 42 per cent of the total planned budget for this area. Could you give us more detail on what the remainder is being spent on?
I am sorry; can you repeat the figure?
Under the heading "Improving Health and Better Public Health", there will be an additional £169.4 million of spending by 2010-11. Specific details are provided for £92.9 million of that. I am looking for a little more detail on the rest of the £169.4 million, if not at the moment, perhaps in correspondence.
Forgive me, but I do not follow the figures that Richard Simpson is citing. They are probably aggregates of a number of figures.
Hold on a moment; we will have to draft our budget report soon, so we need answers now.
Can I undertake to provide that level of detail once we have clarified the figures? I will give a few examples of what might be included in some of the budget lines, which might help. In the health improvement and health inequalities budget line, for example, you will find the resources to expand the keep well project. There will also be significant resources over the next few years for a range of measures to tackle obesity, which I am sure members will agree is very important. The hepatitis C action plan implementation budget line speaks for itself; it is designed to increase diagnosis and access to treatment for people who have hepatitis C. Pandemic flu preparedness covers only the revenue; other resources are available in capital, and I spoke about those last week. Screening improvements include two-view breast screening. I am awaiting a report on the delivery of specialist children's services; the funding is designed to support those services. Those are just some examples of what is included. If the committee wants further details on the budget headings, we would be very happy to provide it.
Thank you.
I am more than happy to look at that.
I want to pick up on tobacco control, which is in the same area. On page 25 of the budget, there is an announcement of
I did not pick up your first statistic.
On page 25 in chapter 5, it says there will be
I think that the bulk of the £3 million that you referred to is accounted for in the rise in that budget line; I guess that the rest is in the health improvement and health inequalities budget line, but we can confirm that. The £11.3 million is funding a range of smoking cessation projects. Such projects have been extremely successful around the country. The additional funding is designed to support the five-year smoking action plan that we intend to publish next year, under which we will further invest in smoking cessation and consider further enforcement and prevention work that we need to do.
The cabinet secretary will understand that I have an interest in the matter, with my proposed bill.
I know.
I am looking for money, although I am not making a bid at the moment.
Our briefing papers mention
I tried to follow your question, Helen. Is it about how primary care services will be supported in light of the Kerr report?
Yes, but there should be particular emphasis on examples. For example, our local SNP people stood on a platform—
I do not want to get into what is happening in Fife; I want to consider the general question.
People wanted to ensure that hospitals would become general hospitals, but if the emphasis is back on primary care, which the cabinet secretary wrote to me about—
The cabinet secretary seems to understand your question, which I did not. I am happy to let her answer it.
I think that I will interpret the question, although there is one part of it that I do not understand. Will Helen Eadie clarify what she meant when she talked about the distribution of £200 million away from health boards? I am not sure where that figure comes from.
It is in the paper that our budget adviser prepared.
No money is being distributed away from health boards, so I do not know what that figure relates to.
The paper mentions
To where?
I am asking you to tell us where it is going.
You have plucked a figure out of thin air. I have never heard it, but perhaps it relates to an issue that we have touched on. As well as the health board allocations, there are a number of budget lines for specific initiatives, money for which will be allocated back to health boards. I am hazarding a guess at what the figure relates to.
Could you eventually give us the figures for that? I do not expect you to do so in time for our budget report, but that would be helpful.
The figures on what?
Spending percentages by area will be considerably altered if we have—
Do you mean the figures for the specific allocations of money?
The reallocations.
Those may not be made in the same timeframe as the overall allocations for health boards. The budget line allocations for health boards will be made in January, and the figures will be made public. Some health board allocations from the other budget lines will not necessarily be made in the same timeframe; rather, they will be made over a period as the policies are implemented.
That is reasonable.
I return to Helen Eadie's question, although before I answer the general question I point out that the promise relating to Queen Margaret hospital is being delivered as we speak. Two weeks ago, I opened the new haematology and oncology unit at Queen Margaret hospital, which enables people to receive locally in Dunfermline treatment for which they previously had to travel to Edinburgh or Kirkcaldy. The people I spoke to that day were delighted to have services provided locally. The Queen Margaret is a good hospital that provides a range of services to local people. On the same day, I opened the Linburn Road health centre in Dunfermline, which is another sign of the investment in primary care services.
