Greater Manchester Devolution Accountability, Budgeting and Reporting

Transcription

1 Appendix 1 Greater Manchester Devolution Accountability, Budgeting and Reporting 1. INTRODUCTION 1.1 The purpose of this paper is to confirm the draft accountability arrangements to support the Greater Manchester Devolution programme. 1.2 The paper will set out the proposed approach to establishing the accountability of different bodies under devolved arrangements from 1st April 2016/17. It will seek to establish the financial framework for arrangements in 2016/17 and beyond, together with the scope of budgets to be delegated or devolved, the nature of that delegation and the basis for establishing the quantum of such budgets. 1.3 It will consider the following key areas: (i) Stakeholders, definitions and concepts (ii) GMH&SC accountability agreement (iii) Future assurance processes (iv) Financial framework for delegation in 2016/17 (v) Scope of budgets to be delegated in 2016/17 (vi) Basis of delegation for individual budgets (vii) Specialised Commissioning (viii) Local and national reporting arrangements 2. BACKGROUND 2.1 In February 2015 a Memorandum of Understanding (MoU) between the Government, the Greater Manchester (GM) health bodies and local authorities and NHS England (NHSE) was agreed, with the aim of the region being given direct, local control over an estimated budget of 6 billion each year from April The MoU described the position in relation to governance and finance in the following terms: The governance arrangements will be based on the principle of subsidiarity, i.e. that decisions will be taken at the most appropriate level. The governance arrangements will be shaped by the CCGs and local authorities in accordance with existing accountability arrangements, whilst recognising that different ways of working will be required to deliver the transformational ambitions of GM. These arrangements will be underpinned by the following principles: GM NHS will remain within the NHS and subject to the NHS Constitution and Mandate; Clinical Commissioning Groups and local authorities will retain their statutory functions and their existing accountabilities for current funding flows;

2 Clear agreements will be in place between CCGs and local authorities to underpin the governance arrangements; GM commissioners, providers, patients and public will shape the future of GM health and social care together; All decisions about GM health and social care will be taken with GM Accountability for resources currently directly held by NHS England during 2015/16 will be as now, but with joint decision making with NHSE in relevant areas to reflect the principle of all decisions about GM will be taken with GM ; There will be a new partnership reflecting the contributions and competencies of all parties. The governance arrangements will be regularly reviewed to ensure the programme aims are delivered within the required timeline. 3. STAKEHOLDERS, DEFINITIONS AND CONCEPTS 3.1 The process of establishing devolved responsibility for Health and Social care across GM is a complex undertaking with a significant number of stakeholders and a variety of different legal and governance concepts. It is important that the stakeholders, relevant definitions and concepts are understood by all those involved in the devolution programme. Stakeholders 3.2 The key stakeholders are identified below: (i) Greater Manchester Clinical Commissioning Groups (CCGs) CCGs are statutory bodies established through the Health and Social Care Act There are 12 CCGs within GM, these are: NHS Bolton CCG NHS Bury CCG NHS Central Manchester CCG NHS Heywood, Middleton & Rochdale CCG NHS North Manchester CCG NHS Oldham CCG NHS Salford CCG NHS South Manchester CCG NHS Stockport CCG NHS Tameside and Glossop CCG NHS Trafford CCG NHS Wigan Borough CCG (ii) Association of Greater Manchester Authorities (AGMA) AGMA is comprised of the ten district local authorities in Greater Manchester: Bolton Metropolitan Borough Council Bury Metropolitan Borough Council Manchester City Council

3 Oldham Metropolitan Borough Council Rochdale metropolitan Borough Council Salford City Council Stockport Metropolitan Borough Council Tameside metropolitan Borough Council Trafford Metropolitan Borough Council Wigan Metropolitan Borough Council (iii) Greater Manchester Combined Authority (GMCA) GMCA is a statutory body that has powers to coordinate certain functions across GM. Its membership is comprised of the ten AGMA authorities and the interim GM Mayor. (iv) NHS England (NHSE) NHSE is an executive non-departmental body of the Department of Health. Established by the 2012 Health and Social Care Act NHSE oversees the commissioning of NHS healthcare. This includes the direct commissioning of a number of services including primary care and specialised services as well as conducting the assurance for 209 CCGs across England. NHSE operates a regional structure with 4 regions (North, South, London and Midlands & East) and 13 local offices within the regions. The North region is made up of four local offices covering Greater Manchester & Lancashire, Yorkshire and the Humber, Cumbria and North East and Cheshire and Merseyside. As part of the devolution process a number of budgets may be set within a GM footprint which is not part of the current structure of NHSE budgets. (v) Greater Manchester Health and Social Care (GMH&SC) GMH&SC is the term used to describe the collective platform established as part of the devolution process as per the MoU. This is not a statutory body or legal entity and budgets allocated to GMH&SC will remain within NHSE and will be set at a GM level within the regional structure described above. (vi) Greater Manchester Chief Officer (GMCO) The GMCO is an employee of NHSE and is the responsible officer within NHS for NHSE functions and budgets held at a GM level. The GMCO is the accountable officer, and the budget holder for all budgets set at a GM level within NHSE.

