Good morning and welcome to the 21st meeting in 2013 of the Finance Committee of the Scottish Parliament. I remind everyone to turn off their mobile phones, tablets and other electronic devices.
In reading through the financial memorandum, I felt that the focus was clearly on the transition and implementation costs that might arise from the bill. Obviously, from our perspective, we have concerns about what would go into the pot in terms of the totality of an integrated budget in relation to aspects of acute spend and how far the guidance will go in terms of being prescriptive about the funding that needs to go into the integrated pot.
The next paragraph says:
The financial memorandum does not go into any great detail on estimations of costs that will come from demographic growth. Studies suggest that, by 2031, we will be looking at an increase of £2.5 billion being needed in the budget. The efficiency measures that are highlighted in the financial memorandum will go some way—although not a lot of the way—towards trying to address some of that pressure.
Mr Kenton, would you like to comment on what we have heard so far?
It is true that the bill does not delve into the impact of demographic changes. Of course, those changes are happening irrespective of the bill or integration so, in a sense, those costs are not directly relevant to the bill, so I suggest going down the route of integration as a way of trying to mitigate the impact of demographic change rather than building such mitigation into the cost of the bill. I agree with Jean Campbell that the sort of offsets that are quoted in the financial memorandum are fairly high-level costs that try to give an overview of the bill. They also rely on releasing fixed costs from the acute sector, and there are risks around that.
In NHS Highland’s submission, you say that it is reasonable to assume that the financial implications will be in line with the estimates that are made in the financial memorandum, and that the assumptions seem to be reasonable.
The issue of the financial implications works on two levels. The first level concerns the costs of making the transition; I think that the bill makes a reasonable attempt to quantify them. They are quantifiable, but they pale into insignificance when compared with the wider implications of sharing budgets for real. My view is that it is hard to legislate for that—it has to be done with a degree of openness and transparency that is hard to set down in legislation. We had to place trust in our counterparts in Highland Council. It is no secret that, during our first transitional year, we had some challenging negotiations in relation to the money, but we came through that and were always open and above board.
The success of the bill will lie in its effecting a culture change in how organisations work together. In terms of money, there needs to be openness and an open dialogue between partners to effect the shifts that need to happen and to ensure that there is a realism about how that can be done. Obviously, getting the key people involved will be pivotal to ensuring that.
One thing that we found in the first year was that even with that level of openness and trust, there were times when we were almost not talking the same language from an accounting point of view, because the regimes were so different. Sometimes, there were misunderstandings rather than disagreements, and we had to work through those as we went along. It was a real learning experience; we would be happy to share that experience with colleagues who are interested in learning from our model.
I want to talk about some of the wider issues that have been discussed. NHS Highland’s submission says:
There is an opportunity to reduce fixed costs. It is very challenging, and it is a medium to long-term goal. As we always said when we went down our integration route, the first two years would be about bedding in and almost “business as usual”—that is the phrase that we used. In transferring £89 million and 1,500 staff one way and £8 million and 200 staff the other way, all the pensions, payroll and accounting treatments were transferred, too, so there was real potential for things to go wrong. Our hope is that all the resources for adult services being in one place in the health service will bring opportunities.
We do not have the same experience that Nick Kenton has had in Highland, but natural efficiencies will come from integration in relation to management posts when there is co-location, for example. That makes delivery of services much more real for people, and efficiencies come from that. A lot can be done around information and communication technology systems by integrating them a lot more and by streamlining processes. It would be a lot more efficient to input information only once, for example.
I will ask one more question before I let the rest of the committee in. This question is to you, Ms Campbell, although Mr Kenton can of course comment, too. What concerns do you have in relation to potential equal-pay claims for staff who will be working more closely together?
There are provisions in the bill such that if we were to use the lead commissioning model, with rafts of staff—under the Transfer of Undertakings (Protection of Employment) Regulations—TUPEing over, there might be natural harmonisation of pay claims as teams come together. There are differences in the pay and conditions of occupational therapists, for example, so in an integrated occupational therapy team, people could see that their counterparts from either the health service or the local authority might be on more advantageous terms and conditions. As a result, there would, naturally, be pay claims around that. That issue might not arise as instantly as it would under a lead-commissioning model, but under a body-corporate model, it might well emerge as teams come together.
Do you have any idea of the cost implications for a health board area of, say, the size of NHS Greater Glasgow and Clyde?
I could not comment on that.
That would certainly be difficult to estimate.
It is certainly worth pointing out that pay claims are a risk. I summarise our approach as proceeding with caution. We do not have a harmonisation policy, but if posts become vacant or if there is a redesign, we are—where we can—moving posts over to the relevant pay scale for the new employer. As I have said, however, we are proceeding with caution.
