Meeting of the Parliament

Meeting date: Thursday, October 4, 2018

Official Report 1282KB pdf

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Health and Care Update

The next item of business is a statement by Jeane Freeman on a health and care update. The cabinet secretary will take questions at the end of her statement, so there should be no interventions or interruptions.

This year, we are rightly celebrating 70 years of our national health service. Across this chamber, we have expressed our pride in our health and social care services and the remarkable commitment of our staff across the country. While there is indeed much to celebrate, it is also our responsibility to look ahead to see what must be done to make sure that the whole system is equipped for the future. Over the coming weeks, I will set out what I believe to be important milestones in the journey that we need to take.

Today, I am publishing our understanding of the overall financial climate in which we will be working, our expectation of future demand and the demand that that will place on future resourcing. Over the coming weeks, I will also provide an update on our NHS estate, setting the scene for a more detailed capital investment strategy that I intend to bring to Parliament before the end of this financial year and, as I set out to the Health and Sport Committee, I will bring to the chamber our plan to substantially and sustainably improve waiting times.

Those important strategic developments underline our commitment to transparency and accountability and are supported by the regular reporting of the financial position of NHS boards and integration authorities. All those elements combined will provide the clarity necessary for the important discussion that we need to have about the future shape of our NHS and social care services.

The Scottish Government’s “Health and Social Care Delivery Plan” highlights the necessity of achieving long-term financial sustainability of our health and care system. The financial framework—the “Scottish Government Medium Term Health and Social Care Financial Framework”—directly supports the delivery plan and sets out in more detail the potential approach and the types of initiatives that are required to deliver a financially balanced and sustainable health and social care system.

It is important to view the health and social care system within the context of the overall Scottish Government budget, the greater fiscal responsibilities of the Government and this Parliament, and the continued pressure of United Kingdom Government austerity. The financial framework is, therefore, firmly set within the context of the Scottish Government’s first medium-term financial strategy, which was published in May this year.

Today’s publication of the framework has required close and effective working with our partners across the whole sector, and I am grateful in particular for the support of colleagues at NHS boards, integration authorities and the Convention of Scottish Local Authorities, who have supported this publication. I am grateful, too, for the support of the Chartered Institute of Public Finance and Accountancy, which has welcomed the financial framework and encouraged other areas of the UK to consider the principles underpinning that work.

The financial framework sets out the financial environment for the period to 2023-24. It follows the principles set out in the Scottish Government’s medium-term financial strategy and reflects our current understanding of the UK Government’s funding announcement in June for the NHS in England.

The implications of the UK Government’s announcement are still far from clear. The Cabinet Secretary for Finance, Economy and Fair Work sought immediate clarification on the true level of the Barnett consequentials that would come to Scotland as a result of the plans in England. Derek Mackay sought confirmation that the claimed levels of consequentials would be a true net benefit to our budget. He also sought clarification on the implied income tax changes that had been suggested as a result of the UK Government’s announcement. It is deeply disappointing that we still do not have the clarity that was sought from the UK Government on those issues, but the limited information that is available indicates that we will receive consequentials amounting to £3.3 billion between now and 2023-24.

In finalising the financial framework, I have made the perhaps bold assumption that the UK Government will honour its commitment, deliver the consequentials as a true net benefit and not reduce the Scottish Government’s funding by cuts applied elsewhere or by other measures. I very much hope that that is a matter on which we can all agree.

I confirm that the Scottish Government remains committed to passing on health consequentials in full. That is reflected in the financial framework.

Our commitments on health and care funding have delivered more than £13 billion in health funding this year, including more than £550 million of investment in social care and integration. Other key investments that we are committed to delivering include £500 million for primary care by the end of this Parliament and £250 million additional investment in mental health services over the coming years.

