Northern Ireland Assembly Flax Flower Logo

Iris Robinson MP MLA
Chairperson, Committee for Health, Social Services and Public Safety

14 December 2007

Mitchell McLaughlin, MLA
Chairperson
Committee for Finance and Personnel

DRAFT BUDGET 2008 - 2011

  1. Thank you for your letter of 24 October 2007 inviting each Statutory Committee to put forward its views on the Draft Budget 2007. I am sorry that the Committee has not been able to meet your deadline. However, the Committee is fully conscious that health and social services account for by far the largest portion of public spending in Northern Ireland and it wished to undertake as thorough a scrutiny as possible in the time available.

Introduction

  1. The Committee for Health, Social Services and Public Safety commenced its scrutiny of the CSR 07 and the Draft Budget 2007 implications for health, social services and public safety with a briefing from Departmental officials at its meeting on 15 November 2007. This was followed by formal evidence from Professor Roy McClelland, Chairman of the Mental Health and Learning Disability Board, and from representatives of the four Health and Social Services Boards on 22 November 2007. The Committee concluded its formal evidence with a presentation from and discussion with the Minister for Health, Social Services and Public Safety on 6 December 2007. A transcript of these evidence sessions will be published on the Committee website.
  2. In addition the Committee considered the draft Budget at closed meetings on 15 November, 22 November, 29 November, 6 December and 13 December 2007. The Committee is grateful to all who gave evidence and would like to thank Professor Ciaran O’Neill, Health Economist, Queens University Belfast, for his advice and assistance to the Committee during its deliberations.

Background

  1. The draft Programme for Government recognises that “the overall health status of our population needs urgent attention” and highlights the higher than UK average mortality from heart disease, cancer and stroke, as well as the over-reliance on long-stay hospitals and limited services available in primary and community care for people with mental health and learning disabilities. The relatively poor state of health of the population in Northern Ireland was clearly identified in ‘A Healthier Future: A Twenty Year Vision for Health and Wellbeing in Northern Ireland 2005-2025’. The strategy also highlighted the higher rates of people with disabilities and mental health problems compared to GB.
  2. The Committee believes that health and social care in Northern Ireland has been under funded for many years, particularly throughout the years of the troubles, despite an increased priority given to spending in DHSSPS in recent years by Direct Rule Ministers reflecting general UK trends. The Committee concurs with the view in the draft Budget that “one of the most significant issues facing this and future Executives will be the priority that should be given to health and social services compared to other public services”.
  3. The Committee, however, has some concern with the draft Budget conclusion that “ Northern Ireland compares relatively well on several … health … indicators” and refers only to overall mortality rates. This is at variance with the entry under ‘Key Issues/Challenges over period to 2010-11’ in the DHSSPS section of the draft budget document which states that “ Northern Ireland has a lower life expectancy and higher incidence of some serious diseases, such as coronary heart disease, respiratory disease, than the UK average. …… Northern Ireland also has the highest prevalence in the UK of mental illness.” The proposal to make growing the economy the top priority, while fully recognised, will inevitably have significant implications for tackling health and social care issues over the next three years.

Departmental Bids

  1. Officials briefed the Committee on 21 June 2007 on the Department’s spending priorities under the Comprehensive Spending Review - a transcript is available on the Committee website. The Department recognised that while the health and social care needs of the population will always outstrip the resources available it had to be “prudent about prioritisation and about coping with a much tighter financial environment”. It was fully conscious of the likelihood of a much lower rate of growth than in previous years and emphasised that it was placing a greater emphasis on improving health and wellbeing than in the past.
  2. The Committee fully supported the overall proposals put forward by the Department and particularly highlighted the need to secure funding to implement the Bamford recommendations and deliver improvements in services for people with mental health and learning disabilities. In evidence to the Committee on 22 November officials reiterated that the bids were “deliberately modest” and “highly prioritised”.