I was just thinking that we have run out of steam, but before the words passed my lips, three members' hands went up. I should never think that.
What is the reason for the large increase in funding for distinction awards?
Distinction awards are a scheme for consultants. In some circumstances, they receive distinction awards, which are payment awards. The scheme is under review by a committee that is due to make recommendations soon, which will come to me for approval.
Do you expect an increase in awards? Is that why the budget is to increase? Will the awards be for consultants only?
The budget is expanding because the number of consultants has increased in the past few years—more people are eligible—but the scheme's operation is under review. I do not want to say more than that because I have not yet received recommendations, so I have not made a decision.
A briefing paper from NHS Highland says that, because it takes five or six hours to get surgeons and consultants to places such as Caithness and Fort William, NHS Highland will have to centralise more services in Inverness to meet the 18-week target. In the context of the tight financial settlement, it predicts that that target will result in more services being centralised because it cannot afford consultants' travel times.
You refer to a document that I have not seen, but I disagree that meeting the 18-week waiting time target will result in centralisation—and it will certainly not result in inappropriate centralisation. On the contrary, one thing that will require to be achieved to meet the whole-journey waiting time target is access to more local diagnostic facilities, which will need to be available in the community rather than in hospitals to which people go with out-patient appointments. Because the target focuses on the whole patient pathway, it has great scope for further localisation of several services. As you know, the Government is committed to having local services wherever possible.
Members will find on page 105 of the spending review and budget document references to important capital schemes that will be supported. Mary Scanlon will be interested to know that one scheme relates to day-case surgery at Raigmore hospital.
It is interesting that one budget line that will be cut is for what used to be known as the centre for change and innovation and is now called improvement and support of the NHS. That is in table 21.02. Funding for it is to be reduced from £23.6 million to £22.1 million and eventually to £20.3 million. As the centre has delivered and supported substantial change that has helped to achieve cost efficiency in the health service, I am slightly surprised to see that reduction. Can you tell us why and how it is being reduced?
I understand that, on the face of it, that might look a bit odd, given the drive to cut waiting times further, but I hope that I can convince Richard Simpson that it is the exact opposite of odd.
We want to ensure that boards have the capacity to undertake redesign themselves, and we have made a lot of progress on that. When we started, we had to create a central resource. Most of that continues; there is no reduction at all in our commitment to service redesign. We still regard as extremely important some of the collaborative programme with which, I suspect, you are familiar, but we have been trying to build capacity in boards to enable them do that themselves. That has been important in the context of the progress we have made in relation to diagnostics and the 62-day wait for cancer treatment.
That is very helpful. The Audit Committee pointed out that redesign has some initial start-up costs, and the unit was meeting those costs—
The substantial part of the budget remains.
Yes, it will continue. That is very helpful.
Those answers will be of great interest to the NHS manager development network, representatives of which have joined us in the public gallery and will be listening very carefully. They are behind you, minister—that is a seasonal comment.
Thanks very much, convener—
I was going to let Ross Finnie speak next.
It is okay. On you go, Helen.
Oh, the courtesy here is delightful.
The age of chivalry is not dead. Thank you, Ross.
I guessed correctly where your questioning was heading earlier on. We have answered those points. First, the flatline budgets for primary care relate to on-going pay determinations. I have explained the reasons for that. Secondly, on the percentages being allocated to health boards that you cite, I have explained the other budget lines that will, eventually, also be allocated to health boards. I therefore ask you to treat the figures in your briefing paper with a healthy degree of caution, especially in the light of the answers that I have already given you.
Before we proceed, I must defend our health adviser. As I read it, there is an understanding that, as the minister has stated, the £200 million-plus that is being shifted is going into other projects that will be centrally funded and will be subject to negotiation post January. That is what I understood from the briefing paper. I feel that Professor Sutton deserves to be defended—not that he asked for that or needed it. With respect, I ask Helen Eadie to read the second section of the briefing paper.
