Feature / Quick save

Local politics in Northern Ireland is never far away from the running of its health and social care services. But while the internecine war of words will be lost on most outside the region, finance professionals are well aware of the difficulty of being asked to find extra cash-releasing savings mid-year – as the local health and social care service has been asked to do.

With the local political process frozen since the March local Assembly elections – due to the main parties failing to agree a new power-sharing executive – 2017/18 spending was not confirmed until July. 

As September ended, the Irish government said the Assembly and executive could be up and running within weeks. But in the absence of a minister, officials at the Department of Health in Belfast are running local health and social care and have been working with trusts and commissioners to develop a balanced financial plan. As part of this process, trusts have been required to bring forward proposals to address a shortfall of £70m.  

In August, the five local health and social care trusts launched consultations on savings plans to close the £70m gap (the total budget for health and social care is £5bn a year, about half of the devolved government’s budget). The consultation ends on 5 October, giving the local service five months to implement their plans – assuming they can push them forward following the consultations.

Funding stalemate

The failure to form a local Assembly government has consequences for the local public services. It appears that the additional £1bn for Northern Ireland from the deal struck between the Democratic Unionist Party and the Conservative government in Westminster – including £250m for health – will not be released until the power-sharing executive is restored. Despite this, with financial storm clouds looming over health and social care, in July an additional £60m was found. So how has the service reached the point where it needs to make additional savings in-year?

A Northern Ireland Department of Health spokesperson gives some clues. ‘The indicative resource allocation for the Department of Health is £5,095.4m, which provides an additional £224.8m for health, when compared against the allocated budget at the start of the 2016/17 financial year,’ they say. 

‘This indicative allocation includes the additional one-off allocation of £60.1m in July. Despite this, the financial challenge for health remains significant due to inflation [widely recognised as 6% per annum], an increasing and ageing population and the cost of new treatments. HSC trusts have been tasked by the Department with developing draft savings plans to deliver a total of £70m of savings in 2017/18, which must be achieved as part of the financial plan for this year.’ 

There are several points to make about the in-year savings. The Department insists the actions that are proposed to make the savings are temporary and are required only to meet the statutory duty of breaking even in 2017/18. If the proposals are implemented and subsequently need to be extended beyond the current financial year, there would be another public consultation.

Inflation running at 6% means there was a shortfall of around £300m at the beginning of the financial year. This year’s uplift leaves the service around £70m short.

John Compton, the former chief executive of the Health and Social Care Board (HSCB, which commissions care across Northern Ireland), says: ‘We’ve got here because we have become overly dependent on non-recurrent funding. In the past, when in-year monitoring funding was awarded, it was to bring things on, to run new services. The service needs around £300m a year to take account of rising demand. You can’t get that 6% – you’ll maybe get 2% to 3% from government, the service can make 1% to 1.5% from its own resources, but you’re still 2% short and that shortfall is getting bigger.’

There are several unanswered questions, he adds. Will the in-year savings lead to a balanced financial position at year-end? If it was known that further action was needed to balance the books, why did the Department wait until August to set the ball rolling? Will next year’s shortfall be £370m or more? And is this year’s pay award, yet to be announced, included in the calculations that led to the £70m savings requirement? Even an overall pay rise of 1% could add more than £20m to the pay bill.

In recent years, trusts have been given extra financial support to help them through the winter, but he questions whether it will be available this year. If not, further lengthening of already-long waiting times seems inevitable.

Mr Compton is not confident the savings will be achieved. ‘There will be five months until the end of the financial year and the question is whether or not they will be able to get £70m out in the teeth of winter when some pressures will be enormous. Cash control on agency and locum spending is going to be enormously difficult unless you’re prepared to have queues of people waiting for service. I think they will make a sizeable amount, but it’s a tall order.’

But what of the savings? It is worth saying that the trusts have been delivering year-on-year savings of 2% for some time, though the late confirmation of allocations means trusts will find it difficult to spend all of their funding specifically aimed at service development. This slippage is reflected in the savings plans (see box).

Emergency focus

The trusts and the Department are keen to minimise the impact on patient and client care. ‘The HSCB will work with trusts during the consultation to develop actions to mitigate as far as possible the proposed temporary service changes to maintain quality of provision. Maintaining patient safety remains the prime priority,’ the Department says.

As far as possible, trusts have taken account of the principles of deliverability, safety, limiting service impact and maintaining its strategic direction. However, they accept some services will be affected.

Launching the Northern Trust consultation, its chief executive, Tony Stevens, said: ‘We are part of a system that’s under significant financial pressure, but the HSC system is working collaboratively to find solutions. We will prioritise services to protect the sickest and most vulnerable. The proposals we have put forward seek to minimise any adverse impact on our plans for reform and modernisation. 

‘The proposals, if implemented, will however have an immediate impact on current service provision. There will be no direct impact on current staff, but the trust will maintain its vacancy management processes. We will continue to seek to find ways to mitigate this.’

In a statement, Western Trust chief executive Anne Kilgallen added: ‘The safety of patients and clients under our care is our utmost priority and we have borne this in mind in developing our proposals. The trust has sought to protect emergency and unscheduled care, red flag and cancer patients, looked-after children, frail people and people with a disability. It is important to note that the draft savings plan is a public consultation – no decisions have been made regarding the implementation of the proposals contained within the plan.’

None of the trusts plan redundancies, but a crackdown on agency and other temporary staff spending is one of the main themes coming through all of their proposals. The Belfast Health and Social Care Trust is taking a leaf from Lord Carter’s efficiency review in England, proposing to maximise the use of internal banks for temporary staff and locum doctors, and use only contracted agencies to reduce the fees paid. Others plan to cap fees for locums, maximising their staff bank or taking temporary staff only from contracted agencies.

The focus on temporary staff is considered a major change that could have an impact on patients and the trusts acknowledge the risks. 

The plans also recognise that the reduction in temporary staff, plus other major changes such as reductions in elective surgery, will lead to the temporary closure of beds and a likely increase in waiting times. 

Waiting times will be a big concern for the public. Northern Ireland already has the longest times in the UK, and it remains to be seen how the service will recover on this key measure of performance. 

Uncertainties remain. Will the trusts get their proposals through the consultation process? Will they be able to deliver on their plans in the five months of the financial year that will remain? And if a new Assembly government is formed, would an incoming health minister halt the savings plans?