Inescapables

  1. The first priority for any additional resources obtained by the Department will go to meet inescapable or unavoidable commitments. Inescapable costs are costs relating to, for example, meeting national pay awards, meeting an increased demand for drug treatments, or providing existing community care services to an increasing number of older people. In written evidence to the Committee the Department set out the five main elements of inescapable costs as, costs relating to pay and superannuation for the 68,000 health and social care workforce (£339m); growth in the pharmaceutical budget for new drug treatments in both the hospital and primary sectors (£150m); 500 additional community care packages a year (£25m); preparations for a pandemic flu (£20m); and the revenue costs of capital schemes (£70).
  2. The Committee asked for and received additional information and a further breakdown of the inescapable budget requirements. Members questioned the Minister and officials on some of these areas. However, without a very detailed audit of each of the elements of these costs it is not possible for the Committee to identify areas where spending could be scaled back. Health and Social Services Boards told the Committee that, in their view, there is limited flexibility within the inescapables elements. They also cautioned that there are additional risks of an unprecedented health crisis arising during the period, for example, preparation for a pandemic flu has been included in the costs but not dealing with the pandemic itself. The Committee calls on the Minister to ensure that there is rigorous monitoring of all inescapable costs over the course of the CSR period.

Efficiency Gains

  1. The draft Budget sets out the Executive agreement that all Departments should work to deliver cumulative efficiency gains of 3% a year for the next three years and all these efficiency savings must be resource releasing. The Committee notes that in the previous three year period a 2.5% efficiency target was in place but only around half of this needed to be resource releasing with the rest being realised, for example, through increased productivity for the same outlay.
  2. The Committee notes that for DHSSPS the 3% target amounts to £343m over the three year period and is a very significant sum. The Boards warned that this will be a “very painful process” and cannot be achieved through cuts in administrative costs alone. The Committee recognises that if DHSSPS is to continue to deliver vital services it is essential that the efficiency savings are achieved in full. The Committee welcomes the unequivocal commitment by the Minister that he will deliver those efficiencies and meet the target of £343m.
  3. The Department stated that “these efficiencies will be attained through a range of measures such as improved procurement; more efficient prescribing and dispensing of medicines; improved productivity; and reduced administration”. The Committee in its scrutiny of the planned efficiency measures has concentrated largely on the last of these, namely, reduced administration. Members questioned the Minister and officials on this in some detail and received a further breakdown relating to the expected savings under RPA.
  4. As part of the RPA the Department plans to reduce staffing levels by 1,700 and save £53m. This was said to represent a 15% reduction in administration and managerial staff costs in HSC Trusts and 24% reduction in other HSC organisations such as Boards, Agencies and NDPBs. However, the Department indicated that the split of savings between bodies “will not be finalised until HSC bodies submit their RPA savings proposals for Ministerial approval (January 2008)”. The Committee raised questions with the Department about management structures in the new Trusts and the re-employment of redundant senior administrative staff. The Committee is concerned that the full potential level of savings resulting from the RPA changes may not be achieved.