I open the session to colleagues around the table; Malcolm Chisholm will be the first to ask questions.
I agree with Nick Kenton that integration can mitigate the effects of demographic change, but I suppose that that will happen only if it works properly and shifts the balance of care in a way that structural change on its own will not.
Perhaps I did not previously express myself as I meant to. My point in response to Jean Campbell’s comment—that demographics need to be included as a cost of the bill—was that those costs will happen whether or not the bill is passed and that the issue is therefore not directly relevant to the costs of the bill. However, it is—as I think you have suggested—a relevant part of the context and we need to be aware of it. Indeed, for me, it is one of the issues in support of the bill.
Do you agree with that, Ms Campbell?
The context of that comment is our view that in seeking to predicate efficiency savings on the basis of the bill, it is relevant to consider the extent of demographic growth in order to see the extent to which integration would deal with certain issues. There needs to be more consideration of how we meet the pressures that will be caused by demographic growth. Although integration will go some way towards addressing that, it would have been helpful had the financial memorandum set out the extent of the issue that we are going to be dealing with over the next 20 years, if we are indeed going to be predicating efficiency savings on that basis.
Obviously you fully understand that, but the problem is that many local authority submissions about the bill assume that significant resources can be released from acute budgets to pay for the development of services in the community. If people think that that is going to be possible, they are being misled because of the demography issue. It might be more possible in some parts of Scotland than in others; it certainly will not be possible in NHS Lothian, given our demography.
That is our aim, but at the moment we do not have a timescale. As I said, the change is a medium to long-term issue. We are looking to keep the ship steady for two years before we try to do anything clever, as it were. I do not have a glib answer to your question, but we certainly want to do what you suggest and we think that it is more likely to happen if all the resources are in one place than if there are organisational divisions between the resources.
I was also puzzled by the comment in the financial memorandum that quite a lot of the savings are going to come from “reducing variation”. After all, variation can be a good or a bad thing. It might be a bad thing because it shows that the service is inefficient, or it might be a good thing because it shows that the service is better. I am interested to hear your comments about making savings by reducing variation.
We should be looking at variation across the whole NHS and local government, and not just in the context of integration. We in Highland certainly need to focus on that issue. You are absolutely right to suggest that sometimes variation can be completely appropriate, but we need to understand the issue, bring it to light and challenge it.
Thank you. Those are all the questions I have, for now.
One of the things that strikes me in all of this is that we are starting with two organisations—local government and health boards—and ending up with three. On the surface, it seems that that might make things even more expensive because there will be more bureaucracy: before a pound is spent, it will have to be approved three times rather than just twice. Is that assumption wrong?
I am not sure who you are directing the question to.
The question is for both of you.
There are only two statutory bodies in the lead-agency model, and even under the terms of the bill the situation in Highland would not need to change much. We would need a joint committee, but we already have a strategic commissioning group that involves both organisations and which actually looks fairly similar to the proposed joint committee. As I have said, the Highland model still has only two statutory bodies.
So, you have just been transferring between yourselves without the need for a third organisation to do all that.
That is correct.
It has been suggested that a third organisation could be set up to do all that.
I think that that is correct with regard to the other model, but that is probably a question for the Scottish Government.
Why did you not go down that route?
When we considered which model to introduce, there was no bill; instead, our model was put together under the terms of the Community Care and Health (Scotland) Act 2002. When in 2010 we first looked at the various models, a third-party model was considered. I am not sure whether that would have required legislation, but the view was that putting in place another body would simply put more boundaries into the system instead of eliminating them.
That is very much my point. Do you share that concern, Ms Campbell?
The key will be in what the guidance says and the level of autonomy that the body corporate will have. It seems from the bill that the body will have quite a lot of autonomy over decisions about the pots of money that are allocated to it, and that it will be able to set clear direction on allocation of resources across the landscape to meet key outcomes. However, the bodies that sit at the back—the local authority and the health board—will need to agree those outcomes and the strategic or joint strategic commissioning plan for allocating the resources.
I am quite concerned by those comments. At the moment, if £10 million goes into, say, social work, social work decides how that money should be spent. In the future, however, that £10 million might be transferred to the new organisation. How hands-on will social work be with that £10 million? Will it simply hand the money over and let the new body get on with it, or will it be quite involved in decisions on how that money is spent?
The guidance will be key in setting out how that money is dealt with once it is transferred. That said, the council might transfer £10 million one year, but the next year it might have to make 3 per cent efficiencies and so might deduct 3 per cent from that £10 million, put in place a process for allocating efficiency savings or ask the body corporate to make those savings. There will need to be a dialogue between the council and the body corporate about the level of funding and the extent to which it will have a say over what happens to that funding. The guidance will make clear the level of autonomy the body will have in such decisions.