Cabinet secretary, in answer to my second question you helpfully directed me to cast my eyes down the page to "Miscellaneous Other Services". The notes on pages 51 to 58 outline some of the matters that are contained within that budget line. Given that, in 2010-11, the final total of increase is £100 million, of which £45 million will be expended on dealing with the removal of prescription charges, and that there are six other headings that have increases, we are not left with a huge sum to cope with the matter to which you directed me earlier—the possibility that you might have to make an inflation increase to the elements of primary health care that are currently flatlined.
You raise an important point. I am not trying to dodge the question. You are right to point out that there are a number of items under that budget heading—they include prescription charges, flexible access to health care and free eye examinations. There are a number of other developments that total no more than £20 million. As I said earlier, I would be defeating the purpose of how we presented the budget if I told you how much is in there to take account of possible pay awards, although I am sure your arithmetic is good enough to do some sums and work it out. We are satisfied that adequate provision has been set aside in that budget.
In your opening comments, you said that the budget for alcohol misuse has increased by £85 million. In fact, it starts at £12.3 million this year and goes up in incremental steps to £47.4 million. Surely that is £35 million rather than £85 million.
I apologise if I misspoke about that, although I do not think that I did. I said that the budget is £85 million over the next three years, which I think is made up of £20 million, £30 million and £35 million.
Maybe I misunderstood, but it is not going up—
I did not say that it is going up by £85 million; I said that the budget over the next three years is £85 million.
For the sake of the official report, please do not talk over each other.
It is going up by £35 million over the next three years—from £12 million to £47 million.
Yes, but if you subtract the baseline from the £32 million, it gives you £20 million; if you subtract it from the £42 million, it gives you £30 million; and if you subtract it from £47 million, it gives you £35 million, which makes the £85 million to which I referred.
If you are in the business of double counting each year.
With respect, I said subtract the baseline. I am not double counting—I am single counting. The budget for the next three years is £85 million, in addition to the £12.3 million.
Going up by £35 million over the three years.
Richard Simpson seems to be in agreement with the minister.
It is £85 million in total, over and above the existing £12.3 million, spread over three years—in the way the cabinet secretary has indicated.
I am still unhappy on that point, but we will have a discussion in private anyway.
I am more than happy to try to clarify it further if Helen Eadie wants me to.
The point is that health boards will have continuing pressures. This morning, we have identified pressures from the agenda for change and financial pressures such as those on the drugs budget. We all welcome the money under the "Improving Health and Better Public Health" heading but, at the end of the day, that will not take away from the on-going pressures that health boards will have on the main budgets. I am concerned that, in the time ahead, we will all go to our respective health board briefings and people will throw up their hands in horror about what you have told us this morning.
I do not deny the central point. I go back to where I started: the settlement is tight and health boards are facing much tighter times. However, there were two parts to the answer that I gave. One relates to earlier questions and the answer that Alex Smith gave: that we are confident that we have made provision for inflationary pressures in the basic health board allocations. The other part is that budget lines have been allocated to health boards for specific priorities. You are right that the additional bits of money will not be available to meet general pressures—they are additional to the amount that we have made available for those.
We will have an interesting discussion when we consider our draft report. Richard Simpson advises me that he has a tiny, short, question, but I am wary of that. I would like to bring the evidence session to a close by 11:50.
We have, rightly, concentrated on the figures, but one theme in Audit Scotland reports is that the Scottish health service still has relatively poor costing information and limited information on effectiveness. To conclude the session, can the team give an indication of what progress they hope to make on that, particularly given that Scotland has not gone down the competitive route? The two major parties are certainly agreed that we want to go down a route of collaboration and co-operation, not one of competition, but it is still fundamental that we ensure good cost effectiveness—otherwise, budgets cannot be used. I know that the efficiency savings should drive that to an extent, but what progress will you be able to make on those elements?
