HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations

 
HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations
HFMA Accounts Planning Conference

    DHSC Overview

    Chris Young & Jen Nichols
    Finance Director & Deputy Director Accounts & Operations

    January 2019

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HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations
Overview

1. Context from Central Government

2. Annual Report & Accounts

3. Annexes

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HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations
Context from Central Government

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HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations
Context - increasing demands for health and care
           By 2029, the number of people aged 85+ is expected to grow by                                           Overall life expectancy is higher but those living in the most
           60%, increasing from 1.5m to 2.4m.                                                                      deprived areas have lower life expectancy and tend to spend more
                                                                                                                   of their lives in ill health
                                                    Population projections for
                                 45.0
   Number of people (millions)

                                 40.0
                                 35.0
                                 30.0
                                                                                                       2014
                                 25.0
                                 20.0                                                                  2019
                                 15.0                                                                  2029
                                 10.0
                                  5.0
                                  0.0
                                             0-14       15-59         60-74        75-84   85 & over
                                 Age group
  Over the last 50 years, healthcare spending has increased at an average of 4% per
  year in real terms compared to 2% for economic growth. Demand is driven by                                        The OBR’s central scenario projects that health spending will increase
  demographics (1%), medical devices (0.5-1%) and policy-driven demand & culture (1-
                                                                                                                    from 6.9% of GDP in 2021-22 to 12.6% in 2066-67. It projects that long-
  2%). Unit costs account for the remaining 0.5%.
                                        5%                                                                          term social care costs will rise from 1.1% of GDP in 2021-22 to 2.0% in
                                                                                                                    2066-67.
Annual real growth in total health

                                                                              SWE
  spend per capita (1997-2015)

                                        4%
                                                         JPN    GBR
                                                               NLD
                                                           AUS     NOR
                                        3%                     USA
                                                          DNK   CAN
                                        2%
                                                                DEU
                                                                FRA
                                                  ITA
                                        1%

                                        0%
                                             0%            1%                 2%           3%          4%     5%
                                                    Annual real growth in GDP per capita (1997-2015)

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HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations
DHSC Funding Flow (17/18 illustrative budget figs)
Flow of funding in the health and care system – the vast majority of the Health budget is allocated to NHS
England, who use that money to fund the commissioning of healthcare services.

                                                                           Funds voted by Parliament*

                                                                                            £126.9bn
                                                                 Department of Health & Social Care
                                                                                                                                                     Ministry of Housing,
                                                                                     Revenue DEL £121.3bn
                                            £110.0bn                                                                                                 Communities & Local
                                                                                       Capital DEL £5.6bn
                                                                                                                                                        Government
                                                                   Of which DH and System administration £2.9bn

                                                                  Other Arm’s              Health Education      Public Health
                    NHS England                                  Length Bodies                 England             England

                                                                                                                          £3.1bn Public
                                             £81.3bn        Clinical Commissioning Groups                                                                 Local Authorities
                         £8.1bn

                                                                                                       £2.7bn
                                                                                                                          Health Grant
                                                                           £63.2bn

         Public Health            Primary Care

                                                                                        NHS and other Providers
         NHS England                 Direct                                      i.e.. Foundation Trusts, NHS Trusts,            Public Health Services
                                                       £20.5bn
        Administration            Commissioning                                           Independent Sector

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HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations
NHS Mandate Funding – how it is used
The vast majority of the NHS budget is spent by NHS providers on their            People with high volume long term conditions take up a
the pay bill so containing workforce growth is important.                         large proportion of the budget.
                                                                                  o c. 50% of the population do not have a long-term
                                                                                     condition, and account for around 15% of costs.
                                                                                  o c. 25% have one long-term condition and account for
                                                                                     around 20% of costs;
                                                                                  o c. 25% have more than one long-term condition and
                                                                                     account for around 65% of costs.

                                                                                  This group are often older people:
                                                                                  o People aged 75+ make up 8% of the population, but 26%
                                                                                    of total health spend;
                                                                                  o Those aged 85+ make up just 2% of the population, but
                                                                                    account for 10% of total health spend.

 Despite the strategy to move more care to the community, the majority of NHS spend
 remains on treating people in hospitals and this continues to increase at a
 proportionately higher rate than other spending

                                                                           Healthcare from NHS providers is
                                                                           calculated based on NHS providers’
                                                                           spending minus non-commissioner
                                                                           income.