4 The GMCO is accountable to the Chief Financial Officer, NHSE; and, the Head of Paid Service, GMCA. (vii) Greater Manchester Strategic Partnership Board (GMSPB) The GM SPB has been established as part of the GM health and social care devolution programme. Its principal responsibility is to set the strategic vision for Greater Manchester s Health and Social Care economy. The GMSPB is made up of CCGs, Local Authorities, GM Combined Authority (GMCA), NHS Provider Trusts and NHSE (via the GMCO). Its membership is supplemented by a broader group of stakeholders including 3 rd Sector and the patient voice. (viii)greater Manchester Joint Commissioning Board (GMJCB) The GM JCB is made up of members drawn from GM CCGs, GM Local Authorities, GMCA and NHSE. Its scope will incorporate those health and social care services commissioned on a GM footprint, via the development and implementation of a GM Commissioning Strategy. Definitions and Concepts 3.3 This paper describes a number of proposals in relation to delegation and devolution of accountability and funding to bodies within GM. It is important to understand the different types of devolution under consideration for individual budgets and functions. 3.4 The following is adapted from NHSE s models on the devolution spectrum to help define the approach taken in GM Approach Broad Definition Definition for GM Not Delegated No change from current arrangements No change Model 1 Delegation to GMCO Model 2:Co-/Joint Commissioning No legal change, or organisational restructuring Decisions about a function are taken by the function holder but with input from another body Accountability and responsibility for function remains with original function holder Two or more bodies with separate functions come together to make decisions together on each other s Local CCGs involved in discussions with NHSE budget holders but accountability and responsibility remains within NHSE This option could be pursued in conjunction with delegation to a GM footprint and/or GMCA The GMCO will take into account advice and recommendation made by the JCB Decisions made by joint commissioning body established for GM

5 Model 3: Delegated Commissioning Model 4: Fully Devolved Commissioning (Transfer of Function) functions Accountability and responsibility for function remains with original function holder (including budgetary responsibility and funding for overspends) Function is delegated to another body Decision-making and budget rest with the delegate Accountability and responsibility for function remains with original function holder (including budgetary responsibility and funding for overspends to be exercised through the GMCO) Function is taken away and given to another legal body on a permanent basis (meaning responsibility, liability, decision-making, budgets and everything else to do with that function) e.g. under a s.105a order Accountability and responsibility for those functions transfers to the new owner (including budgetary responsibility and funding for overspends) including CCGs, NHSE, GMCA and LA s. This option could be pursued in conjunction with delegation to a GM footprint Function and budget will be delegated to GM CCGs and in some cases GMCA. Function and funding could be devolved to a Combined Authority. 3.5 It is important to note that with the not delegated model, as well as the model 1 and model 2 delegation options, budgets remain held within NHSE there is a distinction to be made between those held at a GM level with the budget holder being the GMCO; and, those held on a footprint broader than GM. 3.6 We describe a number of areas later in this paper where budgets currently held on a GM and Lancashire footprint will move to a GM footprint. This is an essential enabler for the cocommissioning arrangements of model In proposing the arrangements described it is further proposed that the longer term preferred option should be for Greater Manchester to pursue full devolution for the commissioning of the relevant specialised services, using the powers contained in the Cities and Local Government Devolution Bill, following its passage into law. This would be targeted for 2017/18, subject to appropriate arrangements for the ongoing management and handling of risk being achieved. 3.8 For Group 2 and 3 services, the proposal remains as described at the inaugural meeting of the shadow GMJCB, ie that they should continue to be commissioned on a regional/ national basis, with GM Health and Social Care working closely with the North West specialised commissioning team and other relevant partners to ensure an appropriate level of input and influence to this process. 3.9 The terminology described above will be used to describe the approach taken to different functions throughout this paper.

6 3.10 The public must be involved in the planning of commissioning arrangements and any proposal that would impact the manner in which services are delivered or the range of services available. 4. FINANCIAL FRAMEWORK 2016/ This section describes the financial framework for GMH&SC for 2016/17. The initial focus of the document is mainly in relation to funding from NHSE but it will be expanded to cover other sectors at a later date. Inevitably 2016/17 will be a transitional year and this agreement will therefore be subject to review. 4.2 This paper describes the financial framework under which the budgets for 2016/17 will be delegated to GMH&SC. It covers the accountability arrangements, reporting and monitoring expectations for budgets, and the planning rules for 2016/17. It expands on the assurance considerations contained within Appendix 1 in relation to some specific financial considerations and considers the transitional arrangements required in 2016/ The scope of budgets to be delegated and the basis for delegation will be considered in the next section. 4.4 The responsibility of individual organisations to keep expenditure within the funds allocated to them remains unchanged by the Devolution agreement. Individual CCGs, and NHS Trusts and Foundation Trusts therefore remain responsible for balancing their budgets. Equally GMH&SC is responsible, on behalf of NHSE, to control expenditure within the budgets delegated to them (as set out in this paper). The longer term intention is to move towards a greater integration of budgets at a place level, to allow the virement of budgets based on local need, and for GMH&SC and local organisations to be held to account for the overall financial control limit across all budget headings and organisations. 4.5 In 2016/17 as well as the statutory responsibility of individual organisations GMH&SC will be required to achieve the overall financial control total limit across CCG and Direct Commissioning (DC) budgets (excluding specialised commissioning, see Appendix 1 for detail). This will involve GMH&SC leading on the development of in year financial risk share strategies. 4.6 It is the intention to include specialised commissioning budgets within an overall GM financial control limit once the overall level of risk is better understood and appropriate due diligence has been undertaken. This does not change GMH&SC responsibilities in relation to specialised commissioning but simply clarifies that in 2016/17 the GM specialised commissioning budget will be reported and accounted for outside of the GM delegated financial control limit. Planning rules 4.7 GM will become the unit of planning for strategic planning purposes. 4.8 GMH&SC will carry forward its 15/16 surplus on DC and CCG budgets to 16/17. GMH&SC will plan for an overall CCG surplus of 1% or the carry forward surplus, whichever is greater,