  5. The Boards provided a breakdown of how the 3% efficiency target will impact on services. RPA changes resulting in a reduction in staff of 1,700 and releasing £53m amounts to 15% of the total. Within that the reorganisation of Boards will account for about £13m or between 3% and 4% of the total. Procurement efficiencies will provide around 10%; pharmaceutical services programmes will account for a further 12%. This leaves 63% or around £215m to be delivered from direct service provision. The Boards warned that “cash cannot be extracted unless the size of the workforce is reduced” and they said that political support will be needed for unpalatable decisions to implement these efficiencies.
  6. The Department also stated that “the exact savings to be achieved from Boards are dependent on the ongoing decisions on organisational restructuring”. The Committee has serious concerns that the ongoing delay in reaching a decision on structures to replace Boards is causing uncertainty, frustration and loss of morale among existing staff. It is also absorbing resources that could be directed to other key service developments. The Committee will continue to press the Minister to make an early decision and implement it without further delay. The Committee believes that further delay will put at risk the likelihood of the Department achieving the planned £53m savings from RPA.
  7. The Committee is convinced there may still be scope for further efficiency savings above the required 3% and welcomes the plans by the Department for Finance and Personnel to establish a Performance and Efficiency Delivery Unit (PEDU) to examine the scope for higher levels of efficiency. The Committee would ask for an assurance that, rather than impose efficiencies, this Unit will work closely with each Department to reach consensus on how best to achieve such efficiencies. The Committee would seek an assurance that the Department would be able to retain any additional savings achieved in this way for service development needs. This, the Committee believes, would provide an additional incentive.
  8. The Boards in evidence to the Committee pointed out that “it may be much more efficient to treat people at home and admit them to hospital only if it is absolutely essential”. They argued that providing effective care in the community could reduce the number of people going into hospital. The Boards identified integration and collocation of out-of-hours services as an area where there is scope for improvement. The Boards also suggested that the large number of A&E departments in and around the Greater Belfast area needed to be examined. The Committee recommends that the Department examine each of the following areas to determine whether there is potential for further efficiencies, namely, the funding set aside each year to cover medical negligence or litigation; wastage in the prescription system, such as, the number of drugs prescribed and not used; the number of missed appointments and cancelled clinics; and the amount of private work undertaken by doctors in health service time.
  9. The Committee noted the review of health and social care services in Northern Ireland carried out by Professor John Appleby in 2005. At that time Professor Appleby concluded that there was considerable scope for improvement in the provision of services and highlighted problems relating to the use of resources. He referred to the numbers on waiting lists and waiting times for treatment as “the most obvious indication of poor performance”. The Committee recognises the significant achievements in relation to waiting lists recently, although realised at considerable cost, and will continue to take a close interest in how the Department uses its resources and tackles inefficiencies.
  10. Professor Appleby also concluded that even when services are more efficient more funding will be required to cope with changing demographics. The Committee notes that Professor Appleby has continued to offer comment and advice to the Department particularly in relation to the implementation of his recommendations. The Committee has therefore invited Professor Appleby to brief the members in the near future on the findings in his review and their subsequent implementation.