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Non-Mandate Funding – how it is used
Over 70% of the non-Mandate budget funds the future workforce of the NHS, and public health through grants to Local Authorities. The
funding also includes the Arms Length Bodies which regulate and support the overall health system.

The remainder funds a wide range of activities including reciprocal healthcare for UK residents when abroad, vaccinations, and prevention activities
including nursery milk and school fruit and vegetables.

                       Non-Mandate Spending
                                                                                                 DHSC Central Spending
                             c£9bn (net)                                                                   c£1.8bn (net)
          Central DH
          Spending                                                                                        Workforce,     DHSC
           £1.8bn                                                                                           129          central
            17%                                                                        Vaccines,                       spend, 249
                                                                                         422
                                                                                                                                     Informatics,
                                                                                                                                         295
 Administration
                                                          Future
 Costs £0.7bn
                                                         Workforce
     7%                                                                          Social care,
                                                          £4.4bn
                                                           42%                       87
                                                                                                                                          NHS, 194
   Arms Length                                                                      Redress,
  Bodies £0.5bn                                                                       135
       5%
                                                                                                                                       ODA, 179

                                                                                                   Reciprocal                       Prevention,
   Pubic Health
                                                                                                   healthcare,                         218
   Grant £3.0bn
      29%                                                                                             730

      Funding for Arms Length Bodies to maintain their services,                                Statutory, legal and commercial commitments are associated
      including:                                                                                with c. 70% of the central DHSC RDEL expenditure.
      NHS Blood & Transplant – harvesting and distributing blood and donated
      organs to the NHS
      NICE – ensuring the efficiency of services
      CQC – maintaining the safety and quality of health and primary care
      NHS Improvement – financial regulation and leadership for the NHS.

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Capital – Application of Funding – By Sector

Total CDEL expenditure in 2017-18 £5.2 billion, compared to a control limit of £5.6 billion,
representing an overall underspend of £0.4 billion (6.43%).
The vast majority of the CDEL budget (53.6%) is spent by NHS providers. Most spending is financed
by retained surpluses and depreciation. However the DHSC supports this spending by providing
financing to NHS providers through loans and Public Dividend Capital, whilst leading on specific
initiatives to improve efficiency in the NHS via informatics and technology projects.

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Capital – Application of Funding – By Type

Capital spending in NHS providers mostly relates to infrastructure and technology improvements
to support the delivery of high quality healthcare.
In addition, the DHSC and NHS England provide capital grants to third party organisations (such
as the voluntary sector and local authorities) to support investment in primary, community and
social care.

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The long-term plan for the NHS: Funding
•     In June 2018, the Prime Minister set out a multi-year
      funding proposal for the NHS, in return for the NHS
      agreeing a new long-term plan with the Government.

•     Government has now agreed the NHS’s Long Term Plan
      and this was published on 7 January 2019. Alongside this,
      Government has confirmed its final cash settlement for the
      NHS, which will see the NHS budget grow by £33.9bn in
      cash terms by 2023-24, compared to 2018-19. This is
      equivalent to the £20.5 billion real terms increase
      committed last June and reiterated at Budget 2018.

•     The table below confirms the NHS England resource
      budget in each year under this final settlement, which has
      been agreed with the NHS as the basis of its fully costed
      Plan.

    NHS England Resource DEL (excluding
                                            2018-19   2019-20   2020-21   2021-22   2022-23   2023-24
    depreciation)
    New nominal (cash terms) budget (£bn)    114.6     120.8     127.0     133.3     140.0     148.5

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What the NHS Long Term Plan means
                •   From getting the best start in life, to supporting you into old age, the NHS Long Term Plan is an historic moment for
                    patients across the nation. The plan launched by the NHS will transform patient care and make sure every penny of
     NHS LTP        taxpayers’ money is spent wisely.
    headlines
                •   With the single biggest cash increase made in the organisation’s history, the NHS now has unprecedented certainty to
                    plan for the next decade, ensuring that patients will be supported with world-class care at every stage of their life.

Spending taxpayers’ money wisely
•    It’s important that every additional penny of funding is being well spent. Through year-on-year improvements in
     efficiency and productivity, the NHS will continue to cut waste from the system, focusing on reducing
     unwarranted variation and bringing the right organisations together to make the best decisions about their local
     population.