7 in 16/17 but will have the flexibility to agree differential targets with individual CCGs. These will be set in a framework of robust management control ensuring that all organisations have plans in place to deliver the required 1% surplus in the medium term. 4.9 GMH&SC will have the flexibility to manage the drawdown of surpluses each year, including related release mechanisms, within an overall control total agreed with NHSE. The expectation is that drawdown should be returned to the contributing budgets unless agreement in GM is reached to the contrary and any guaranteed returns agreed with NHSE in 2015/16 should be supported As in previous years GM will maintain and develop risk share arrangements between CCGs 4.11 CCGs / GMH&SC will be required to remain within nationally calculated running cost targets, but additional running cost allocations will be provided in line with revised/ increased responsibilities. To support transitional arrangements some local flexibility will be required between programme and running cost allocations. GMH&SC will have the flexibility to agree differential targets with constituent CCGs provided the overall GM running cost allocation is not breached 4.12 GMH&SC will set its own business rules, in addition to the national ones, in line with the phasing of its strategic plan i.e. the level of non-recurrent spend/risk reserve The level of contingencies held 4.13 The requirements of the national business rules will be delivered in aggregate on a GM basis with the split determined by GMH&SC. GM must adhere to the national release mechanism in relation to the 1% risk reserve. This will only be released by agreement with NHSE (national team) following appropriate assurance and approval of the local financial position of both commissioners and providers GMH&SC will develop its own arrangements for financial risk management. Included in this will be the ability to agree different levels of non-recurrent spend and contingencies based upon the risk profile of the organisation GMH&SC is committed to developing plans to support the integration of health and social care. Current pooled budget plans are in excess of the minimum mandated BCF values. For 16/17, GM will continue to adhere to the national BCF policy framework / planning guidance; however it will have the additional flexibility to plan on a GM footprint for the purposes of the BCF For 2016/17 GM will continue to use national planning documents and templates for funds held by both GMH&SC and CCGs If not included in national planning templates, GMH&SC will devise arrangements to ensure that Trusts, CCGs and Local Authority plans are in line with agreed locality plans and that any assumptions have been included consistently in each partners plans. Financial Governance and Assurance

8 4.18 Insofar as budgets remain within NHSE, GM will be required to conform with the NHSE Standing Financial Instructions (SFIs), Standing Orders (SO s) and other governance requirements. However NHSE will work with GMH&SC to ensure such processes are sufficiently flexible to meet the requirements of GMH&SC wherever possible Governance arrangements in relation to the operation of the 450m GMH&SC transformation fund will be finalised in advance of the start of 2016/17 financial year CCGs as statutory organisations will maintain existing arrangements for internal and external audit and counter fraud. Audit committees will remain. Local Authorities will retain their existing internal and external audit arrangements and Audit Committee. Overview and Scrutiny committees will continue to provide scrutiny of the health and local authority resources, and developments within the local authority area GMH&SC will continue to use NHSE internal audit, external audit and counter fraud arrangements and be part of national programmes agreed but will set up a local audit group to advise / recommend to the national NHSE audit committee GMH&SC will be responsible for ensuring it remains compliant at all times with HM Treasury and DH statutory guidance and approval limits, including Cabinet Office expenditure controls where relevant. Transitional arrangements Specialised services 4.23 The arrangements for specialised commissioning in 2016/17 are detailed in a separate paper presented today. That paper sets out the process that has been undertaken to propose the categorisation of specialised services into three groups: Group 1 Greater Manchester Group 2 Regional Group 3 - National 4.24 The services provided by GM specialised providers to GM CCG patients will be directly managed and led by GMCO taking into account advice and recommendation of the JCB, with supporting capacity from officers of Trafford CCG and the North West NHS England specialised commissioning team. This capacity will be managed via a service level agreement It is proposed that services within group 2 and 3 will continue to be commissioned at regional or national level. The GM input to this process will be co-ordinated by the lead CCG officers The specialised services paper proposes that officers of Trafford CCG continue to lead this process 4.27 The proposal set out at 4.25 is made in the context that ultimate accountability for the discharge of Specialised Commissioning responsibilities in GM will lie with the GMCO The budget will be held by the GMCO but for 2016/17 will sit outside of the GM control total and any under or overspend on the 2016/17 budget will be managed as part of the NHS