Your council, which is relatively small, deals with Greater Glasgow and Clyde NHS Board. Will there be one joint body for Greater Glasgow and Clyde?
That has still to be determined.
That is not determined.
It is not. Under the bill, each local authority area will have a partnership agreement, so we would expect East Dunbartonshire Council to have its own partnership agreement. However, we share hospital provision with six other local authorities.
I presume that your council will want to ensure that the £10 million that it puts into the pot benefits its residents rather than, for example, Renfrewshire residents.
Or Glasgow residents—yes.
When Highland Council transferred the £89 million, NHS Highland had a debate with it about how much influence and control or otherwise the council would have over that funding. We debated whether we should focus on the inputs—the staff and all the transferred budgets—or the outcomes. We are in a state of flux, but we prefer to look at the outcomes and how we deliver with the £89 million rather than how many social workers have been appointed or whatever. That debate has yet to be resolved but, as we mature, I hope that we will move towards looking at the outcomes that each of the other agencies has delivered, rather than focusing on the exact amount transferred.
I realise that neither of you is directly answerable for my next topic but I will ask the question anyway. I understand that Healthcare Improvement Scotland and the Care Inspectorate would come in and do the inspections and so on. That has the potential for duplication. Is it your understanding that both bodies would do the same thing or would they do different things?
They currently do different things—Healthcare Improvement Scotland looks at the quality of healthcare and the Care Inspectorate looks at the quality of social care delivery. However, I understand that the bodies are moving towards joint inspections.
To be sceptical, that sounds as if two people are turning up to inspect something together, although that is probably better than two people turning up and inspecting it separately. Would it ultimately be better if just one person turned up and did the inspection? That would save 50 per cent.
Yes. I hope that that is the way that things will go. When the Care Inspectorate came along, it looked at the whole joint landscape of child protection delivery and how we work jointly to deliver on related outcomes. When the healthcare inspectorate comes along, I hope that it will take cognisance of that care inspection and that that will inform the level of inspection that it does. As things develop, I hope that that will come together a lot more.
Mr Kenton, do you share the view that it will be in the longer term that inspections join up?
I am not sure that we have a formal organisational view on that, so I will speak in a personal capacity. On the one hand, joining up and integrating the inspectorate regime and the care at the same time seems to make sense; on the other, we must ensure that we do not lose expertise. For example, if the national health service is running care homes, we need to ensure that the standards applied are not the ones that apply to hospitals, as otherwise we will end up with inappropriate responses. In principle, it makes sense to join up the regimes, but we must keep an appropriate inspectorate regime for each part of the organisation.
In your experience of bringing together two organisations—or at least of joint working—was there a big financial input from outside or did you cover that with your own resources?
We had support from the Scottish Government to the tune of about £1.5 million, of which about £900,000 was for the direct costs of transition. Because we were first in the queue, some costs have not applied to other organisations. The model that we used also had some costs for human resources support that would not necessarily apply under other models.
So you just needed to get the accountants to behave themselves.
Like the deputy convener, I am interested in the costs of organisational development. Paragraph 53 of the financial memorandum states:
Some costs are reflected in the financial memorandum, such as those for the appointment of joint accountable officers and for the displacement of community health partnership managers—under the bill, those posts will go. However, there seems to be no reciprocal provision for the local authority side, which has management or leadership posts that will go under the new arrangements as well as management structures that are underneath them. Health and social work management teams will need to be joined up to deliver on the new agenda, but the fact that those arrangements could have redundancy and displacement costs in local authorities is not reflected.
In the Highland model, there was no new body to staff up. We have had to restructure on the back of integration, but that has been broadly cost neutral for us.
Given that the new arrangements will apply across the whole of Scotland, have you considered how the provision in the financial memorandum will apply overall rather than just from your own perspective? The changes will apply to all health boards and local authorities, so there will be cost implications. We need to consider whether the Scottish Government has taken those cost implications into account in its planning for the financial arrangements.
I can answer only from an NHS Highland point of view, so that is probably a question for the Scottish Government officials who will appear on the next panel.
Committee members have no further questions, so I will finish with a question to each of you, although both of you might want to respond to each question. Ms Campbell, your submission says:
To establish whether the target is achievable, it would be helpful to see how successful partnerships across Scotland are in achieving the current 28-day target. Certainly, I know that our authority had no delayed discharges when there was a six-week target but, in the months leading up to the current 28-day target as well as in the initial months of having it, we had some delays against it, although we are now achieving it.
Mr Kenton, is the new target realistic and achievable?