Key Financial tests
•    The Government set the NHS 5 financial tests. These tests are:
       o the NHS (including providers) will return to financial balance;
       o the NHS will achieve cash-releasing productivity growth of at least 1.1 per cent a year (with a final number
          agreed in the plan), with all savings reinvested in frontline care;
       o the NHS will reduce the growth in demand for care through better integration and prevention (with a final
          number agreed in the plan);
       o the NHS will reduce variation in performance across the health system (financial and operational),
          improving all providers to a level to be agreed in the plan; and
       o the NHS will make better use of capital investment and its existing assets to drive transformation.
Spending Review 2019 (SR19)

The NHS financial settlement covers a majority of the total budget for which DHSC is responsible –
however, there will remain a large number of important budgets to be addressed at the next Spending
Review, which we expect to run during the course of 2019. These include:

•   Adult Social Care budgets within the overall Local Government Finance Settlement;
•   The Capital settlement for the NHS and DHSC as a whole;
•   The Public Health Grant to local authorities;
•   Funding for Health Education England; and
•   A wide variety of programmes and functions delivered directly by DHSC or its other arms-length
    bodies.

The Treasury have not yet confirmed the final envelope for SR19 and the timing is not yet confirmed.

However, at Budget 2018 the Red Book set out an indicative path for total Government Resource DEL
spending to 2023/24.

These figures implied that aggregate day-to-day spending outside the NHS will grow at flat real over
this period. As a consequence, it is likely that substantial fiscal restraint will continue to apply to
unprotected departmental budgets.

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EU Exit preparations

•   The Autumn Budget 2018 confirmed an additional £500 million of funding for 2019/20, meaning
    the government will have invested over £4 billion in preparing for EU exit since 2016.

•   DHSC will receive £50m for 2019/20 which will be used to implement no-deal contingency plans
    at a national level, as well as ensuring that the UK is prepared to seize the opportunities available
    when we leave the EU.

•   Our no-deal plans mean the health system will be prepared for EU Exit under either a deal or
    no-deal scenario in key areas including:
     • Reciprocal healthcare
     • Supply of medicines, medical devices and consumables
     • Workforce
     • ALB readiness

•   At a local level the system will need to manage pressures under either a deal or no-deal scenario
    All organisations should ensure that they have assessed how EU Exit will impact them and have
    plans in place to mitigate any risks.

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Annual Report and Accounts
Annual Report and Accounts - Context
Key Messages

•   The Government has and continues to back the NHS with extra funding, despite the context of
    broader economic uncertainty - increasing levels of scrutiny

•   The DHSC Annual Report and Accounts (ARA) is the key public document, providing an
    overview of the resources for which the Department of Health & Social Care is
    responsible and how these have been deployed.

•   It is a statutory requirement for all Government Department’s to produce an ARA and lay
    before Parliament, before the summer parliamentary recess.

•   There will be continued scrutiny on the way in which NHS finances are deployed
    (accounted/reported)

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Annual Report and Accounts - 2017-18 Headlines
•   2017-18 DHSC Annual Report & Accounts laid in Parliament 12 July 2018

•   DHSC underspent its revenue DEL budget by £692 million, which represents a 0.6%
    underspend against a £121.3 billion budget.
1. Net NHSNet
           Financial Balance 2017-18
              NHS Financial  Balance 2017-18

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2018-19 Accounts Preparation - What’s New?
Key Messages
•   Timescales remain broadly the same (annex b)
•   In accounting/audit terms, no new material risks introduced.

      Highlights                               Lowlights
      • IFRS9 & IFRS 15 - Transition year      • GDPR - Explicit need to advise
        (see next slide)                         colleagues about disclosures of
      • TDR - Introduction of Nominal            information.
        HMT Discount Rates for general         • IAS 32 – new adaptation in the
        provisions.                              FReM & GAM.
      • MIS - Clarification of accounting      • IFRS15 – revised adaptation in the
        treatment for the Maternity              FREM & GAM
        Incentive Scheme.                      • TUFT - Inclusion of Trade Union
      • SCCL - Supply Chain Co-                  Facility Time in FREM, FT ARM &
        ordination Limited (new ALB)             GAM.

AND Finally - EU exit impact on 2018-19 accounts………..