9 England specialised commissioning budget The NHSE NW Specialised Commissioning Team will progress contracting arrangements for 2016/17 working closely with GMH&SC team. Other direct commissioning 4.29 NHSE Direct Commissioning Teams will progress contracting arrangements for 2016/17 working closely with GMH&SC team. This capacity and resource will come under direct control of the GMH&SC team from 1 st April DELEGATED BUDGETS 5.1 This section describes the proposed approach to the delegation of budgets to GMH&SC for 2016/17. It seeks to confirm the approach to the following key areas: Scope of the budgets to be included in the GMH&SC delegation The nature of the delegation Full analysis of 2015/16 budgets and spend The basis of delegation in 2016/17 NHSE Financial Mandate 5.2 All health funding within the scope for delegation to GMH&SC is delegated from the overall NHSE financial mandate set out by DH. 5.3 NHSE s total funding is set out in the DH s (DH) Financial Directions to NHSE each year. The financial directions allocate funding across four funding streams, these are: Revenue Department Expenditure limits (RDEL) Annually Managed Expenditure (AME) Technical Accounting/budgeting Capital Resource limit (CDEL) 5.4 The Financial Directions for NHS England for 2016/17 allocated a total of 106.5bn of revenue funds to NHS England for 2016/17. The table below shows how this funding has been allocated across different commission streams within the NHS. Description 2016/17 Budget ( m s) CCG Allocations 71,853 Primary Care 7,652 Specialised Commissioning 15,662 Total place based allocations 95,168 Sustainability Fund 1,800 Transformation fund 339

10 Revenue Budgets Sustainability & Transformation Funds 2,139 Other Direct Commissioning 6,642 NHS England Central Costs 1,637 Non recurrent use of Drawdown 250 Total Other (excluding Technical) 8,529 Sub Total (Excluding Central Technical & AME) 105,836 AME & Technical 660 Mandate total 106, The following section sets out the detail behind the headings shown in the table above. It confirms the proposed approach to what is delegated to GMH&SC and what is not delegated and whether the delegation is to a GM budget held by the GMCO within NHSE s overall budgets or to the GM CCGs. It also proposes the basis for the delegation. 5.6 The table below summarises the approach to each budget area with further narrative in section i) to xiv) beneath. 5.7 Specialised commissioning allocations and budgets have been included within this paper for completeness but due to their complexity, a separate more detailed paper has been prepared. Budget area Basis of delegation Organization to whom the funds are delegated CCG programme allocations. To include primary care budgets agreed under level 3 cocommissioning CCG running cost allocations Primary care (not included in CCG allocations under co-commissioning arrangements) and S7A Public Health CCG allocations. Primary care budgets agreed CCGs Accountability arrangements - Risk share arrangements Accountability with CCGs as statutory organisations Risk share arrangements to be agreed across CCGs CCG allocations CCGs Accountability with CCGS as statutory organisations Risk share arrangements to be agreed across CCGs Based on NHSE national allocations process GMH&SC local office of NHSE Legal accountability remains with NHSE But operational responsibility for delivery will be with GMH&SC - Need to report and Accounting / reporting arrangements Included in CCG annual accounts and monthly returns Included in CCG annual accounts and monthly returns Included in GM NHSE monitoring arrangements Included in NHSE accounts

11 Other direct commissioning Specialised commissioning (Group 1 Services only others not expected to be delegated) Transformation fund Not expected to be delegated Based on NHSE national allocations process Ring fenced allocation to GM of 450m over duration of CSR Budgets will be held by GMCO GMH&SC local office of NHSE monitor as primary care/public health (S7A) spend by NHSE - risk share with other primary care allocations Accountability remains with NHSE Operational responsibility for delivery will be with GMCO Legal accountability will be with GMCO. But operational responsibility for delivery will be with GMH&SC Included in GM NHSE monitoring arrangements for information only Included in NHSE accounts Included in GM NHSE monitoring arrangements Included in NHSE accounts Sustainability Fund Capital Not being delegated Potential for delegation of NHSE BAU capital budget: to be determined GMH&SC local office of NHSE Accountability remains with NHSE Operational responsibility for delivery will be with GMH&SC Included in NHSE monitoring arrangements Included in NHSE accounts Social care/ Other LA funds Public Health Agreed within locality plans Agreed within locality plans Local Authority Local Authority Pooled budget arrangements if in place will detail accountability arrangements. For other funds, accountability remains with LA Pool budget arrangements in place will detail accountability arrangements if applicable. The grant remains a ring-fenced grant which has to be reported on as part of the Revenue Outturn reporting Pooled budget arrangements Other funds included in local LA accounts Included in Local Authority Accounts

12 5.8 The individual budgets are described in more detail below: process (i) CCG Budgets The total funding allocated for CCG services excluding delegated PC in 2016/17 is 3,861m which is made up of programme funding and admin funding CCG allocations will continue to held at individual CCG level and have been confirmed in the January NHSE Allocations publication. (ii) CCG Quality Premium NHSE maintains an overall allocation for CCG Quality Premium payments. These funds are then allocated to CCGs on assessment of their performance in relation to the performance criteria. The quality premium budget will continue to be held centrally and allocated to CCGs in GM in the same way as other CCGs. (iii) Specialised Commissioning The basis of delegation to GMH&SC is set out in a separate detailed specialised commissioning paper. NHSE holds a 2016/17 budget of 15,662m for the direct commissioning of specialised services. These are currently commissioned on a hub basis and the budgets are held at that level. It is anticipated that some of the specialised commissioning budget will be allocated to GM level within NHS England for 2016/17. Elements of this budget will operate under MODEL 1 Delegation to GMH&SC with the budget remaining within NHSE specialised commissioning but monitored on a GM footprint. The budget for the GM level specialised providers will be held by the GMCO. (iv) Armed Forces NHSE holds a budget of 47m for the direct commissioning of health services for members of the Armed Forces.

