HFMA Accounts Planning Conference - DHSC Overview Chris Young & Jen Nichols Finance Director & Deputy Director Accounts & Operations
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HFMA Accounts Planning Conference
DHSC Overview
Chris Young & Jen Nichols
Finance Director & Deputy Director Accounts & Operations
January 2019
1
Overview
1. Context from Central Government
2. Annual Report & Accounts
3. Annexes
2
Context from Central Government 3
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)
4
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
5
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.
6Non-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.
7Capital – 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.
8Capital – 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.
9The 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
10What 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.
12EU 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.
13Annual 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)
15Annual 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
162018-19 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………..
172018-19 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
18Any questions? 19
Annex A – NHS Long-Term Plan 20
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.
21Top 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.
22The 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.
23Annex B – Accounts Timetable 24
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
25Accounts 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
26Annex 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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