Infrastructure

  1. The Committee notes that the Department bid for £1.1bn for infrastructure requirements over the CSR period made up of Primary and Community Care (£262m), Hospital Modernisation (£616m), and Public Safety and Technology (£232m). The draft Investment Strategy would provide the Department with £714.5m.
  2. The Committee notes the establishment of a Capital Realisation Taskforce set up by the Executive to report before the draft budget and draft Investment Strategy are finalised. The Committee believes that the disposal of any surplus assets identified by the Taskforce could provide welcome additional capital funds for investment. However, the Committee is concerned that only social housing and schools have been identified in the draft Investment Strategy as priority areas for any additional funds. The Committee believes that health should be added to those priorities and would urge that the Department be permitted to retain at least part of any additional capital funds realised from the sale of surplus assets as an added incentive.
  3. The Committee notes the warning from the Health and Social Services Boards that if a capital project is postponed additional “investments to shore up a vulnerable service may be needed”. The Committee also recognises that a reduction in capital assets will result in reduced capital costs outlay from the revenue budget.

New Service Developments

  1. After meeting its inescapable costs the Department indicated that its top priority is implementation of the Bamford recommendations on mental health and learning disability. The Department bid for £17m, £29m and £48m across the three years. Professor Roy McClelland, who had chaired the Bamford Review and now Chairs the independent Board for Mental Health and Learning Disability, gave evidence to the Committee on his analysis of the implications of the draft budget. Professor McClelland stated that “in the long term, if an evidence based approach to mental health and learning disability is to be adopted, a doubling of investment will be required”. Professor McClelland estimated that the service needed £311 million and he argued for an additional investment of around 4% or £20m each year for the next 15 years. This is more than the Department had bid for but he said that he fully supported the bid by the Department.
  2. Professor McClelland expressed serious concerns about the implications for people with mental health and learning disability based on the draft budget proposals which, under the Department’s indicative allocations, would mean an addition of £4m, £7m, and £18m for both mental health and learning disability over the next three years. He argued that there was “a coalescence of attitudes and minds among the professionals, the users and the carers” in support of the Bamford recommendations but that there was now a real risk that implementation could be stalled. He expressed particular concerns about the consequences in years 1 and 2. He argued that for mental health it would mean that resources would either be spread too thin to have any impact or concentred on one aspect to the detriment of other areas. He argued that the implication for learning disability was that “far fewer people will move into decent living conditions ….. They will either be in hospital or in oversubscribed long-stay institutions”.
  3. Professor McClelland referred to the position in England where the Government has “committed to the provision of 10,000 therapists in primary care over the next year. We need a similar model in Northern Ireland.” He proposed that if an additional £4m could be provided each year, that is, £4m, £8m, and £12m, over and above the indicative outcome of the draft budget “we could transform primary care and lower the level of secondary care”. He argued that this was based on “a crucial and hard-nosed economic argument and we have an evidence base with which to demonstrate it”.
  4. Professor McClelland also referred to his understanding of an additional £1m, £2m, and £4m, proposed in the budget for mental health promotion and suicide prevention but he believed this could be completely used up through extending the current pilot helpline throughout Northern Ireland. He said “a proper crisis service and adolescence service will be needed to back up the helpline, and there is no money in the budget for that”.
  5. The representatives of Boards expressed a ‘sense of disappointment’ with the draft budget outcome and argued that more needs to be done. They stated “we must invest more in mental health services, further develop childcare services and procedures, continue to provide services for the sick and most vulnerable, ensure that services keep pace with advances in medical technology, and ensure that high quality services are supported by modern infrastructures”. They pointed out that, for example, the older population will increase by 30,000 over the next three year period and this will increase pressure on health and social care services. The Boards said that reforming and modernising will improve efficiency but it has to be accepted that “not all demands or needs can be met”.
  6. The Chief Medical Officer in evidence to the Committee highlighted his concerns about the impact on patients if the draft budget remains at the same level. He pointed to significant health inequalities between those living in the most deprived areas compared to the Northern Ireland average and identified health problems prevalent in those areas including childhood obesity; high numbers of smokers; alcohol and drug use, including binge drinking and underage drinking; and sexual health and teenage pregnancy. He said “The stark reality is that people who live in the most deprived areas are three times more likely to die before the age of 75. The draft Budget, if accepted, will present us with significant problems, particularly in those communities that are hard to reach. Years 1 and 2 will be particularly challenging.”
  7. The Chief Medical Officer also highlighted the impact of three other programmes which he said would not be able to be taken forward. He said that 40,000 to 45,000 women over 64 years would not benefit from the breast screening programme until 2010; 13-17 year old girls will not benefit from the catch-up programme for HPV vaccine to prevent cervical cancer; and there will be a delay in offering a bowel cancer screening programme for people aged 60 to 69 years whereas Scotland already offers bowel cancer screening between 50 and 74 years.
  8. The Committee remains strongly supportive of the need to address the issues identified in the Bamford recommendations. However, it recognises the potential difficulty in providing adequate services particularly in years 1 and 2 and welcomes the compromise proposal by Professor McClelland that, given some additional resources, would provide additional therapists in primary care. The Committee believes it would be helpful if this money allocated for mental health could be ring fenced. The Committee would also wish to explore ways of ensuring that other important service developments identified in the Department’s bids, such as breast and bowel screening, can be taken forward.