13 This budget will not be delegated to GMH&SC from 1 April (v) Health and Justice NHSE holds budgets for the direct commissioning of healthcare to the justice system in England including the provision of prison health services. This budget will not be delegated to GMH&SC from 1 April 2016 but there is agreement that this is in scope for consideration to be delegated/devolved at a future date (subject to mutual agreement). (vi) Primary Medical Services NHSE holds a direct commissioning budget for primary care and secondary dental care services. This includes primary medical services, primary and secondary dental care, pharmacy services, and primary optical services. All 12 GM CCGs have elected to take delegated responsibility for primary medical services under the primary care co-commissioning initiative in 2016/17. The Primary Medical services budget will therefore be delegated to the 12 GM CCGs for 2016/17. The budget will be delegated on the basis of the national approach to primary care cocommissioning delegated budgets which corresponds to MODEL 3: DELEGATED COMMISSIONING. (vii) Other Primary Care and Secondary Dental The other primary care budgets described above are currently held at NHSE local office level. In 2015/16 this is on the GM and Lancashire footprint. Costs in these areas can be mapped on a GM basis. This also includes a limited amount of costs relating to GP services which are not part of the co-commissioning delegation such as GP revalidation. Budgets for non GP primary care and secondary dental care will be delegated to GMH&SC and held at a GM level with NHSE. The budget holder will be the GMCO for GMH&SC. This is delegated under MODEL 1 Delegation. This budget will be delegated on the basis of the national NHS England allocations process. (viii) Public Health

14 NHSE holds a direct commissioning budget for public health related services. This budget includes funding for screening services, flu services, vaccinations and immunisations and a variety of other public health functions. Much of the public health funding transferred from the NHS to local authorities in 2013 with a number of services for children aged 0-5 transferring in October Public Health budgets will be delegated to GMH&SC and held at a GM level with NHSE. The budget holder will be GMCO for GMH&SC. This is delegated under MODEL 1 Delegation. This budget will be delegated on the basis of the national NHSE allocations process. (ix) NHSE Running Costs NHSE has a running cost budget in 2015/16 of 486m. This funding covers the central NHSE directorates as well as the regional and local office structure within the commissioning operations directorate. Within these running costs is the corporate budget for the Lancashire and Greater Manchester (LGM) local office of NHSE. This includes the senate and clinical network administration budget but excludes network and senate programme budgets (see section xi below). A detailed exercise has been undertaken to disaggregate the LGM budget between Lancashire and GM. Pay budgets have been assigned to GM and Lancashire based on staff location (subject to formal HR agreement), and non-pay budgets based on individual criteria. Based on these assumptions, and excluding costs jointly incurred, the GM share of the overall LGM budget is 5.7m (63%). This compares with a GM population share of 66%. Work is ongoing to quantify potential diseconomies of scale associated with disaggregation (for example, Director posts will be needed in each of the GM and Lancashire offices) and ways in which this will be managed. A 5% savings target against 2015/16 budgets is being assumed for 2016/17. Local running costs budgets will be delegated to GMH&SC and held at a GM level with NHSE. The budget holder will be the GMCO for GMH&SC. This budget will be delegated on the basis of historic costs in this area, however overall costs to NHSE must not increase as a result of this process. (x) Commissioning Support Unit (CSUs)

15 The overall NHSE reporting structure includes the net costs of the CSUs which are currently hosted by NHSE. These functions are not allocated funding from the NHSE Mandate as they are expected to fully recover their costs through charges to their customers. It is expected that from 1st April 2016 the remaining services delivered to GM CCGs from these functions will be transferred to the Greater Manchester Shared Services (GMSS) hosted by Oldham CCG. Any surplus of loss from these services will remain within the 12 GM CCGs. Accountability for GM commissioning support will transfer to the 12 GM CCGs in 2016/17. (xi) NHSE Central Programme Costs NHSE holds budgets for central programme costs this covers a variety of functions which can broadly be split into the following areas: Funding for corporate priorities Directorate funding Pass through costs (e.g. clinical excellence awards) Other costs including depreciation The majority of these budgets will continue to be managed across NHSE central functions. The principle is proposed that where budgets align to specific workstreams within the Strategic Plan, where possible the budget should transfer to GM. Where GMH&SC has no local influence, the budget should remain with NHSE central function. As such, the budgets that could transfer to GMH&SC are: GM Networks and Senates GM AHSN Further work will be undertaken with the relevant national NHSE budget holders to establish whether this is feasible in 2016/17. If allocated to GM these elements of central programme costs will be delegated to GMH&SC and held at a GM level with NHSE. The budget holder will be the GMCO for GMH&SC. If approved for delegation these elements of the central programme budgets will be delegated on the basis of the NHSE business planning process for 2016/17. (xii) Other