However, increased funding alone will not be sufficient to meet the challenges that lie ahead. Our health and social care services are faced with clear challenges, not least those of demographic change, price pressures on areas such as medicines and rising demand and expectations. We require to address all those issues against a backdrop of the uncertainty caused by Brexit, its impact on our existing and potential workforce and the estimated economic damage to Scotland’s gross domestic product of £12.7 billion by 2030.

If we follow the status quo, running costs would increase by £5.9 billion in 2023-24 compared with 2016-17. In order to meet the challenge, as a responsible Government, it is critical that our significant planned investment is twinned with reform to drive further improvements in our services to achieve better outcomes for patients.

The reforms include the development of regional working and better collaboration between the national health service boards to improve services, including improved regional approaches to the planning and delivery of services. That will help to drive change in how clinical networks are formed and help to reduce duplication in services and functions.

I recognise that it will take considerable effort for NHS boards to deliver the necessary reforms to achieve what has been outlined in the financial framework, so today I am offering NHS boards a new deal. In return for their efforts to deliver the reforms, I am facilitating a new three-year financial planning and performance framework for our NHS territorial boards. The change will require boards to deliver a break-even position over a three-year period, rather than annually as is the case currently. In each year, boards will have 1 per cent flexibility on their annual resource budget to allow them scope to marginally underspend or overspend in that year.

For the new deal to be successful, it needs a new start. In order to give all our territorial boards clear ground to move forward on the three-year planning cycle, I will not seek to recover their outstanding brokerage—that is, the expenditure that they have incurred over the past five years that has been above their budget.

I want all boards to be able to focus their attention on delivering the measures set out in the health and social care delivery plan and the financial framework in a safe and appropriate way, making sure that they maintain a strong focus on patient care and the delivery of services that are safe, effective, person centred and timely.

In publishing the financial framework, I want to inform the mature, responsible discussion about the future of our health and social care services that I have referred to before in this chamber. I have been clear about my expectations of the UK Government’s funding announcement and about how we intend to design, deliver and manage the right health and social care within our available resources. It is essential that the UK Government’s commitment is delivered in full. Failure to do so will have a direct detrimental consequence on the financial position outlined in the financial framework.

I believe that we can work together to take the steps required to equip our health and social care services with the resources and the support that are required for the years and generations ahead. I commend this statement and the framework to Parliament.

I thank the cabinet secretary for advance sight of her statement. In her first statement as health secretary to Parliament on 12 September, she said that she would approach her job with “mature reflection”. Twenty-two days later, I am sorry to say that this statement does not feel like that. Her Majesty’s Treasury figures show that health spending in England has increased by 20 per cent since 2011 to 2016 but only by 14 per cent in Scotland over the same period. If it had increased at the same rate, NHS Scotland would have £676 million more to spend today. Why have Scottish National Party ministers short-changed our Scottish NHS at a time of record UK Government health funding?

The cabinet secretary also mentioned in her statement that she intends to provide an update on the NHS estate. Communities across Scotland that have seen services cut and centralised will be concerned that the statement could be the start of yet more SNP cuts and centralisation of our health services. What are the parameters for the NHS estate review and will Parliament have a chance to see them before it is announced?

I am grateful to Mr Briggs for his questions, but I have to start by disagreeing with them. Health spending in Scotland is 7.1 per cent higher than in the UK as a whole. Let us be clear about the facts—this Government is not short-changing anyone. With regard to the estate, the only reason why people would be concerned is if, once more, the Conservatives in this chamber put out false accusations and claims that are then rebutted by us and serve to do nothing more than add to concern and upset among the constituents who Mr Briggs claims to represent. I am looking for a mature, reflective discussion and I hope that the Conservative members show themselves able to rise to that challenge and get involved with us in planning our health service for the future.

I thank the cabinet secretary for early sight of her statement and also for the way in which she has engaged so far with us in the chamber as she settles into her new role.