This is not my direct area of expertise, but I think that we have set ourselves a target of beating that target. However, we currently have issues with delayed discharges, so we are looking at care-home and care-at-home capacity.
My final question is to Mr Kenton, although Ms Campbell might also want to comment. Your submission states that it is important to have
That relates to my earlier point that we cannot legislate for everything and write everything down. Although we have a 400-page partnership agreement, it does not cover all eventualities. We need to encourage flexibility to allow partnerships to find their own local solutions.
I agree that we need to focus on the outcomes that we want to deliver, although it is hard to get away from the practicalities of transfers, partnership agreements and all the minutiae required to make those happen. At the front line, we need to do the best for older people, who do not want to be in hospital and want good-quality care at home. To deliver those outcomes for older people, we need to look at what we need in the pot.
Before I call this evidence session to a halt, do you want to make any further points to the committee?
No, thank you.
No.
Thank you both very much. We really appreciate the responses that you have given to our questions.
We continue to take evidence on the financial memorandum to the Public Bodies (Joint Working) (Scotland) Bill. I welcome our second panel of witnesses, who are from the Scottish Government: Frances Conlan, Christine McLaughlin, Paul Leak and Alison Taylor. There will be no opening statements and we will go straight into questions. The first questions will come from me, as usual—the joys of convenership—and I will then open the meeting out to other committee members.
I will begin with a general statement on the policy and then hand over to my colleagues, who did the calculations. Would that be best?
Sure—I am happy with that.
On uncertainty, part of the challenge for us is that, as in all health and social care systems in developed countries, the issues at work are highly complex. There is a wealth of evidence, but that is, in itself, complex. Drawing down what potential improvements are available requires a multifaceted calculation.
The efficiency savings are estimated across three areas: anticipatory care plans, the reduction in delayed discharges and the reduction in variation. The range relates to the calculation for delayed discharges, for which there were two assumptions—14 days and 72 hours. That explains the difference in the range.
Colleagues will drill down into that, so I will resist the temptation to ask further questions on the issue.
The method that we used to calculate the transition costs was to take the Highland example, as Mr Kenton indicated, and remove from its costs any costs that do not apply under the bill, such as children’s services costs, and costs that are specific to the lead agency model, to give us a transition cost estimate for the integrated joint board or body corporate model.
We have received written evidence from some local authorities, and a representative of East Dunbartonshire Council has given oral evidence today. In its submission, East Dunbartonshire Council says:
From my understanding of the response that was given earlier, I think that that refers to the fact that we did not include in the bill the potential benefits of the redesign of secondary care by referring specifically to that. It could be argued that some of the potential efficiencies from reducing delayed discharges reflect that.
There has previously been helpful discussion about the difficulties associated with releasing any resource from acute spend and the need to incorporate acute spending and activity in what I would describe as the strategic planning process that we are laying out for the integrated systems. The main focus in policy terms is that we do not believe that we can deliver better outcomes for people unless we ensure a strategic planning process that reflects the entire journey of care. The assumptions that are worked in about redesign of all types of provision—primary care, community care and hospital care—depend largely on the local opportunity for improvement.
The bill covers an overall approach in relation to scope. A number of submissions have referred to the extent to which scope is included in the financial memorandum, and the memorandum sets out the total spend on adults, although it does not specify in great detail the components of resources that will come within the scope of a plan. That work has been taken forward through the integrated resources advisory group, which I chair and which includes directors of finance from local government and health, the Association of Directors of Social Work, Audit Scotland, the Chartered Institute of Public Finance and Accountancy and other bodies. The issue is how to get the best use of the total resources; we have tried to outline that up front in the financial memorandum. This is not just about what things cost and what can be identified as tangible savings but about the wider question of making best use of the total resources available.
To a degree, it does. I will continue on costs, which are fundamental to the financial memorandum. A number of people who have submitted evidence have said that the costs on health bodies are more clearly identified and addressed than the costs on local authorities are. Why is that?
That partly reflects the fact that the financial memorandum reflects the costs incurred under the bill. As the bill—if and when it is enacted—will take community health partnerships off the statute book, it will have a direct impact on management arrangements that health boards have had in place to support CHPs.
We did not have the time to consult on the financial memorandum, so we took the opportunity to work informally with the ADSW and the Convention of Scottish Local Authorities to identify costs that local government might incur. We reflected all those costs in the financial memorandum.
You mentioned the ADSW, which believes that management posts are more likely to be deleted than is being suggested. It therefore says:
As you will be aware, in the discussion with previous witnesses and in other discussions on the issue, there has been some reflection on the need to ensure that local systems have the flexibility to put in place arrangements that best suit local needs and which provide a smooth, sustainable and robust transition from current patterns of provision to a more integrated model. We have worked closely with representatives of the ADSW and other pertinent bodies in formulating the figures, as Paul Leak indicated. We have not been able to fathom in detail what such changes might amount to in a general sense, because they tend to be particular to local systems.