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2018-19 Accounts Preparation – What’s New?
Key Messages

IFRS9 & IFRS15 - adopted 1 April 2018

     IFRS 9                                     IFRS 15
     • Despite adapted definition of a          • Identify contract revenue streams
       contract, the existing PDC                 noting adaptations to definition
       interpretation remains                   • Assess performance obligations to
     • Determine classification                   determine revenue recognition
     • 3 stage expected loss model              • Assess transaction price
     • Consider disclosure                      • Consider where variable
       requirements                               consideration exists
     • Consider transition approach             • Note transition approach
     • Know your interpretations and            • Be aware of disclosure
       adaptations and their                      requirements
       consequences

   2019-20 GAM –consultation - LIVE! due to be published April 2019

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Any questions?

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Annex A – NHS Long-Term Plan

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What the NHS Long Term Plan means
                       •   From getting the best start in life, to supporting you into old age, the NHS Long Term Plan is an historic moment for patients
                           across the nation. The plan launched by the NHS will transform patient care and make sure every penny of taxpayers’ money is
       NHS LTP             spent wisely.
      headlines
                       •   With the single biggest cash increase made in the organisation’s history, the NHS now has unprecedented certainty to plan for
                           the next decade, ensuring that patients will be supported with world-class care at every stage of their life.

                                                                     Top commitments

     Transforming care out of hospitals:                   Prioritising prevention:                          Parity for mental health
     • The plan will keep people healthy and out of        • The plan sets out how we will improve           • There will be a comprehensive
       hospital by focusing on prevention of ill-              the prevention, detection, treatment              expansion of mental health services,
       health and boosting services closer to home.            and recovery of major diseases,                   with an additional £2.3bn being
     • The plan commits to an unprecedented                    including cancer, heart attacks and               invested in mental health by 2023/24.
       increase in spending to improve access to               strokes.                                      • This will give 370,000 more adults with
       primary medical and community health                • This will include the introduction of               severe mental illness and almost
       services such as GPs, nurses, and                       new screening programmes, faster                  350,000 more children greater support
       physiotherapists, with spending on these                access to diagnostic tests and new                in the next five years.
       services £4.5 billion higher in five years’             treatments, and the use of technology         • The NHS will also roll out new waiting
       time.                                                   such as genomic testing.                          times to ensure rapid access for those
     • Integrated Care Systems (ICSs) will become          • In 10 years, 55,000 more people each                that need it most to mental health
       the driving force for coordination and                  year will survive cancer for at least             services in the community, and
       integration across primary and secondary                five years and up to 150,000 heart                upgrade the urgent care and support
       care, health and social care, and physical and          attacks, strokes & dementia cases will            needed for those in crisis.
       mental health. ICSs will cover the whole                have been prevented.
       country by April 2021.

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Top commitments continued

Improving the quality of care for all     Supporting the workforce for      Digitally-enabled care         Personalising care
                                          the future                        across the NHS
•    The plan will ensure all children                                                                     •   The plan will increasingly personalise
     get the best start in life by        •   Key to all of this are the    •   The plan will also             care and empower patients to have
     continuing to improve maternity          people, who are the core of       roll-out and support           more control over their care.
     safety including halving the             the NHS. The Long Term            new technologies           •   It will also expand the use of personal
     number of stillbirths, maternal          Plan sets out how we will         that deliver                   health budgets to another 200,000
     and neonatal deaths and serious          make the NHS a world-class        improved access to             people, and give patients more freedom
     brain injury by 2025.                    employer. It commits to           NHS services                   to book appointments and view their
•    A renewed focus on supporting            ensuring our people receive       including new digital          care plans through the NHS app.
     people with learning disabilities,       better training and career        GP services and give       •   The NHS will also invest in new
     autism or both by speeding up            progression, clamping down        patients additional            medicines and medical technology like
     assessments, reducing over-              on bullying and violence,         flexibility with digital       genomics, with an additional one
     prescribing of medicines, and            and a comprehensive               options for diabetes           million whole genomes being
     ensuring they have access to             wellbeing offer to support        prevention and                 sequenced in the UK in the next five
     high-quality care and support in         their own resilience and          arthritis                      years, to increasingly personalise the
     the community.                           mental health.                    management.                    treatment patients receive.

         Spending taxpayers’ money wisely
         •   It’s important that every additional penny of funding is being well spent. Through year-on-year
             improvements in efficiency and productivity, the NHS will continue to cut waste from the system, focusing
             on reducing unwarranted variation and bringing the right organisations together to make the best decisions
             about their local population.