16 There are other NHSE budgets of 481m in 2015/16. These relate to specific earmarked funding for continuing healthcare legacy costs, depreciation offset costs, and some funding relating to transformation funding for primary care and other areas which will be considered in the section below. These budgets will not be transferred to GMH&SC from 1 April The approach to transformation funds is set out below. (xiii) Transformation Funding NHSE has set aside 450m of the CSR settlement for transformation to GM. This funding will be delegated to GMH&SC. The funding does not include sustainability funding (see below) but is spread over the duration of the 5 year spending review period. Spending commitments relating to the New Models of Care Vanguard programmes will need to be funded from the 450m GM transformation funding envelope. Such commitments will need to be aligned to the Strategic Plan and meet the criteria to access the Transformation Fund. 450m over 5 years will be delegated to GMH&SC. The precise process around the operation and management of the Transformation Fund will be confirmed in advance of 1 April There is joint accountability for the use of the fund (including delivery of Value for Money and the relevant NHSE Mandate requirements attaching to the funding) between GMCO and the GMCA Head of Paid Service. Decisions on its use are made by the SPB and its Executive. (xiv) Sustainability Funding The CSR process identified a total of 1.8bn in 2016/17 to ensure the financial sustainability of the provider sector of the NHS. NHS Improvement (NHSI), working closely with NHSE will identify a process for allocating this funding to individual NHS Providers, both Foundation and NHS Trusts. Following the provider assignment an amount of the 1.8bn will be allocated to GM provider Trusts. This budget will not be delegated to GMH&SC from 1 April Greater Manchester will have the opportunity to influence decisions regarding any targeted elements proposed for GM providers within this national allocation. Annually Managed Expenditure

17 5.9 AME/ Technical items AME/Technical budgets will not be allocated to GMH&SC from 1 April LOCAL and NATIONAL FINANCIAL REPORTING ARRANGEMENTS 6.1 The financial reporting requirements post 1st April 2016 at both a local (GMH&SC) and national (NHSE) level are set out below. 6.2 The approach required for statutory reporting and the production of local and national management information is described below Statutory Reporting 6.3 The current devolution plans do not change the structure of statutory bodies within GM or outside GM as a result of the changes. There are therefore no changes to the statutory reporting requirements. 6.4 The 12 GM CCGs will continue to produce individual annual reports and accounts under the requirements of NHSE s Accounts Directions and the DH manual for accounts. Following the delegation of primary care budgets all 12 bodies will include reporting on delegated primary care medical services within those documents in line with the primary care cocommissioning arrangements. 6.5 NHSE will continue to report all GM direct commissioning expenditure including specialised commissioning and non-delegated primary care within its parent accounts regardless of the change to managing these budgets on a GMH&SC footprint as described above. These areas of expenditure remain the responsibility of NHSE and must be reported as such. 6.6 NHSE s group accounts will include the consolidation of all 209 CCGs including the 12 GM CCGS as in previous years. Local GMH&SC Reporting 6.7 GMH&SC will require the production of financial reports which summarise the various elements of GMH&SC expenditure. The will require all NHSE expenditure previously reported on a different basis to be reported specifically for GMH&SC. For example non delegated primary care will need to move from reporting on a GM and Lancashire basis to a pure GM spend. The table below shows how the different elements of spend will be reported for local purposes. NHSE Management Information 6.8 Expenditure delegated to GMH&SC will remain within NHSE for both statutory reporting purposes, as described above, and also for internal management reporting purposes for NHSE. 6.9 NHSE monthly financial management information reports will include GM level spend within specific areas, for example the NHS specialised commissioning analysis will include separate analyses of relevant GM specialised commissioning.

18 6.10 The NHSE monthly financial management information reports will also include a memorandum account breaking down all GMH&SC expenditure which will mirror the information described above The reporting of individual budget areas is described in the table below: Description Current reporting line Proposed reporting line NHSE MI Pack Section Local Reporting requirements CCG Expenditure GM CCGs Programme North CCGs North CCGs North CCG (& GM Memo) GM Memo account GM CCGs Admin North CCGs North CCGs North CCG (& GM Memo) GM Memo account GM CCG - Primary Care co-commissioning North CCGs North CCGs North CCG (& GM Memo) GM Memo account Direct Commissioning Specialised Commissioning North DC North DC North DC (& GM Memo) GM Memo account Armed Forces Not delegated Not delegated Health and Justice Not delegated Not delegated Primary Medical Services Not delegated Not delegated Other Primary Care & Secondary Dental North CCG & DC North CCG & DC North CCG & DC (& GM Memo) GM Memo account Public Health North CCG & DC North CCG & DC North CCG & DC (& GM Memo) GM Memo account Other (excluding Technical) NHS England Running Costs Central (GM & Lancs CC) Central (GM Cost Centre) Other - Running Costs (& GM Memo) GM Memo account CSUs CSUs North CCGs? (GMSS) North CCGs? (& GM Memo) GM Memo account NHS England Central Programme Costs Central Central (GM Cost Centre) Other - Programme Costs (& GM MemGM Memo account Other Not delegated Not delegated 7 CONCLUSIONS 7.1 The following conclusions are drawn from the detail of the paper: NHSE will remain legally responsible for the delivery of its statutory functions; NHSE will assure GM (in aggregate) once, and will discharge its obligations in relation to individual CCGs through its employee, the GMCO, and by an agreed process; GMH&SC will be a separate planning unit from 2016/17 onwards with decisions made at the most appropriate level; The business rules applicable to CCGs will be delivered in aggregate on a GM-wide basis; The control total for GMH&SC for 2016/17 will include CCG, Primary Care and Public Health (S7A) budgets only, with relevant elements of specialised commissioning included in the overall GMH&SC control total from 2017/18 onwards following due diligence of the budgets transferring; Subject to agreement with the national budget holders, NHSE central programme costs budgets will transfer from NHSE to GMH&SC, where they align to specific work streams within the Strategic Plan; Where possible GMH&SC will have flexibilities regarding the delegated limits contained within the SFIs and SOs to enable it to discharge its responsibilities for any budgets delegated within NHSE; There are no changes to statutory reporting requirements; GMH&SC will require the production of financial reports which summarise the elements of GMH&SC expenditure. 8 RECOMMENDATIONS 8.1 The following recommendations are made: That the detail of this paper, both principles and recommended actions for 2016/17 and onwards, should be approved; That the draft accountability agreement should be finalised and brought back to the