I will ask Dr Woods to come in but, in general, you are absolutely right to raise the point, which is important. I suspect that Audit Scotland will continue to monitor the matter and have things to say about it in its regular reports on the NHS. Some work is on-going, such as the important work on tariffs that looks to standardise the costs of cross-health-board-boundary procedures. There is also the work that I mentioned that will be driven by a national steering board to help health boards achieve the 2 per cent efficiency savings—as you rightly say, that work is extremely important. We will continue to ensure a sharp focus on value for money, for example in procurement, through Health Facilities Scotland and NHS National Services Scotland.
You have covered most of the important points. Our response to the challenge in the audit reports has been to become more systematic about initiatives. We have several valuable initiatives, but we feel that we could co-ordinate them better and engage the whole service better. That is what the programme to which the cabinet secretary referred is intended to achieve. Through the SMC, we have an effective system for assessing the cost effectiveness of new drugs. Recently, we have been working to extend that thinking into the broader area of other health technologies. If we consider the package, we can see that we are trying to take a much more coherent and strategic approach to cost effectiveness, efficiency and productivity. I do not want to lose sight of productivity, because it is important. For instance, we are doing benchmarking work on the use of operating theatres, which is important in securing higher productivity and greater efficiency.
I will exercise some kind of privilege and ask the very last question. In real terms, the allocation to health boards represents a 0.5 per cent increase each year. Can you advise the committee what information you used to allow for inflation in that figure?
With respect, convener, I think we have covered that. The 2.7 per cent GDP deflator was applied and the 0.5 per cent to which you refer is on top of that. Ross Finnie and Richard Simpson raised points about health inflation, rather than general inflation. Alex Smith answered those questions, so he might want to say more on that.
The assessment was informed by our examining future prospects on pay. Across all the supply budget heads that we have, we arrived at that position.
This is foreign territory for me, so I am being prompted somewhat. I asked whether you could share with us the information on which you have based the increases. What factual information did you use?
On pay, for example, we used the submissions to the pay review bodies that Scottish Government health directorates made.
Remind me what percentage salaries are of the health budget.
They are 70 per cent.
About two thirds.
So pay is a huge determinant in our considerations.
The submissions to the pay review bodies are publicly available—they are published on the Department of Health website.
We have exhausted our queries. I thank the cabinet secretary and the officials for their evidence. I will suspend the meeting, after which the cabinet secretary will return to answer questions on sport.
Meeting suspended.
On resuming—
I call the meeting back to order. Would the cabinet secretary like to make some introductory comments on the sports aspects of the budget, or shall we move straight to questions?
I covered the main budget headings in my opening remarks. I am happy, in the interests of time, to move straight to questions.
In evidence two weeks ago, the chair of sportscotland, Julia Bracewell, expressed serious concerns about the cut in sports lottery funding for sportscotland that is intended because of the spiralling costs of the London Olympics. She painted a serious picture and said that the potential cuts that sportscotland faces place it
Members are aware that the Government has repeatedly expressed concerns to the UK Government about the impact on sports development in Scotland of the funding arrangements for the London Olympics. I will give the committee some numbers that Julia Bracewell may already have discussed with you. Over the next few years, there will be a direct loss to sportscotland of in the region of £13 million, which will be diverted to fund the London Olympics. On top of that, it is estimated that ticket diversion—people buying not general lottery tickets but the special ticket for the Olympics—could lose sportscotland an additional £4 million or thereabouts over the next few years, although it is difficult to be exact about that figure.
Stewart Harris, the chief executive of sportscotland, stated in evidence two weeks ago that, to date, the organisation had not received an assurance from the Department for Culture, Media and Sport in London that the cut in sports lottery funding in Scotland will be capped at £13 million. That opens the door to a potentially even greater cut. Will the Scottish Government consider making further representations to the DCMS, to seek an assurance that the cut will go no further than the proposed £13 million?
I will seek such an assurance, as I would be hugely concerned if the loss were to be in excess of the figures that we are discussing today. Without my going into too much detail, members can be assured that we will continue to have discussions with the UK Government about how we can avoid some of the losses that have been proposed. We are in new territory, as we have our own games to look forward to, just two years after the London Olympics. The London Olympics are great and there are benefits to be had from them, but clearly our priority is to ensure that in 2014 we have not just the best Commonwealth games ever but a real legacy in community sports facilities. In that context, some of the losses that we are discussing are even more alarming than they were previously.
