Telford and Wrekin CCG. Financial Strategy Update

Size: px

Start display at page:

Download "Telford and Wrekin CCG. Financial Strategy Update"

Annis Alannah Cain
5 years ago
Views:

Telford and Wrekin CCG Financial Strategy Update Introduction In 2012/13 the CCG produced a Medium Term Financial Strategy (MTFS) based on the PCT budgets devolved to the CCG.

1 Telford and Wrekin CCG Financial Strategy Update Introduction In 2012/13 the CCG produced a Medium Term Financial Strategy (MTFS) based on the PCT budgets devolved to the CCG. The Medium Term Financial Strategy utilised and incorporated a number of assumptions in relation to future allocations, funding growth as well as cost pressures including demographic and non demographic growth. The MTFS was shared with local provider Directors of Finance and informed contract discussions. The purpose of the Medium Term Financial Strategy (MTFS) is to underpin the delivery of the CCG Operating Plan by establishing and sustaining a favourable financial environment. The strategy: Responded to the significant challenge for Public Services in responding to the current economic downturn and its longer-term impact on Public Service expenditure. Promoted sound financial control and maintained the strong financial governance established within Telford & Wrekin. Through the use of funding and expenditure scenarios sought to deliver flexibility in the event the most likely scenario required adjusting to reflect further changes in the economic climate. Made the case for holding a 2% Reserve Policy. Sought to deliver a 1% surplus as part of the reserve policy. Proactively sought to maximise the opportunities of working with all key partners to deliver benefits to the population of Telford & Wrekin through aligning the strategies of local partners. Took its place with a range of key documents and strategies in communicating and informing staff, the public and patients as to the strategic direction of Telford & Wrekin CCG. Appendices A-C are extracts from the MTFS. The MTFS illustrates a number of scenarios in relation to resource growth, investments and cost pressures. Developments At the time of production it was envisaged that the MTFS would be revisited at least annually to enable a refresh in line with the NHS planning cycle. The strategy was derived prior to the completion of the baseline allocations exercise and therefore does not reflect a number of changes including the growth in activity assigned to specialised services. In addition the outcome of the spending review has recently been announced. Whilst health expenditure has been protected there are a number of areas that impact on the assumptions made during the formulation of the MTFS. One significant factor is the announcement that the government will put 3.8 billion into a pooled budget for health and social care in order to deliver better services to older and disabled people, keeping them healthy and out of hospital. The existing annual 1billon pledged to social 1

2 care from the NHS budget will be increased to 3bn in 2015/16. This amount, as well as an extra 0.8bn from other budgets, will be placed into a shared budget between the NHS and local authorities It is likely that the money will be routed via CCG budgets and will be spent on locally agreed health and social care services. The likely impact on CCG budgets will be the necessity to introduce additional QIPP schemes to generate cash for reinvestment in new services. The exact details are not currently clear and it is possible that Telford and Wrekin CCG s liability resulting from this initiative could equate to circa 6m. Some of these funds, as outlined above, are already invested by the NHS in the Local Authority and this current investment will be deducted from any future liability. A possible scenario is that the 2013/14 QIPP challenge of 4m will double in 2015/16. This is just one scenario and is subject to change. Recommendation Net of the adjustment for Specialised Commissioning the 2012/13 MTFS broadly reflected the predicted outcome of the allocations rebasing exercise. There have however since been a number of adjustments to allocations and a number of risks have materialised including an allocation reduction of 3.8m. The outcome of the West Midland s Specialised Commissioning allocation review is not yet known and this may create additional risks. It is therefore recommended that the MTFS is updated to reflect the known allocation adjustments and that the number of sensitivity analysis scenarios is increased to reflect the level of uncertainty. 2

3 Appendix A: Scenario Sources and Application of Funds Most Likely, Downside & Upside Most Likely Down Side Upside % '000 % '000 % ' /13 Budget 191, , ,893 Source Transfer of Centrally Held 1% Risk Reserve 1,909 1,909 1,909 Return of 2012/13 Surplus (70%) ,000 Uplift 2.51% 4, % 4, % 5,373 7,426 6,131 8,282 Application Tariff Deflator 1.50% (2,118) 1.50% (2,118) 1.50% (2,118) CQUIN 0.50% % % 706 Demography 1.29% 1, % 1, % 1,962 Prescribing 2.00% % % 406 Cost Pressure 1.88% 1, % 2, % 1,400 Activity Growth 3.00% 4, % 4, % 3,530 QIPP 1.90% (3,740) 3.52% (6,894) 0.79% (1,549) 1% Risk Reserve 1.00% 1, % 1, % 1,919 Change in Reserves to achieve 2% per OF Surplus 1.03% 1, % 1, % 1,919 7,426 6,131 8,282 3

4 Appendix B: Sources and Application of Funds Investments and Disinvestments 15 4

5 Appendix C: 2014/15 Five Year Source & Application of Funds 5

Medium Term Financial Strategy

Medium Term Financial Strategy 2013 2016 1 *07/06/2013 Reader Information Table Name of document: Medium Term Financial Strategy Version: Draft v3 Status: Draft Owner: Zoe Pietrzak, Chief Financial Officer