19 PB in March.

20 APPENDIX 1 DRAFT ACCOUNTABILITY AGREEMENT 1. In 2016/17, NHSE will remain legally responsible for the delivery of its statutory functions within GM. To ensure that we fully honour the principle of devolution, NHSE intends to delegate internally responsibility for the operational management of the delivery of the NHS constitution and mandate to the GMCO as its employee. 2. This accountability agreement between NHSE (nationally and regionally) and its employee, the GMCO, describes the terms of that delegation, pending any formal request from GM for delegation of responsibilities under the Cities and Local Government Devolution Bill. However, it is intended that this accountability agreement will endure if progression from delegation to devolution is made, all principles within this agreement will remain. Background and Context 3. Following the signing of the MoU to work towards the devolution of health and social care functions by NHSE to the Association of GM Authorities (AGMA) and the Association of GM CCGs, a new architecture has been developed to support the devolution. The proposals on assurance in this paper are intended to be consistent with the principles and arrangements described in the MoU. 4. The assurance proposals are based on the following assumptions, which are derived from the MoU. For the purposes of this agreement, Greater Manchester Health and Social Care (GMH&SC) is defined as the programme of health and social care commissioning in GM, headed by the GMCO, who is employed by NHSE. GMH&SC intends to deliver the NHS Constitution and Mandate commitments in full; GMH&SC will demonstrate, through a business case, how it will be a financially and clinically sustainable system within five years (the CSR period) - assurance of delivery of the 5 year plan should be aligned with assurance of in-year delivery; The 37 statutory organisations in GMH&SC (12 CCGs, 10 Local Authorities; 15 provider Trusts) will continue to exist as sovereign bodies and hold their existing budgets and accountabilities. 5. The scope of the devolution deal within the MoU is all-encompassing in terms of health and social care and NHSE will devolve into GMH&SC (subject to governance) responsibilities for specialised commissioning, primary care and other directly commissioned services. 6. The Cities and Local Government Devolution Bill is awaiting Royal Assent. Once the Bill is active, any formal request for delegation of responsibilities to a joint committee of NHSE, AGMA, GM CCGs and GMLAs will take some time to work through associated governance processes. 7. In the meantime, and in line with the pace of development in GM, it is intended to honour the principle of devolution even when, for pragmatic reasons, what will have been done in legal terms is internal delegation a synthetic devolution. It is for this reason that it is important to make a distinction between NHSE (nationally and regionally) and the GMCO as an NHSE employee. Current Statutory Requirements for CCG Assurance

21 8. This document has been cross referenced with a paper prepared by NHSE on the proposed retention or delegation of its statutory functions. 9. NHSE has a duty under s.14z16 of the NHS Act (as amended by the 2012 Act) to assess the performance of each CCG each year. The assessment must consider, in particular, the duties of CCGs to: improve the quality of services; reduce health inequalities; obtain appropriate advice; involve and consult the public; and comply with financial duties. NHSE must publish a report each year which summarises the results of each performance assessment. 10. The assurance status is subject to continuous review with an annual assessment, therefore the status of a CCG can be changed at any time through recommendations made to the Assurance Oversight Group. NHSE publishes an annual summary report based on the assurance status for each CCG at the end of the year. 11. The details of the CCG Assurance Framework are NHS England policy rather than set in statute or regulations and can be amended by the Commissioning Committee of the Board. Proposed Principles for CCG Assurance in GM 12. The following principles have been applied in the proposed arrangements for CCG assurance within GM: It is recognised that GMH&SC remains part of the wider NHS and social care system, such that NHSE can be assured GM will deliver against the minimum operational standards required nationally. NHSE will retain legal responsibility for CCG assurance in accordance with the NHSE Assurance Framework. Operational management of the assurance process will be delegated to the GMCO as its employee, who will be required to follow NHSE assurance processes and criteria. There will, however, be flexibility on how the process is delivered within GM NHSE will be supportive of any additional GM assurance process that does not conflict with the national framework but encourages improved outcomes Through delegation to the GMCO, GM will be assured once, as a place, for delivery of the NHS Constitution and mandate, financial control and quality (subject to agreement about not allowing inequalities to develop through unwarranted variation) The process will be proportionate and minimise the burden on the organisations involved; Be consistent with the principle of subsidiarity (decisions are made at the most appropriate level) within GMH&SC, recognising the place (Locality Authority footprint) as the primary unit of planning; Be developed in the context of the emerging governance arrangements for the NHS in GMH≻ Acknowledge the continuing formal and legal accountability of individual CCGs; Recognise that the approach in a devolved GMH&SC system is to integrate governance, planning and delivery;