Most of the CHP general manager posts are funded by boards, but some are part funded by boards and local authorities, so the estimate of the displacement costs in relation to those posts addresses the costs that boards and local authorities will incur. That calculation relates just to the displacement of CHP general managers, as those posts are directly affected by the bill.
An issue that North Ayrshire Council, which is the council for my constituency, commented on was
We have included in the financial memorandum costs specifically for a project to improve management information to support strategic planning. Strategic planning is a key proposal in the bill. The information that we have used to support the figures in the financial memorandum is based on a project that we have had under way for a number of years, which is called the integrated resource framework. It links health and social care data at an individual client/patient level and aggregates that up to larger geographies—general practitioner practice areas, CHP boundaries or local authority districts.
Thanks for that. That is very helpful.
I know that a number of responses suggested that a new IT system is needed. The experience in health over the past five years or so has certainly been very much about the convergence of systems as opposed to creating new systems, and focusing on the standardisation of clinical information as well as the data itself. The approach very much fits the wider e-health strategy of using existing systems and accepting that sometimes the answer is not a one-size-fits-all system for every part of the country.
Okay. Thank you.
CNORIS is not an insurance scheme as such; rather, it is a risk-sharing scheme that is mandatory across all NHS boards. Basically, it allows the total costs of claims in any one year to be shared on an agreed basis across all the members. Currently, it does not provide for social care functions. The reason for the scheme being in the bill is to extend its provision so that, if local authorities wished to join it for the functions that are defined in the bill, they can do so. In respect of additional costs, a premium would not be put in place; it is simply about sharing costs.
Thank you for that comprehensive response. I now open up the discussion to colleagues.
I will start with the issue of reducing variations, in relation to which Paul Leak gave the helpful Lothian example. However, I am still struggling to see how that works. That is the largest potential efficiency, but I genuinely do not really understand it.
We considered very carefully the figures for the financial memorandum. We started by looking at the variation in health and social care expenditure across partnership populations. However, we were aware that some of the variation in local authority expenditure per head might be due to political decisions, so we took that out of the equation. That left us with the variation across partnership areas in health board expenditure. To stick with the Lothian example, that gave us expenditure figures per head of population for the four partnerships in Lothian, which, when they were averaged out, gave Lothian’s spend per head across the whole of the Lothian population.
I will not pursue that, but I am sceptical about it. We already have separate partnership boards in Lothian, so I am not quite sure why they would not be able to act now if they wanted to.
The question is whether that information—the total health and social care expenditure on adults in Midlothian, West Lothian and so on—is being reported at the moment. I am not sure that it is. At the moment, I think that all that is reported is information about the direct budgets that the CHPs manage. However, the fuller information will include figures on the use of all the services by the population, which will show quite material variation.
Okay. That leads me on to my next question. You referred to the uncertainty about decisions taken by partnerships, but that also goes to the financial heart of the bill. Is that just about decisions taken by partnerships? Surely the totality of the resource that they have will be determined not by the partnership but by the council and the health board. I agree with the bill’s objectives and everything that you have said about the best use of total resources and so on, but it is still not clear to me how it will work in practice.
I will answer that unless Alison Taylor wants to.
There are several points in there that we might respond to. Paul Leak will start.
Alison can address policy issues afterwards.
That will drive up costs, because no one will say to the parent body, “You’re allocating us £50 more than you’re allocating to the next partnership.”
The challenge is for the parent body to say, “We’re allocating you £50 more than before. We’re setting you a differential efficiency target to achieve the same outcomes.”
Christine McLaughlin might want to speak about how local integrated budgets are arrived at and agreed, and about the interaction and support that we are putting in place around that with local partnerships. I go back to the discussion on variation and a point that Paul Leak made a few minutes ago about the investment that we are making in improving the provision of linked data at the local level. As he said, that will go below the partnership level as we work through the process and build on the experience of the integrated resource framework.
Throughout the discussions that we have had on acute budgets, it has become evident that there are two different approaches: effort can be focused either on how much is in the pot or on the outcomes that will be delivered. We have got to the point of thinking that it is more productive to focus on the outcomes. As the committee will know, there are well-defined performance management arrangements in place for local authorities and health, so delivery of outcomes will be integral to those arrangements. We are not saying that we are leaving arrangements entirely to the discretion of local partnerships. If we do not see the outcomes that we expect to see, that would just fall within the normal management arrangements that already exist.