Given the tight settlement for local government, less ring fencing and the fact that a lot of money for sports comes from local government, can you give us an assurance that sports funding will not be squeezed? In anticipation of an answer that refers to the concordat with local government, can you give us some idea about whether there will be a measurable target or outcome? If so, when will that be decided on?
I cannot give you that detail at the moment for the simple reason that the outcome agreements are still subject to discussion. However, you are right to say that local authorities contribute a great deal to sport and sports development. Without speaking for COSLA, I can say that I know that it, like us, has a desire to ensure that, as we move towards 2014, there is an increased focus on those issues.
When are we likely to know the targets or outcome agreements that will be set with COSLA?
As you know, the Cabinet Secretary for Finance and Sustainable Growth is the lead cabinet secretary in relation to that matter. The issues are subject to negotiation. The situation has a number of layers, including the single outcome agreement and the individual outcome agreements with individual local authorities. I am sure that Mr Swinney will report to Parliament regularly on progress.
Will those targets be set before the budget vote in February?
That is a question for the Cabinet Secretary for Finance and Sustainable Growth, at this stage.
Mary Scanlon might want to lodge a parliamentary question on that.
In relation to the overall single outcome agreement, the answer to your question is yes. However, Mr Swinney would be able to talk to you in much more detail about the progress of the negotiations.
The previous Administration tried to persuade local authorities to ensure the provision of two hours of physical education a week, but the last report on the matter showed that a disappointing number of local authorities had failed to do that. I should also mention that the Scottish Consumer Council has reported that parents want five hours of PE a week. We look forward with great interest to the outcome agreements and the monitoring of them.
On your first question, obviously, the allocation of sportscotland's budget is a matter for sportscotland, although we have a keen interest in that. Sportscotland funding is designed to allow progress on the national and regional sports facilities strategy. About five of the strategy's projects have moved to stage 2 of the process and another one will move into stage 2 in the next wee while. We need to upgrade our facilities as fast as we can and the Commonwealth games provide a focus and a catalyst for that. We want Scotland to be in a position to benefit as much as we can from the Olympic games, although I refer to my earlier comments.
Why not? Everyone else has mentioned their constituencies.
That seems to be the order of the day.
Perhaps we can return to that if end-year flexibility is available or underspending occurs in future years.
I have no doubt that we will.
Yesterday, the Subordinate Legislation Committee considered a proposal by the Scottish Government that all bank accounts in Scotland that have not been used for 15 years would become the Scottish Government's property. To what extent have you factored that proposal into your budgeted expenditure for sportscotland and other sporting activities?
As far as I am aware, no decisions about using the money from defunct and disused bank accounts have been taken—I think that the subject falls within the Cabinet Secretary for Justice's remit. However, I confirm that nothing in the sportscotland budget that we are discussing depends on anybody's bank account becoming defunct.
I will follow up Richard Simpson's question about the benefits of the Olympic games to Scotland. I am keen to learn of the benefits to the whole of Scotland from the Commonwealth games. It is important that benefits are not just felt in Glasgow, but pushed out throughout the country and—to be parochial—into the Highlands and Islands.
I am losing the battle and I might have to take steps.
Has the cabinet secretary thought about what form such benefits could take?
The Commonwealth games organising committee will think carefully about the matter. It is no accident that the strapline for the Commonwealth games bid was "Scotland's games". It is clear that Glasgow will benefit most, but the event should benefit all of Scotland. Some of those benefits will be indirect, but they will be no less important—jobs, the economy and tourism will be boosted. Opportunities will arise for more direct benefits. Stewart Maxwell and I have received several parliamentary questions from members who represent areas as far afield as Orkney and Shetland about the potential benefits, which should arise. Those benefits can take several forms, from training camps to a range of matters. I assure Rhoda Grant that the Commonwealth games organising committee will have the issue at the forefront of its mind.