We welcome the financial framework and the extra time that it gives boards to plan their future services. Previously, in responses to freedom of information requests, health boards have told us that they expect to make more than £1 billion savings over this parliamentary session. How does this medium-term financial framework impact on those figures and what level of cuts will health boards be expected to make over the next three years? The cabinet secretary will also recognise that local government budgets impact on social care services, so will she set out what the framework means for integrated joint board budgets and any savings that they have to make?

The statement confirms that all brokerage over the past five years is to be written off. We must recognise that the financial mismanagement by boards happened under this Government. Can the cabinet secretary say how much that will cost and whether she has confidence in health boards’ future financial management?

We welcome some honesty at last from the Government on its plans for service reform. Will the cabinet secretary commit to setting out her plans to the chamber in a future debate and will she ensure full public consultation?

I am grateful to Mr Sarwar for his questions. I am clear that the savings that boards are required to make will be retained by them to allocate to other areas of spend. That has always been the case; they are not cuts but savings, which we ask boards to make in order that they can use the resource in other areas of their spend. The money does not come back to me or to the Scottish Government; it stays with the boards to use to improve their services.

With regard to IJB budgets, clearly the financial framework is for the service as a whole. Through the money from local government and, most importantly, the money from this Government’s health spend, we have contributed significantly to the IJBs and their work. The IJBs have a degree of flexibility already because they are part of the local government accounting system; I seek to provide the same degree of flexibility in the three-year planning cycle as IJBs have, and I am grateful to Mr Sarwar for welcoming that.

Mr Sarwar also raised an important point about financial management. All our boards are required to demonstrate, not just in their publicly available reports, but through regular contact between their finance officers and my officials, that they are managing their budgets prudently and seeking value for money. There are pressures on boards—and indeed on the overall health budget—over which we have little control, such as from inflation in drug prices. We have also made positive decisions on pay awards, which will be another pressure.

Nonetheless, boards have to manage their financial resources with some care. I assure Mr Sarwar that, where boards have previously shown themselves to be unable to do so or in need of additional skills or improvement, my finance officials are actively engaged with them. They will continue to engage with those boards and regularly report on and monitor their work, so that we ensure that all our boards meet the standard of our best boards, which is what we expect of them when they use public funds to deliver quality health and social care.

The financial framework is clearly predicated on the UK Government actually delivering the Barnett consequentials that it boasted about earlier this year. What will be the consequences for the framework if the UK Government’s budget later this month does not deliver on its promises?

I am grateful to Ms Maguire for that question. As I said, the financial framework assumes the full net benefit of those consequentials; in other words, it assumes that there is no detrimental effect on the Scottish budget from other areas, including from any tax changes that the UK Government may want to introduce.

I advise members to turn to the section on almost the last page of the framework document in which we describe our anticipation of demand and expenditure in health and social care and what we expect to achieve through reform—and then imagine the effect of taking away £3.3 billion. That would be the detrimental impact from our not receiving the consequentials, either in full or in part. It would destabilise the financial framework and require us to look at it again. More than that, it would be, in effect, a broken promise. That would be significant for how we work with the UK Government, as it repeatedly says it wants us to do.

Presiding Officer, may I pick up on Anas Sarwar’s question about service reform? I apologise that I did not take the opportunity to do so at the time, but there are two things that I want to say. First, our health and social care delivery plan outlines what we need to do on service reform. Secondly, I am happy to speak to individual members or party spokespeople about not only individual reforms, board by board, as they come forward, but the wider reforms that we have already set out for primary care, GP working, our increase in the workforce and any other matter that might be of interest to them.

I have to say that I was hoping that a change of cabinet secretary might bring a change of approach, but I am reminded of the words of Roger Daltrey:

“Meet the new boss—same as the old boss.”

Given the reported struggles of NHS Ayrshire and Arran—the health board for the cabinet secretary’s constituency—to meet its existing and future financial obligations, what impact does she anticipate that the new proposals will have on the delivery of a number of procedures, including cancer treatment and cataract surgery, that are already matters of concern in our area?