My final question—
Paul Leak wants to come back in.
I just want to emphasise Christine McLaughlin’s point. The main focus for hospital provision in the bill is on unplanned admissions. A significant proportion of our hospital capacity is taken up with unplanned admissions, particularly of elderly people. I do not know whether this will be done through regulations, but we will target particular specialties for partners to include within the scope of the strategic plan. A relatively small number of specialties are responsible for most of the unplanned admissions bed days for elderly people so, through the bill’s provisions, we will direct partners to include those within the minimum scope of the strategy.
That leads on to my final question, because the most difficult question is about the acute budgets. We had a representative of East Dunbartonshire Council here earlier, and I was struck by how many different local authorities Greater Glasgow and Clyde NHS Board has to negotiate with. It is difficult to see how that will work in practice. Your answer implies that you will give guidance or direction on which aspects of hospital budgets will have to be included.
I will address the technical points. The bill focuses on enabling parts of the NHS to use resources better across the entire spectrum of care. At present, there are artificial disconnects between community provision and acute provision within boards, and between boards and local authorities, all of which affect expenditure in each of those sectors. The bill’s premise is that, by bringing those things together and focusing on them all, we can better allocate the resource.
I reiterate what Paul Leak says, which goes back to the point that I made earlier. It is not really about handing money over; it is about bringing money together to reflect the care journey of the growing population of need, which largely consists of people who are frail and in their older years but also includes other adults who have multiple and complex needs.
Surely we are bringing such aspects together now. The bill sets up a body corporate, to which resources will be handed over, but you are proposing that we move a step on from that, and have a body that is, in a certain sense, separate from health boards and local authorities.
As we reflected on how we could integrate in the broadest and most straightforward sense, it struck us that—to return to what Mr Kenton said earlier—we could follow the type of model that Highland has used. It has also been used, to good effect, in some places down south, where—to put it in the simplest terms—one body hands something to the other, which takes the lead, and the money and the functions go together in that way.
In terms of the technical aspects of the bill, there is a strong role for the health board and the local authority in relation to strategic planning. The duties are on the body corporate, as described in the bill. However, there is a clear duty on that body corporate to fully consult the health board and the local authority to ensure that they are full partners in that strategic planning process.
It is probably beyond the remit of this committee, but I merely add that both NHS Lothian and the City of Edinburgh Council think that there is a big gap between the policy memorandum and what the bill actually says. That issue needs to be ironed out in the committee process.
The witnesses have already had a heads-up on the area that I am concerned about, and it is not dissimilar to Malcolm Chisholm’s point. There is an element of dancing on the head of a pin when considering whether a new integration joint board or an integration joint monitoring committee is a different institution from what already exists. However, the fact is that they are referred to in the financial memorandum as separate entities.
The estimates for organisational development that are included in the financial memorandum were based on estimates by—goodness, I have forgotten the name.
It was the Scottish Social Services Council and NHS Education for Scotland.
They were estimates for providing organisational development for the members of the integration joint boards. In addition, we are looking to develop the strategic planning capabilities within partnerships, and that is included in the estimate from the SSSC.
In the response that I had earlier, there was a comment on management positions being lost and redundancy costs being incurred. Have those costs been included in the financial memorandum?
Yes. I do not have the reference point, but we included a provision for the potential displacement cost of CHP general managers. We have not included any other posts, as the CHP general manager posts are the posts that will be directly removed as a result of the bill.
Have numbers been discussed in relation to that and can those numbers be achieved through voluntary redundancies?
We have set out three scenarios for the CHP general managers. One is that all the general managers are successful in applying for the chief officer posts in the joint boards; another is that none is successful in securing a chief officer post; and the third is a midway point, where half the general managers are successful. For each scenario, we then calculated the potential displacement costs, depending on the number of general managers who are not successful. In each case, we assumed that half of the people who were not successful would be made redundant and half would go on to a redeployment register and then subsequently be re-employed. I am just trying to find my notes on that.
While Paul is doing that, I will mention that we are in a fortunate position in having had a pilot of which we can take cognisance in developing the costs. However, we are aware that there was a slightly different position in Highland, partly because of the speed of implementation there.
Paragraph 51 of the financial memorandum, on page 31 of the explanatory notes, says:
Continuing on the same theme, I refer to a point in the NHS Highland submission that the convener quoted earlier. It states:
None of us would make the leap to saying that legislation alone is sufficient, but our position and ministers’ position is that, given the shape of population need, it is reasonable, in the light of the experience of the last several years of partnership working, to place particular emphasis at this stage on the importance of effective integrated working.