22 Be a continuous process developed in partnership with the GMH&SC system; Aim to move the focus of assurance to quality of care and experience and outcomes for the population of GMH≻ Recognise that data is part of the intelligence to build an assurance picture about GMH&SC, but that an understanding of the local economies in the context of a GMH&SC system will be essential; Be aligned and developed alongside the assurance and regulation processes being developed and agreed with NHS Improvement Clarify what each locality and GM as a conurbation aims to achieve. Standard Operating Model 13. In the GMH&SC governance paper it was proposed that: 14. A robust GMH&SC assurance / performance management framework has been developed, that focuses on system wide performance, rather than compartmentalise each of the component parts. This framework, it is proposed, will need to include a suite of metrics that are suitable for GMH&SC and focus energy on achieving the outcomes that GMH&SC is seeking to achieve as documented in the GMH&SC Strategic Plan. This will ensure that constituent parts of the GMH&SC health and care system are not working to different regulatory regimes and work for the benefit of those using the services. 15. The governance paper goes onto to propose that a system of assurance is developed and agreed between the regulatory bodies that GMH&SC is assured as a place, and that GMH&SC will assure its component parts internally. This does not preclude that in the circumstances prescribed (or, set out in law) and if required, intervention powers will be used that are retained by NHSE and the Secretary of State. CCG Planning Round 16. On an annual basis, NHSE requires CCGs to submit an Annual Plan, and that plan is assured. There will be a difference between how this will work in transition for 2016/17 and how future planning rounds will be managed. 17. The approach to the assurance of planning will be consistent with the devolution agreement in GM but will also provide assurance that the requirements of the planning guidance are being taken forward by commissioners in GM working with NHS and local government partners. 18. Each CCG in GM will develop an individual operational plan for 2016/17 in line with NHSE s planning guidance. It is required that CCGs will meet the requirement for individual activity, finance and transformation (i.e. QIPP) submissions via UNIFY. NHSE (nationally and regionally) will only review an aggregated GM plan GMH&SC will review the 10 locality plans and 12 CCG plans; and will put in place arrangements to do so, that NHSE will confirm as appropriate. 19. The planning guidance expects CCGs to demonstrate plans in a number of clinical and service areas (not least against the 10 priorities in the NHSE business plan). The handling of the assurance of any individual elements in the 2016/17 will be a matter for discussion and agreement between NHSE regional team and the GMH&SC team. 20. Individual CCG operational plans will have to be consistent with the Sustainability and Transformation Plans (STPs) expected to be required for the planning round, with the activity

23 and finance plan numbers in the STP reading across in full to the operational plan for each CCG in 2016/ The narrative requirement for the STP will reflect national guidance, consistent with any specific messages agreed for the handling of the STP in GM as part of that guidance. 22. The STP will need to include specialised commissioning and NHS England s direct commissioning plans in GM. 23. The STP is expected to be a shared plan between the providers and commissioners within GM, informed by local government issues for example as captured in Health and Wellbeing Strategies and Better Care Fund plans, on agreed unit of planning footprint. The configuration of the unit of planning in GM is expected to be agreed before the end of January The assurance of the STP is expected to include an approach across the arm s length bodies (ALBs) including NHS, Public Health England (PHE) and Health Education England (HEE). 25. The lead responsibility for the assurance of the STP will be within the GMH&SC team supported by the regional team and involving ALB colleagues. 26. NHSE will provide advice on the aggregate achievement expected at GMH&SC level to contribute to the NHS plans as a whole. 27. NHSE regional team and incoming GMH&SC team will work together during the transition period (up to 31 st March 2016). 28. NHSE regional team will make staff and resources available to support any work required with individual CCGs subject to agreed limits on delivery and capacity within support service level agreements. CCG Assurance Framework 29. A key principle that will form part of the accountability agreement is that, NHSE will discharge its functions in relation to the 12CCGs in GM through delegation to the GMCO and not directly on an individual basis with each CCG. 30. GMH&SC remains part of NHSE, in that any NHSE commissioning functions that are undertaken by GMH&SC will legally be functions exercised by NHSE acting through its employee the GMCO. Any CCG or LA functions that the CCGs/LAs decide to commission on a pan-gm footprint through the JCB shall not become NHSE functions as a result. 31. The GMCO will internally assure its constituent CCGs, and will be required to follow NHSE assessment processes and criteria. There will, however, be flexibility on how the process is delivered within GM. 32. NHSE will retain the responsibility to publish the annual assessment of CCGs. 33. The GMCO will advise NHSE (regional/national) on the assessment and performance of each of the individual GM CCGs. 34. The GMCO will deliver the legal assessment requirements of NHSE and the NHS requirements