Welsh finance reviews to support balanced target

30 September 2021 Steve Brown

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Speaking to the HFMA Wales and ACCA annual conference, interim director of finance for the Welsh government Health and Social Services Group Steve Elliot (pictured) said there would be less opportunity to amend allocations in the run-up to the year-end.steve elliot L

‘The finance that we have given out now, with a little bit of tweaking if necessary around the month 6 position, will be what we expect you to maintain and deliver plans for the rest of the year and to deliver the outturn,’ he said.

He added that his expectation was for all organisations to maintain balanced outturn forecasts through to year end – or in the case of Hywel Dda and Swansea Bay health boards to deliver on their planned deficit positions – with the aim that the overall outturn would be at least similar or better than 2020/21.

In 2020/21 overall revenue spending on health rose to £9.6bn and the NHs Wales deficit fell from £89m to £48m.

The draft Budget at the end of 2020 allocated an extra £420m recurrently for health and social services in 2021/22, with £385m targeted at the NHS. Mr Elliot said this had enabled the group to provide core growth funding and fund the 3% pay award in full, as well as investing in mental health, digital and health protection.

A further £551m was announced in August providing additional funding for the second half of the year – taking total Covid-19 funding for the year to £1.1bn for the second year running. ‘The additional investment is what you’ve projected you need to cover ongoing spend until the end of the financial year, as well as further investment of £100m revenue and £40m capital for recovery,’ Mr Elliot said.

‘So, to date, we’ve provided nearly £0.25bn for recovery and letters went out yesterday to chief executives to confirm the second tranche of recovery funding,’ he added. ‘Most organisations should now have the funding confirmed to them for this financial year.’

Mr Elliot praised finance teams for their contribution to the NHS response to Covid-19. The service had seen an ‘unprecedented’ £1.1bn increase in expenditure in 2020/21, which at a practical level meant a huge increase in the number of transactions that had to be tracked. At the same time, many finance staff had been pushed into new territory, for example supporting the establishment of field hospitals and mass vaccination centres and advising on commercial deals.

‘This must have taken some of you out of your normal comfort zone,’ he added. Despite this the service had maintained good governance. This point was acknowledged at the beginning of the year by Wales auditor general Adrian Crompton, who said the revised arrangements had enabled NHS bodies to ‘govern in a lean, agile and rigorous manner’.

‘Despite all the difficulties, the ultimate outturn was that organisations delivered outturns in line with their original plans,’ said Mr Elliot. Although four organisations failed to meet their financial duty to break-even over three years, all organisations delivered a clean set of accounts within deadlines that were slightly tighter than previous years.Andrew goodall L

In a separate session, NHS Wales chief executive Andrew Goodall (pictured) added his thanks to finance teams for their efforts in supporting the delivery of new ways of working. ‘But it has also been necessary to maintain governance and ensure the public purse is spent appropriately,’ he said. ‘There are decisions that have been made over the last 20 months, which have been at a pace and urgency that our system has never had to facilitate before.’ He added that ‘landing technical processes’ were often taken for granted, but they were far from straightforward, especially given the increase in funding over the year.

Ian Gunney, interim deputy director for capital, estates and facilities, said the capital programme for 2021/22 now stood at £429m, including £83m of discretionary funding for health bodies to use on repairs and small schemes. While all named schemes require ministerial approval, a new Estates Funding Advisory Board had been set up this year to prioritise smaller schemes that could not be supported through discretionary funding.

He said that the annual process of fixing health bodies’ capital resource limits and capital expenditure limits would take place at the end of October. ‘This helps the government to know what we are trying to manage in terms of any underspends and available capital. That gives us five months to ensure we have other schemes that are deliverable within the financial year,’ he said.

He said he had contacted finance directors for a prioritised list of what they could do with any additional capital. He added that in developing schemes, it was helpful to be clear how projects addressed Welsh government priorities.