From what I can see at a distance, Highland seems to be a good example of where things have worked well. However, my concern is that, if we repeat the process 32 times, there might be one or two cost implications. The committee’s job is to be a bit sceptical about that. If the new joint board, or whatever it is called, develops a life of its own and we effectively have three legal entities all trying to relate to one another, there are cost implications in that.
The joint board has to have some life of its own. It is meant to lead strategic planning in an integrated way, which has been set out in a fairly novel manner. However, it needs to be carefully and closely bound into a relationship with the health board and local authority. Those are the points that Frances Conlan reflected on.
No.
I asked the representative from East Dunbartonshire Council whether, if it hands over £10 million to the joint body, that money will have to be double accounted for, because the joint body will have to scrutinise exactly what the £10 million is used for and East Dunbartonshire will also scrutinise exactly where it goes. If they do not do that, will the auditors criticise them? I fear that there might be duplication.
I recognise your concern. It is of key importance to us that, in the pursuit of improved outcomes, we do not create a whole new bureaucracy and a whole new science. I will hand over to Christine McLaughlin to reflect on how we are handling the issue.
The resources group is focused on the accounting impact of the arrangements, with the focus being on doing it once and being able to take an approach that we use. Hosted arrangements are in place in many services. Glasgow is a good example of such an approach being taken, because often one part of the system or one council takes the lead on a service and provides it to others. There are some pretty tried and tested ways of ensuring that a service can be provided somewhere and that that does not result in duplication of effort, whether in accounting, bureaucracy or the administration of the people who are involved.
Do you anticipate that the specific problem that Highland Council identified with properties moving between the two sides will arise? How would that be dealt with?
We are aware of that issue, which relates to the lead agency model. There is a way of dealing with that whereby assets would be retained under local authority provision.
Is the VAT issue one that has been resolved, or is it one for which there are a few options?
We are close to a resolution on VAT. We have been working effectively with Her Majesty’s Revenue and Customs on the issue and have had good engagement with it. We are not yet at the point of a formal decision, but the advice that we are getting on the model that we have proposed is that, on the face of it, HMRC is in agreement with our working assumptions, which would mean that there would not be an additional VAT burden.
I want to go through a few parts of the full financial memorandum, if I may. However, before I do so, I want to clarify something. Did Paul Leak say that there was no time to consult on the financial memorandum?
I may have used the wrong terminology. Frances Conlan will expand on that.
We consulted with ADSW and COSLA and with our third sector and independent sector colleagues on some of the assumptions and estimates that we have identified and are in the financial memorandum. I suppose that Paul Leak was referring to a formal consultation that might involve a wider distribution and a wider stakeholder group.
To be clear, you spoke to some stakeholders, but there was no formal consultation. Why was there no time for a formal consultation?
It was felt that the best approach was to use existing examples around the country, as my colleagues have said. Using Highland as an example, we decided that speaking to colleagues who have already made good progress on the integration of services, such as West Lothian Council and East Dunbartonshire Council, and then speaking to specific professional groups and stakeholder groups that were involved in key areas, such as the third sector, which is a big provider of care services, would be the most efficient use of our time in identifying the estimates that are in the financial memorandum.
Forgive me for labouring the point, but did you do that because you thought that it was a better way of working or because of the pressure of time?
We felt that it was the most appropriate engagement method. In fact, we have received feedback from colleagues and stakeholders to the effect that they were receptive to that approach.
Thank you for clearing that up.
Yes. To arrive at that figure, we took the total days that are spent in hospital following the point at which people are clinically ready to go home—we counted 14 days from that point, and basically took the subsequent days that were spent in hospital. The total delayed discharge equates to something like 80 wards across Scotland, so it represents a material level of resource. The assumption was that, if there was sufficient community capacity in community health district nursing and social care to prevent those delays, those patients could go home. However, the resource that would be released from that would need to be recycled into the provision of that community capacity.
How likely is it that we will get to a stage at which nobody is delayed for more than 14 days? Is that a realistic goal or is it a best-case scenario?
We need to recognise that we are in a dynamic situation, as we have discussed. We have increasing demand due to demographic change, so any efficiencies that we make might just create capacity to cope with increased demand in future. Nevertheless, we need to make those efficiencies, particularly in relation to delayed discharges, as the evidence is that elderly people start to experience functional decline after three days. There is, therefore, an imperative to get people home or into a homely setting as soon as possible.
Obviously, such a goal is desirable and everyone wants it but, coming back to my initial question, how likely is it and how long will it take to happen?
The evidence from the integrated systems in Torbay, North East Lincolnshire and the Isle of Wight shows that they do not have delayed discharges and that that is possible through the redirection of resources.