We probably all agree—well, we might not all agree, but many of us do—that it was not actually Roger Daltrey who said that. That aside, I am sure that the shadow cabinet secretary for health and sport and I will work together very well over the weeks ahead.

On waiting times, we need to understand that we are setting out the medium-term financial framework. It sets out our understanding of the financial pressures against demand and against what we know we need to do, assuming full net consequentials from the UK Government, and what the position will look like as we go forward. Members who have had the opportunity to look will see that, even with the reforms, there is still a financial challenge. We need to work together to address that now, and I live in hope of that mature conversation.

As I am sure Mr Whittle heard me say, I will come to Parliament with a plan for improved—sustainable improvement—on waiting times, including for the procedures that he mentioned. The resourcing that I will outline then and commit to is taken account of in the framework.

Although I welcome many of the initiatives in the statement, such as waiving brokerage, I want to ask the cabinet secretary about the key underlying trends that have caused financial instability in many boards, such as NHS Highland. The cabinet secretary will know that the Auditor General made it clear that brokerage for NHS Highland was likely to be needed for the next three years. The areas of financial concern are well known to the cabinet secretary: adult social care; the drug overspend; and the cost of hiring medical locums.

What comfort can the cabinet secretary give to patients and staff of NHS Highland that the next three years will not just be more of the same? Is she saying, as Bob Dylan said, that the times they are a-changing?

I am not going to get into a competition of quoting songs, although I am pleased to note that both members went for songs from my era, which is a comfort to me.

Mr Stewart makes an important point that links to what Mr Sarwar asked me. I appreciate the fact that members have welcomed the fact that we are, in effect, clearing the slate and introducing the three-year planning cycle, which gives flexibility within those three years. However, at the end of three years, the territorial boards have to break even. We cannot continue with a situation in which boards have significant overspends on their budgets, albeit that those spends were made on patient care.

We are looking at how we deploy our resources to boards and how we expect boards to deploy their resources. Part of the reforms are about how we can ensure that the resources that we have, within all the caveats that I have outlined, are adequately targeted at patient care, meeting the waiting-times targets and so on. They are also about how we value our workforce, increase recruitment and meet the pay pressures that I have talked about.

Not every board is looking for brokerage. Indeed, the number that set out looking for brokerage at the start of the year is coming down, and if we look at previous years, we can see that that is what happens. However, we have a small number of boards where brokerage is expected at the end of the year, and I am saying that I will not seek repayment of that.

I want the lessons learned from boards in which financial management and quality of patient care are being finely balanced but are being managed to be transferred to colleague boards, and my officials will help them to do that. That is actively happening right now.

I completely accept that there are additional pressures in some boards, such as Highland, because of their geography and the demands that are placed on them. However, some of the initiatives that we have introduced on rural working and general practitioner recruitment in rural areas will help to address some of the new or different challenges for our territorial boards.

I welcome the move to a three-year financial planning cycle and the fact that the Government is not seeking to recover outstanding brokerage.

The ability of NHS boards to forecast demand, to meet it, and to deploy their resources most effectively hinges on them having access to the best data and the highest-quality information. What is the Scottish Government doing to offer boards support in that regard?

I thank Ms Johnstone for that important question. She is right that part of the key to all this is the ability to forecast demand. One of the areas in which we have the highest-quality information that goes down to a significant level is our integration authorities and integration joint boards.

We have not been triangulating to the degree that is required all the information and data that we have, so that we can adequately forecast demand in different areas. We are beginning work on that to ensure that the data that comes to the Government and the data that the integration authorities hold is not only shared as widely as it should be but triangulated. That will mean that we will get more than a one-dimensional picture of the demand on health and social care services in the decades ahead.

I thank the cabinet secretary for advance sight of her statement.

Three years ago, the Scottish Government said that it would eradicate delayed discharge, which is one of the biggest financial drains on our health service’s resources. This week, the level of delayed discharge got worse. Will the proposals that were outlined in the statement end delayed discharge?