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The NHS Long Term Plan also supports wider public priorities
     Department for Education                                        Department for Business, Energy and Industrial Strategy
     • Care leavers: the NHS, together with partners at national     • Prevention and Ageing- supporting the delivery of an extra
       and local level, will commit to improving outcomes for our      5 healthy and independent years by 2035 whilst reducing
       most vulnerable children and young people.                      inequalities.
     • Looked-after children: Commitment to deliver                  • The NHS is open to innovation/new technologies in the
       recommendations of expert working group on mental               health service and supporting world-class clinical research,
       health of children in care and a stronger support for young     in addition to supporting implementation of the first and
       people during transition to adult services with development     second Life Sciences Sector Deals.
       of 0-25 mental health provision.
     • L&D and Autism: a clear commitment to quicker                 Department of Work and Pensions/DHSC Work and Health
       assessment and diagnosis for those with autistic spectrum     unit
       disorders.                                                    • Long-term commitment to the importance of work and
                                                                       health.
     Ministry of Justice                                             • Greater leadership on musculoskeletal (MSK) health.
     • Greater access to clinical support for victims of crime:      • NHS investment in Integrated Health and Employment
        particularly child victims of recent sexual abuse.             support.
     • Improved continuity of care for prisoners on release from
        custody.                                                     Ministry of Housing, Communities and Local Government
     • .                                                             • Prevention: High impact change model for prevention.
     Home Office                                                     • Significant expansion of ‘enhanced health in care homes’
     • Marauding Terrorist Firearms Attack: increase specialist        approach.
        ambulance capability to respond to terrorism.                • Increase in provision of intermediate care.
     • Community Mental Health: better support for people with       • Meaningful role for local government with ICSs and STPs.
        mental health problems in crisis.
     • Avoiding passing demand onto police through improved          Rough sleeping
        crisis care.                                                 • The NHS will spend up to £30 million extra on meeting the
                                                                       needs of rough sleepers.

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Annex B – Accounts Timetable

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Accounts Timetable
                                                 Month 9                    Deadline

 Accounts submission - ALBs                                          21 January (noon)

 Accounts submission - Commissioners                                 23 January (9am)

 Accounts submission - Providers                                     23 January (noon)

 Debtor & creditor variances reports issued                          30 January

 AoB I & E (& Dr/Cr) submission - Commissioners & Providers          6 February (9am)

 AoB I & E (& Dr/Cr) submission - ALBs                               6 February (9am)

 AoB I & E variance reports issued                                   Wed 13 February

 AoB Resubmission I & E and Dr/Cr - Commissioners                    25 February (9am)

 AoB Resubmission of I& E and Dr/Cr -Providers & ALBs                25 February (noon)

 Resubmitted variances (I&E and Dr/Cr) issued to individual bodies   4 March

                                                                                          25
Accounts Timetable continued…
                                                 Month 12              Deadline
 Accounts submission - ALBs                                      24 April (9am)

 Accounts submission – Commissioners                             24 April (9am)

 Accounts submission - Providers                                 24 April (noon)

 AoB I & E & Dr/Cr variance reports issued                       30 April (10am)

 AoB Resubmission I & E and Dr/Cr - Commissioners & Providers    7 May (noon)

 AoB I & E variance reports issued                               14 May

                                             Month 12 -Audited         Deadline
 Audited Accounts submission - Commissioners                     29 May (9am)

 Audited Accounts submission - Providers                         29 May (noon)

 Group Accounts to NAO                                           25 June (10am)

 DHSC Annual Report & Accounts laid in Parliament                11 July

                                                                                   26
Annex C – Key Contacts

27
DHSC Contacts

                                                Jen Nichols
                                             DD – Accounts and
                                                   Ops

    Martin Donnelly-                                                                    Suzanne Ibbotson
                         Carolyn Gallagher                           Steven Wareing
       Thompson                               Joanna Peters                              Head of Finance
                         Financial Consol                           Accounting Policy
   Accounting Systems                        AoB Section Head                           Capability & DHSC
                           Section Head                               Section Head
      Section Head                                                                        Annual Report

      Geoff Ward             Vacancy          Duncan Cadge              Vacancy             Mike Harris

     Charlie Middleton         Andy Topham
                                                   Phil McTiernan         DHSC Consolidated Account:
                                                                          ALB.Finance@dhsc.gov.uk
                                                                          NHSE: England.yearendaccounts@nhs.net
                                                                          NHSI: provider.accounts@improvement.nhs.uk
           Rudo Dozwa          Sarah Owen           Becky Leason

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