Dudley & Walsall Mental Health Partnership NHS Trust

Transcription

1 Dudley & Walsall Mental Health Partnership NHS Trust Date of Board meeting: 25 th March 2009 Subject: Financial Plans 2009/10 Trust Board lead: Presented by: Aim of the report: Ian Baines, Director of Finance Ian Baines, Director of Finance To present to members the Trust s proposed budget for 2009/10. Key points: The Trust is able to set a balanced revenue budget per the attached report, albeit with a savings programme amounting to 2m, and hence equating to around 3% of the Trust s gross turnover. The Trust is also proposing a capital programme amounting to the internally generated depreciation levels for 2009/10 of 1.4m, thus leaving the brokered sum of 1.8m with the Strategic Health Authority for future drawdown by the Trust. Recommendation: The Committee are asked to note and agree to the contents of this report. Board action required (please tick) Information Approval X Discussion Other (please state) Key Standard for Better Health: Implications: Financial: Revenue - Contained within report. Capital - Contained within report. HR/Personnel: Staff costs represent around 75% of the Trust s total expenditure budgets. All established posts have been re-costed for the 2009/10 budget setting round. Community/user: Significant improvements to the Service User/Patient Experience, are expected as a direct result of the works proposed within the capital plans contained within this report. Equality & Diversity: NIL direct impact. Attachments; Appendix 1: Dudley & Walsall Mental Health Partnership NHS Trust Summary Income & Expenditure plan & Monitor Metrics for 2009/10 Appendix 2: Dudley & Walsall Mental Health Partnership NHS Trust Summary Revenue plan for 2009/10 Appendix 3: Dudley & Walsall Mental Health Partnership NHS Trust Capital Plan for 2009/10 1

2 Dudley and Walsall Mental Health Partnership NHS Trust Trust Board 25 th March 2009 Financial Plans 2009/10 1. Introduction The Trust is obliged to set a realistic and robust budget for the forthcoming financial year, 2009/10, to demonstrate that it is able to meet its statutory financial targets. To this end, an incremental revenue budget setting process has been adopted, along with the development of a comprehensive programme to meet our CIP targets; comprising both unidentified savings rolling forward from 2008/09 of 600k and with new efficiency saving requirements emerging in 2009/10. This has enabled the Trust to set a revenue budget for 2009/10, which strives for a 100k surplus as advised to the Strategic Health Authority previously. The development of the capital budget/plan has also been undertaken using knowledge gained to date. Members are asked to recognise that the capital programme for the coming year will very much be a dynamic one, subject to change upon the receipt of the six facet survey, estates strategy and clinical plans that are being compiled currently. 2. Financial Plans 2009/10 Revenue Revenue budgets have now been set for 2009/10, with the following adjustments being made to budgets to move them on from a 2008/09 to 2009/10 price base. a) Month 7 budget 2008/09 b) Less non-recurrent funded items c) Plus full-year effects of part-year funded items/developments d) Plus generic cost pressures e) Plus specific allocations, if any f) Plus developments g) Plus locally agreed cost pressures to be funded h) Less cost improvement plans (CIPs) levied i) Less contingency funding identified j) Plus budget changes actioned since month 7 All appropriate entries to reflect these adjustments have been made on the appropriate schedules within the budget setting papers, per the attached appendices. In terms of increased costs moving into 2009/10, the following pressures have been highlighted, assessed and quantified; Generic cost pressures. Generic cost pressures are those that are not specific to the organisation, but rather generic pan-nhs. In essence, these are simply inflationary pressures which will increase costs and enable the Trust to deliver the same level of service provided in 2008/09 but at a 2009/10 cost-base. There is no central definition of generic cost pressures within the Operating Framework for this year, and as such, the Trust has currently defined its own generic cost pressures as follows : 2