We have provided the financial framework, which includes our current estimate of the financial circumstances that our health service will face and the demand that will be placed on it in the years ahead. The framework does not—nor should it—have specific initiatives within it. The waiting times plan, which I will introduce to Parliament in the coming weeks, will look at improvement and sustainability in our work on waiting times. That links to delayed discharge, as Mr Cole-Hamilton well knows. The plan will consider what further improvements can be made on delayed discharge.

I draw Alex Cole-Hamilton’s attention to the successful work of the Aberdeen integration joint board, which brought down—by significant percentage points—the levels of not only delayed discharge but unscheduled bed days in hospitals. Through learning from the work in those areas, we will scale up, and transfer across, the work in all our integration authorities. That is what I mean when I talk about increasing the pace and effectiveness of their work.

I do not think that I will be able to call every member who wants to ask a question.

The health secretary made the welcome announcement of a new deal for health boards, which will give them greater flexibility between annual budgets. What flexibility do integration authorities have to plan beyond annual budgets?

In accounting terms, integration authorities are part of local government, so they have a degree of flexibility and the capacity to hold reserves. I am trying to ensure that that degree of flexibility and capacity to plan within a reasonable timeframe is something from which our NHS boards can benefit, too.

The cabinet secretary stated that the brokerage to health boards will be written off. When will that happen? Will it be in the Scottish Government’s budget this year, along with an estimate of how much debt will be written off?

I will start with the last part of that question. Our current estimate of the cost of brokerage for the past five years—this does not relate to the current year alone—is around £150 million. All territorial boards will start with a clean slate from 2019-20, when we will begin the three-year planning cycle that will involve all the work that I have described.

In the meantime, boards will continue to work to reduce their anticipated level of brokerage. That level is reducing significantly in many boards as they refine and finalise their reform and service delivery plans. As I said, all boards will start with the new deal from the financial year 2019-20.

The cabinet secretary’s statement mentioned Brexit, which will have an impact on the economy. There could be less money in taxes, which would put pressure on the NHS, and a shortage of skilled and unskilled staff. Does the UK Government understand those potential extra pressures on our NHS?

I do not have insight into the minds of UK Government ministers but, by their actions, it appears that they do not understand—or if they do, they are not taking sufficiently seriously—the impact of Brexit on our health service not only in Scotland but in England, Wales and, indeed, Northern Ireland. All of us benefit significantly from European Union nationals being valued, skilled and experienced members of our workforce. We also all benefit from our workforce being able to work in EU countries. We benefit from the mutual recognition of qualifications. We benefit from being part of—and, in Scotland’s case, leading members of—international research collaboratives that themselves produce significant input to our economy.

There is a great deal that is at risk. That is troubling and worrying. We need to repeat that. I look to colleagues in this chamber—not least those on my left—to assist us on this issue. We need clarity from the UK Government, and it must demonstrate that, if it understands the issue, it will act to do something about it.

I welcome the financial framework and congratulate the cabinet secretary on it. It has been recommended for some time now and has been long awaited. The Conservative front-bench members have misjudged the advance that has been made today, because the framework allows us to make the shift to the care that we need.

I would like to ask for a clarification. The cabinet secretary said that she will write off all outstanding brokerage. She knows that NHS Tayside has a projected deficit of £18.7 million for this financial year. Will she write that off as well, so that we can start with a clean sheet to make that shift of care that we need?

I am grateful to Jenny Marra for that question and for her recognition of the importance of the financial framework—I believe that that recognition is shared by all colleagues on the Labour benches, who accept what it actually is rather than what it is not.

The member asks an important question, and I direct her to what I said earlier about the fact that all health boards will start with a clean slate from the financial year 2019-20. That will be the case. No brokerage will be recovered, where that additional spend has been on patient care, from the end of this year. We move forward from 2019-20 to that three-year cycle and that clean slate.

My apologies to Rona Mackay, who was unable to ask her question. We have eaten into time for the next debate, but we still did not manage to get through all the questions.