Download 23 05 Budget Strategy 2013-14

Public Health Wales
2013/14 Budget Strategy - March 2013
Public Health Wales Board
2013/14 Budget
Strategy
Author: Huw George, Executive Director of Finance
Date: 19 March 2013
Version: 1
Purpose and summary of document:
To seek approval from the Board for the Budget Strategy following the
Chief Executive Scrutiny meetings and Executive Team approval.
Who will Present:
Huw George
Date of Board Meeting:
21 March 2013
Please State if the Paper is for:
Discussion

Decision

Information
Date: 19 March 2013
Version: 1
Page: 1 of 7
Public Health Wales
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2013/14 Budget Strategy - March 2013
Purpose
The purpose of this report is to inform the Board of the current status of
budget setting following the conclusion of scrutiny meetings and Executive
team discussions. It is also intended to highlight risks, the savings
schemes planned and the investments to be made. Board approval is then
sought.
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Recommendation
The Board are asked to discuss and agree the final budgets.
3
Timing
Financial position for 2013/14 which needs approving by the Board on
21st March.
4
Financial Implications
The Board has a duty to produce a balanced financial plan.
This report has identified the current known risks that Public Health Wales
faces in striving to balance its strategy.
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Board members are asked to
Consider, comment on and approve the contents of this
Confirmation of decisions on investment requests is also required.
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report.
Introduction
As with other NHS bodies in Wales, Public Health Wales has received flat
line funding for 2013/14.
The level of core funding (£76.077m) was set out in the letter from the
Director General of Health and Social Services NHS Wales to the Chief
Executive on 7th February 2013.
In addition to the core funding Public Health Wales also receives non-core
funding from the WG. This was referenced in the same letter (£1.363m)
although the figures were not complete. The Trust also receives funding
from a number of sources including Service Level Agreements with Health
Boards for Microbiology.
Date: 19 March 2013
Version: 1
Page: 2 of 7
Public Health Wales
2013/14 Budget Strategy - March 2013
Planning for 2013/14 started in October 2012 with discussions and a
presentation at the Senior Management Forum. The Board and Executive
team have both considered and agreed the key principles. Scrutiny
meetings were then held between Directors, the Chief Executive and
Finance Director. The final figures recommended in this paper are the
result of consideration and approval by the Executive team on 6th March
2013.
Public Health Wales is modelling its financial future on the message that
we face a flat cash settlement for the next three years. The Planning
Submission included on this Board agenda highlights the effects of this
challenge over the next 3 years.
As an organisation we face many of the normal cost pressures resulting
from national contractual agreements and inflationary price increases. It is
accepted however that these do not include all of the issues which face
the rest of the NHS in Wales but they do represent a significant challenge
to what is a diverse and geographically spread organisation.
The Board agreed in 2011/12 that it would continually seek assurance that
operational efficiency is being maintained and that a minimum cost
improvement plan would be set at 1.5% of all budgets over the planning
period. This approach continues this year.
It is agreed it will be impossible for us to meet the financial challenge that
lies ahead through our traditional approach to achieving cost improvement
targets. We need to undertake a more fundamental review of programme
spend across the full range of services provided by the Trust and we are
now moving that work forward with some speed.
The Chief Executive has emphasised that there are two key principles that
we should adhere to if we are to meet our statutory duty to break even:
1. “We don’t spend money we don’t have;
2. We seek to do an agreed range of things properly and not to do
everything badly.”
We have experimented with an economic method through the Health
Improvement Review that has proven its worth. We are now scoping out
the basis of a process for applying this sort of rigour to the totality of what
Public Health Wales currently does.
Date: 19 March 2013
Version: 1
Page: 3 of 7
Public Health Wales
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2013/14 Budget Strategy - March 2013
Financial Revenue Plan
The following table sets out the summary position after the budget
scrutiny meetings and Executive team consideration.
TOTAL
2012/13 Rollover Budget at month 7:
Expenditure - Pay
Expenditure - Non Pay
Income
Rollover Budget (Net) after base adjustments
Funded Increases / Savings
Increments
Incremental Pay Savings
1.5% savings
Approved Budget
Total Other Changes (committed)
£
53,822,602
39,586,500
-93,409,100
2
763,325
-141,575
-1,341,659
-719,907
-34,000
Draft Budget before Further Investment
-753,907
Further Investment / Cost Pressures
2012/13 Decisions - recurring financial impact
Pay Investment
Non pay investment
Reduction in income
Investment / Cost Pressure
231,770
205,255
189,273
127,609
753,907
NET BUDGET FIGURE
balanced
The table below sets out the budgets which will be formally approved by
the Board.
Pay
Non Pay
CIP
TOTAL
£
£
£
£
Total Income
Expenditure:
Screening
Microbiology
Health Protection
Public Health Development
Safeguarding Children Services
NLIAH
Corporate Services
Total Expenditure
Date: 19 March 2013
-99,351,327
12,811,803 21,370,711
13,711,415 6,624,441
4,336,081 1,072,116
18,220,749 9,888,826
893,007
105,561
0 4,657,000
4,908,320 2,092,956
54,881,375 45,811,611
Version: 1
-496,824
-293,897
-78,376
-359,044
-13,615
0
-99,903
-1,341,659
99,351,327
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Public Health Wales
2013/14 Budget Strategy - March 2013
The increases to the Budget for 2013/14 are primarily the transfer of
NLIAH functions and the agreed AAA funding. The breakdown of the
investment proposed in this Budget Strategy is set out in the table below.
The proposed investments were put forward by Directors in the Budget
Scrutiny meetings and subsequently approved by the Executive Team.
Corp
£
HR Review
Stat and Mandatory Training
Welsh Risk Pool Litigation provision
Organisational Development investment
2 X Divisional Directors (partially offset by VERS savings)
Alcohol Brief Intervention
Reduction in income (DOH / poultry)
Reduction in income (HIW)
Reduction in income (WCISU / WG)
Admin Review
Full year effect of Board costs
Comms. post
Powys post
Microbiology projects backfill
Various - incl additional session & infection control changes
PH
Services
£
52,736
20,000
50,000
93,785
25,000
63,032
£139,032
£753,907
51,000
35,000
41,609
7,062
30,825
27,366
45,749
£333,101
TOTAL
£
52,736
20,000
50,000
93,785
185,255
25,488
51,000
35,000
41,609
7,062
30,825
27,366
45,749
25,000
63,032
185,255
25,488
£281,774
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PH
Devt
£
Savings
As outlined earlier in the paper, there is a requirement for all budgets to
make a 1.5%. The total target is £1,341k. There was a requirement for
the detailed plans to be presented at the Scrutiny Meetings. The Board
will be provided with a detailed schedule of these schemes and this will be
regularly monitored throughout the year.
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Risks not included in budgets
The following risks have been considered and will need to be managed in
achieving a balanced Budget Strategy.
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