The projected £12 million saving from anticipatory care plans is based on the Nairn study. How robust is that study and how likely is it that what happened in Nairn will be replicated elsewhere?
The study is robust. It was published in the British Journal of General Practice, is second-tier and has been peer reviewed. However, although its evidence is transferable to other partnerships in Scotland, it is contingent on having an integrated approach. Nairn fostered an integrated approach between health and social care, with locality and integrated teams working closely together and a reactive response to admissions. There is no question but that it is transferable. Indeed, a subsequent study across other settings supports our initial assessment and indicates a £16 million saving.
The third and largest category of saving is from reducing variation. Malcolm Chisholm has already asked about that, but is the £104 million in efficiency savings to be achieved through having no variation whatever in health boards? Where do we need to get to in order to realise such a saving?
With a four-partnership health board, we assumed that the partnerships with more than the average level of variation would in time be able to get down to the average but there would still be variation within the partnership. The saving is not achieved by removing all variation.
You say in the financial memorandum that such differences could be
That sentence relates to variation in social care expenditure. For those reasons, we removed that from the analysis and focused on the variation in health board expenditure, controlling for the population’s demographic profile and differences in need—or so-called demand-side issues. That left historical supply-side decisions as the only explanation for variation.
Can you get some of your workings to us? As I said in my opening remarks, the £104 million seems to have been just plucked out. It might be absolutely right, but I have no way of knowing.
I can prepare an explanation for you.
Finally, on the issue of VAT, which is covered in the financial memorandum but has not yet been raised, your view, at least on 28 May when the bill was introduced, was that the bill was likely to be VAT neutral. However, South Lanarkshire Council has said that VAT is “critical”—obviously it will be critical if it costs £32 million—and that the issue
I think that my earlier answer stands. We are still having constructive dialogue with HMRC, but we do not yet have a formal position from it on the matter. Its verbal response to the information that we have provided is that it agrees with our logic that takes us to a VAT-neutral position, but I do not want to commit it to anything at this point, because more work still has to be carried out. However, the position is encouraging.
I will not ask you to overreach but, just to be absolutely clear, are you saying that, as it stands, HMRC’s verbal position is that the bill will definitely be cost-neutral?
I am sorry, but that is not what I said. As Paul Leak was at the most recent meeting with HMRC, I ask him to confirm the position.
The VAT issue is different for the different models. HMRC has advised us that, in its opinion, the integration joint board—the body corporate model—is not a taxable person because it does not provide services. However, the bill includes provision that, at some point in future, a body corporate might be empowered to do so. In that case, in HMRC’s view, the body corporate would become a taxable person and the question of section 33 or section 41 status—in terms of the Value Added Tax Act 1994—would need to be decided on.
For the financial memorandum, your position is that it is likely that the arrangements will be cost neutral. Is that a fair description?
Yes.
That is certainly our working assumption, if I may put it like that. Our working assumption is that the arrangements will be VAT neutral. From our discussions so far with HMRC, there has been nothing that would change our position on that.
Many of my points have already been answered in responses to earlier questions, but I have a couple of questions.
Fortunately, as we have developed the policy underlying the bill, we have had the opportunity to reflect on evidence from elsewhere. As my colleagues have mentioned, evidence from one or two places in other parts of the United Kingdom demonstrates that there are significantly better outcomes from what we might describe in informal terms as better integrated working. We have been able to learn from those places.
That has exhausted questions from committee members, but I want to ask a couple more questions before we wind up. First, what target, if any, is there for delayed discharges under the national performance framework?
Ministers have established a new target for delayed discharge this year. Local partnerships are currently working towards delays of no more than 28 days—I look to Paul Leak to confirm that—and we are moving towards a 14-day target. If Paul Leak can check the timescale, that would be helpful.
I will just check.
A considerable amount of effort is being invested in trying to shift the pattern of delayed discharge, in part because there is anecdotal evidence—this would apply to any such situation—that having a target makes it easier for people to focus on the issue. There is also an opportunity for improvement. Would it be best if we wrote to the committee on that point?
Yes. I asked the East Dunbartonshire Council representative about the issue because its submission expresses concern about how realistic the 14-day target might be for some local authorities and health boards to achieve.
Ministers have reflected quite carefully on the improvement in delayed discharge over recent years in Scotland. There has been a tremendous degree of progress.
The financial memorandum includes a dramatic graph to illustrate that.
Yes, the graph is dramatic. Evidence from elsewhere suggests that there remains opportunity for improvement. We shall write to the committee with details of the timescales for the new targets.
Thank you.
Any question on public sector reform more broadly is one that we would refer to ministers.
Somehow, I thought that that might be your answer, but I decided to take a chance anyway—it has certainly woken up Jamie Hepburn.
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