3 Pay inflation. The NHS Employers website quotes the 2009/10 pay uplift to be 2.4% but with provision for an extension to the incremental points within bands 5 and 6, a figure of 2.54% is felt to be more realistic. The current assessment of the Trust s pay award requirement for 2009/10 stands at 1,321k. Capital charges on net additions. The Trust has available capital resource significantly in excess of its depreciation levels, and as such, increases in our asset base, and hence depreciation and cost of capital charges will increase accordingly. Based upon previously forecast capital expenditure of 3.2m, less 1.4m depreciation, this cost pressure amounts to be 183k. However, the Trust has now made the decision that it will not spend more on its capital programme for 2009/10 than the internally generated depreciation cash of 1.4m. This means that, in essence, the Trust s capital charges costs should not increase, as its asset base will remain unchanged in totality. The 183k noted as the capital charges increase has now, therefore, been moved to reserves, and will remain there as a small contingency fund. This is noted under the category of contingencies identified within the budget setting papers. Non-pay inflation. The Trust has set aside a sum to reflect any forecast uplifts on non-pay costs. Given the current economic situation, the Trust has opted for an uplift of 2% to be retained in reserve for any unforeseen non-pay pressures as we move into 2009/10. This is currently assessed to be 259k for the Trust. NHS Litigation Authority (NHSLA) costs. The majority of insurance cover within the NHS is provided directly via the NHSLA. There are only a couple of instances whereby NHS bodies need to seek commercial insurance cover, for example for the insurance of any NHS owned vehicles. In all other instances, the NHSLA would cover the Trust for claims, which would largely result from alleged clinical negligence or injuries sustained within NHS premises. Due to a surge in the number and value of claims against the NHS, NHSLA contributions for 2009/10 are expected to increase by a sum in the region of 50%, representing a sum of around 50k for the Trust, which is now included within our schedule of generic cost pressures for 2009/10. The current schedule of generic cost pressures is detailed within Table 1 below. Table 1: Generic cost pressures 2009/10 Cost Issue k Pay Inflation 1,321 Cost k Nature (R/NR) Capital Charges on net additions 183 R Non-pay inflation 259 R Increase in contribution to NHLSA 50 R Sub-Total 1,813 Locally agreed cost pressures. Within this section, any areas considered to be under financial pressure will be considered, and funded or otherwise, each based on their own merits, and prioritised where appropriate. 3

4 To this end, the Trust has currently included provision for increased costs reflected within Table 2 below; Table 2: Local cost pressures 2009/10 Cost Nature Issue k Cost k (R/NR) Licences for encryption software 9 R Incremental drift & Unsocial hours costs for Dudley Locality 18 R Incremental drift & Unsocial hours costs for Walsall Locality 14 R Incremental drift & Unsocial hours costs for Corporate functions * 293 R Walsall Commissioned services - 3 additional challenging behaviour beds 140 R Walsall Commissioned services - Reedswood contract 12 R Catering recharges from Walsall Manor based on M1-6 charges 50 R Lost income from Walsall MBC 87 R Ongoing running costs of IT link between Dudley & Walsall 25 R Cost of delivering CQUIN 100 R Lease of Falcon House 50 R NHS Confederation Networks 17 R MAPA budget 5 R Sub-Total 820 * Includes cost of travel allowance/lease car costs, on-call payments and 152k residual contingency funding Increases to Trust income. The Trust is assuming that all contracts for 2009/10 will be agreed at 2008/09 levels, along with 2.2% inflation. Members should note that this 2.2% comprises the following; 1.7% generic uplift 0.5% relating to CQUIN. At present, increases in income for the Trust have been calculated at 1.339m per the attached papers. Obviously, these increases are reliant upon negotiations for 2009/10 with commissioning colleagues, particularly if activity or care pathway changes are anticipated. Members should note that such discussions are at advanced stages, with sign-off of contracts, in terms of activity and financials, largely concluded. Where changes have been agreed with commissioners, adjustments have been made to the proposed income budgets, with any excess funding transferring to reserves as part of the Trust s contingency funding. These increases amount to 164k in total. 4

5 Taking account of forecast changes in income and expenditure levels, table 3 below, reflects the opening position for the Trust for 2009/10. Table 3: Budget Setting Summary 2009/10 Income increases 1,339 Less Generic cost pressures (1,813) Less Local cost pressures (820) Add 09/10 forecast surplus (100) Add back CIPS found non-recurrently in 2008/09 (606) Budget shortfall and hence savings requirement (2,000) The Trust must, therefore, take urgent action to identify cost savings to this level, and given our aspirations to Foundation Trust status, to potentially go further still, to endeavour to generate an even bigger surplus for the year. Cost improvement plans (CIPs). As previously reported, there are some initial cost savings as a result of the finalisation of the contracting round and a revision to the capital expenditure and hence capital charges requirements for 2009/10. These savings amount to 347k and this funding has been transferred to reserves, in essence adding to the Trust s small contingency fund for 2009/10. The 2m saving alluded to above has been distributed to budgets, pro-rata to budget size, and is reflected within the budget papers. The summary distribution is per Table 4 below. Table 4: Distribution of CIP target for 2009/10 Category Proposed budget 09/10 Distribution of 2m Dudley 22, Walsall 27, Corporate 14, Grand Totals 64,997 2,000 There are a range of budgets that are surplus to requirements, as highlighted during discussions with Budget Holders over their 2009/10 requirements. These will form the initial basis of the CIP programme in 2009/10. In addition to this, there are areas that the finance team are currently investigating with Budget Holders to assess the likelihood for budgetary savings. Members of the finance team are arranging to meet with Budget Holders, both in their Locality meetings and individually to discuss areas that could be targeted to find the savings required. 5