Underperformance on savings – there are risks in the lists of savings
schemes which must be addressed.
Vacancy Factor underachievement – some directorates have relied
heavily on vacancy factors to achieve savings in the past and need to
provide assurance that this can be achieved again.
Microbiology Contract Income –assumptions are made that costs of over
performance will be met by SLA’s. If Health Boards do not agree then
costs will need to be reduced.
Date: 19 March 2013
Version: 1
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Public Health Wales
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2013/14 Budget Strategy - March 2013
WG Capital Charge Income – we are assuming that we are funded at
the same level as 2012/13 but this is to be confirmed.
Digital Mammography Funding – we are still pursuing confirmation from
WG that the previously promised funding is made available.
The plan assumes that any wage awards are nationally funded.
Travel cost increases – budget holders will need to manage these costs.
Pensions auto-enrolment – the current plan assumes that the date of
this is deferred to avoid an additional cost.
Microbiology – the Directorate is planning to address all of the 2012/13
non pay overspend. Whilst we have clearly stated that overspends will
not be funded this will be a risk which will be monitored closely over
forthcoming months.
Microbiology – the Directorate submitted a business case when they
sought to purchase the equipment in this year’s capital plan. They
agreed to underwrite the small excess revenue costs. Decisions taken
subsequently have increased this cost and it is now a cost pressure of
£88k.The assumptions are being revisited in order to manage down this
cost pressure.
Estates/utility inflation. This has been brought up as a pressure in the
scrutiny meetings but inflationary costs are not yet fully worked up.
Whilst some of these risks may be mitigated the coverage which exists is only
the CEO contingency (£50k). Traditionally a review of old creditors on the
Oracle system provides the benefit of a write back of circa £200k per annum.
The Executive Team will manage the implementation of the investments in
order to mitigate any risks.
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Capital Budget
The table below summarises the decisions of the Capital Review Group. All
Divisions have had the opportunity to present their bids to the group and
have used the agreed scoring matrix.
We have not yet been informed of the final allocation for 2013/14 but for
planning purposes must assume the previously forecast 10% cut.
Date: 19 March 2013
Version: 1
Page: 6 of 7
Public Health Wales
2013/14 Budget Strategy - March 2013
SOURCES OF FUNDS
Total
2013/14
£000's
930
-93
837
Discretionary Capital
Potential 10% cut
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Total
2013/14
£000's
2012/13 Schemes c/f:
Microbiology Division - 3 MALDI-ToF MS Analysers
Microbiology Division - 4 Versatile Antibiotic Susceptibility Readers
Screening Division - AAA Equipment
2013/14 Schemes approved:
Screening - Colposcopy Imaging Cameras
IT - Replacement Server for BTW Swansea Phone System
Microbiology Division - Replacement of Molecular Platform
Microbiology Division - Replacement of Cryptosporidium Molecular
Platform
Microbiology Division - Light Microscope
Microbiology Division - -80 Freezer
Total committed
Funds available
30
21
160
96
15
100
28
8
6
464
373
Other schemes to consider after month 6
Accommodation
Microbiology Division - Sereology Standardisation
Microbiology Division - Rhyl Lab Equipment
UNDER / (OVER) COMMITMENT
125
200
150
(102)
The current plan does not fully commit the allocation available and it is
agreed that the three additional schemes listed will be formally considered
in readiness for a month 6 review.
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Conclusion
The process of developing a Budget Strategy has produced a draft budget
which fully funds unavoidable pay increases and investment decisions
which are already planned. There remain risks which must be addressed
and considered.
The Board are asked to approve this strategy which ensures that its
statutory duty to breakeven is achieved. In doing so, we must recognise
the challenges of the savings target and the opportunities of the
investment made.
Date: 19 March 2013
Version: 1
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