I turn to an outstanding matter that arose during our evidence session on 21 November with representatives of sportscotland. The witnesses acknowledged the level of increase in the sportscotland budget over the three years, to which you referred earlier, but they claimed—I stress that I am the messenger here, although what they said is in the Official Report—that it was unclear whether the additional funds were new money or whether they included the £27 million that the agency had in its capital reserves. Will you clarify that?
The funds are a combination. The money in the capital reserves to which you referred is of course in the capital reserves of the Government, not specifically of the agency. That money has been rephased, reprofiled and consolidated into sportscotland's budget over the next three years. In addition, there is £15.5 million of new money over the next three years. The short answer to your question is that the money is a combination of the money that was in the central unallocated provision, to use its technical term, and the new money that I have talked about.
An Audit Scotland report from last year identified that £2.1 billion might be required to bring all our community sports facilities up to speed. It is amazing how Audit Scotland always seems to manage to manufacture such numbers—it must be some professional thing that it does.
"Manufacture" is another naughty term. You used the term, "slush fund" earlier.
I am a member of the Institute of Chartered Accountants of Scotland, so I am allowed to use such phrases.
I agree that £2.1 billion is a daunting sum. As members will know, I am not one ever to resort to party politics, but I have to say that the sum is a fairly shameful legacy that the new Government has inherited. The sum has accumulated through years and years of neglect of community sports facilities. Tackling that deficit and bringing our facilities up to the standard that people have a right to expect will take a lot of time. I am confident that sportscotland has been funded in a way that allows it to make a start on that. How it allocates its budget between the big national and regional projects that I talked about and community facilities, and how it works with partners to lever in their resources is a matter for further discussion.
I presume that sport is in your portfolio because of the contribution that it makes to the health and well-being of the country—rightly so. It is human nature to concentrate on the elite aspects of sport, because seeing athletes winning medals improves everyone's feelings of self-satisfaction and so on. I am probably in a minority of one in that I am not at all convinced that participating in elite sport is necessarily a healthy activity, having seen people 20 or 30 years further on from their peak in their elite sport. However, we know that persuading the ordinary citizen to walk a bit twice a week and get moving has enormous health benefits. I do not know whether you see exercise as coming under the sport portfolio—I am certainly not talking about competitive sport. Do you think that you have got the balance of expenditure right? Masses of citizens in Scotland who would not even begin to try emulating our great athletes in the Commonwealth games would benefit from taking a tiny bit more exercise if they could be persuaded to do so. Are you satisfied that we are investing adequately in that aspect of sport in the health and well-being portfolio?
You make a vital point about the need to see sport in its widest sense. It is important that we support our elite athletes by ensuring that they have the facilities to perform at the top of their game. We should not underestimate for a minute the catalyst effect of a big event such as the Commonwealth games. If our young people can see our elite athletes performing and winning medals, that will have an impact on encouraging them to become more active and to take up sport.
I add my support for Ian McKee's comments, so he is not a lone figure. We took evidence from sportscotland on the legacy of the Commonwealth games. I see that one of the priority goals in the draft budget is:
Speak for yourself, convener.
I take neither crisps nor lager; my sins are different. Does the minister take my point that we can overemphasise that legacy?
Having had discussions with sportscotland and with others in the field—pardon the pun—I think that we have an opportunity over the next seven years to get this right in a way that other countries did not. I feel strongly that the legacy will be created not just by talking about it but by doing what is necessary to ensure that we achieve it. That applies from the bottom right up to our elite athletes.
Richard Simpson wants to make a point, which I hope is not about crisps and lager.
It is not about crisps and lager, neither of which I consume.
We will discuss with sportscotland the impact of the efficiency savings targets, but the 2 per cent efficiency saving applies across the public sector. There is an on-going review—again, I must be careful not to pre-empt decisions that have not yet been taken or announced—of the future of sportscotland. In our decision making on that, one of our priorities will be to ensure that we channel as much as possible of sportscotland's funding—even more than is the case just now—into the front line and away from administration and backroom functions. Clearly, those issues are important in that context as well.
We have managed to reach the end of our questions. I thank the cabinet secretary and her supporting team.
Meeting continued in private until 12:59.
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