6 This exercise is already well underway, and the key to the success of the exercise is that the identification of savings is corporately owned, and cascaded to Budget Holders accordingly. The intention is to have an identified project plan, with responsible officers and a phased release of savings. Budget Holders are expected to have compiled their schedule of savings, and will be asked to attend the Finance & Performance Committee in April to present the savings identified, along with any residual balances, and a strategy for in-year management where required. Contingency/risk management strategy. In totality, the Trust has set aside a contingency reserve for 2009/10, amounting to 876k, representing just in excess of 1% of gross turnover. This includes the capital charges reduction and the contract income increases mentioned previously, amongst other smaller sums. This reserve is anticipated to be used for delivery of CQUIN, progress towards Foundation Trust status and the requirements of the clinical plan, as well as leaving a realistic contingency for any further unforeseen cost pressures materialising in 2009/10. Capital The Trust is proposing a capital programme amounting to the internally generated depreciation levels for 2009/10 of 1.4m, thus leaving the brokered sum of 1.8m with the Strategic Health Authority for future drawdown by the Trust. As reported previously, the 6-facet survey/estates Strategy, which is currently being compiled, will be the key driver, though planned programmes of upgrade and replacement of clinical equipment must also be considered and prioritised accordingly. Capital funding must also be considered with reference to the emerging clinical plans for the Trust, which will undoubtedly require capital investment to ensure success. Members are asked to recognize, therefore, that the capital programme for the coming year will be a very dynamic one, subject to change upon the receipt and adoption, of the key documents alluded to above. To this end, the schemes included within this year s plan are as follows; Schemes deferred from, or not completed in 2008/09; o Installation of new emergency generator set at Dorothy Pattison Hospital; 120k o Section 136 works at Bushey Fields Hospital; 80k o Guttering replacement programme at Bushey Fields Hospital; 30k o Halesview fire alarm upgrade; 20k o Data warehouse for information systems development; 46k o Bushey Fields car park barriers access control changes; 20k o Walsall locality schemes identified within former Walsall PCT estates strategy; 62k. Schemes proposed for 2009/10. There are a range of schemes which the Trust is keen to progress in 2009/10 as follows; o Lantern House furniture requirements; 15k o PICU relocation at Dorothy Pattison Hospital to ensure the facility is fit-forpurpose for the future; 200k. 6

7 o IT infrastructure costs to enable the Trust to pursue its IM&T Strategy; 350k. o Bloxwich Hospital Water Project Phase 1 as highlighted by Walsall PCT; 30k o Boiler replacement programme; 160k expected to cover costs of full replacement within two Trust properties. This scheme should not only improve the Trust s facilities for patients, staff and visitors, but should also generate efficiency savings of a revenue nature. As an indication, similar installations in PCT owned properties have shown a reduction in gas consumption of up to 60%. Emergency schemes/contingency funding; 394k. The plans should always build in an element of flexibility to enable the funding of unforeseen schemes of an urgent/emergency nature. Given the size of the Trust s capital resource, this has been set at around 25%, and will be subject to regular review at the Capital Planning Group. Regular updates on progress against the capital plan will be brought to, and discussed in detail at, the Trust s Capital Planning Group, and will be brought to the Finance & Performance Committee accordingly. As noted above, this plan clearly leaves the previously returned brokerage of 1.8m with the SHA for future draw down by the Trust. The Trust s Director of Finance will need to discuss and agree such arrangements with the Director of Finance from the SHA, though this is not anticipated to pose any problems at this stage. 3. Recommendation The Trust Board is asked to note and agree the contents of the report and to the adoption of the following : The Trust s revenue budget for 2009/10. The Trust s capital plan for 2009/10. In addition, the Trust Board is asked to note the current size of the Trust s CIP target of 2m and to approve the process for identification of such savings via the Finance & Performance Committee. 7