Draft Budget Allocation

  1. The Committee notes that the outcome of the Comprehensive Spending Review for Northern Ireland represents an average annual growth of 1.2% in real terms and that this will mean a much reduced level of spending compared to recent years. The Committee accepts the view of the Executive that growing the economy will be the top priority over the lifetime of the Programme for Government but is also conscious that building a strong economy will require a healthy workforce.
  2. The Committee noted the argument by the Department that “Expenditure in Northern Ireland today is over £300m less than it should be if allocated on the basis of need indices fully agreed with DFP”. The Boards supported this assessment and stated “all commentators agree that the budgetary provision over the next three years, compared with that for England, will increase the funding gap by a further £300 million, simply based on applying the difference between real term funding increases of 1.1% in Northern Ireland and 3.7% in England”. The Department also argued that expenditure in England is 35% higher on children’s social needs despite the higher needs in Northern Ireland. It also argued that expenditure on mental health and learning disability per head is 34% lower than in England when adjusted to reflect need.
  3. The Committee accepts that the outcome for DHSSPS in the draft Budget, even allowing for any increased efficiencies above the required 3%, will not enable the Department to implement the much needed new service developments in the Department’s bids and recognises the particular pressures that the Department will face in years 1 and 2. The Committee fully recognises the need for additional funding on health and social care. However, it also recognises that all departments are facing significant economic pressures and would not wish to impact on the indicative budgets of other departments set out in the draft budget.
  4. The Committee puts forward the following proposal for consideration as a way of providing some additional resources to tackle very real and pressing needs in health and social care. With the rapid growth in public expenditure in recent years there has been a growing problem of year-end underspend. The amount underspent across all departments in 2005-06 was £138.7m and in 2006-07 £155m. The Committee notes that successive administrations have used the mechanism of planned over-commitment to reduce levels of year-end underspend. This enables some additional allocations to be made in anticipation of in-year reduced spending. The Committee understands that the level of planned over-commitment is about £153m in the current year and notes the proposal in the budget to reduce this level to £100m, £80m, and £60m respectively over the period. One suggestion which emerged from the Committee is that the rate of reduction in over-commitment be slowed down in years 1 and 2 to perhaps £125m and £100m respectively and believes that this potential additional allocation would make a very significant impact on health and social care provision, particularly in relation to mental health and learning disability services.
  5. The Committee appreciates the argument in the draft budget that a high level of over-commitment will reduce the Executive’s flexibility to provide for contingencies and respond to emergencies during the year. However, if in the event the funding is not required it would be allocated to Departments during in-year monitoring rounds. The Committee suggests that the proposed level of over-commitment would still allow an element for contingencies and strongly believes that it is much more efficient if resources for service developments can be identified before the start of the financial year to allow time to prepare and develop new services.
  6. The Committee would put forward the view that the Barnett consequentials of any in-year additional allocations by the Treasury for health or social care should go directly to these services in Northern Ireland.

Equality

  1. The Committee believes that the impact of the draft Budget, including the impact of any efficiency measures, and the draft Investment Strategy should be subject to a rigorous equality impact assessment.

Conclusions

  1. The Committee concurs with the view in the draft Budget that “one of the most significant issues facing this and future Executives will be the priority that should be given to health and social services compared to other public services”. The proposal to make growing the economy the top priority, while fully recognised, will inevitably have significant implications for tackling health and social care issues over the next three years.
  2. The Committee fully supported the overall proposals put forward by the Department and particularly highlighted the need to secure funding to implement the Bamford recommendations and deliver improvements in services for people with mental health and learning disabilities.
  3. The Committee calls on the Minister to ensure that there is rigorous monitoring of all inescapable costs over the course of the CSR period.
  4. The Committee recognises that if DHSSPS is to continue to deliver vital services it is essential that the efficiency savings are achieved in full. The Committee welcomes the unequivocal commitment by the Minister that he will deliver those efficiencies and meet the target of £343m.
  5. The Committee is concerned that the full potential level of savings resulting from the RPA changes may not be achieved. The Committee has serious concerns that the ongoing delay in reaching a decision on structures to replace Boards is causing uncertainty, frustration and loss of morale among existing staff. It is also absorbing resources that could be directed to other key service developments. The Committee will continue to press the Minister to make an early decision and implement it without further delay.
  6. The Committee is convinced there may still be scope for further efficiency savings above the required 3% and welcomes the plans by the Department for Finance and Personnel to establish a Performance and Efficiency Delivery Unit (PEDU) to examine the scope for higher levels of efficiency. The Committee would seek an assurance that the Department would be able to retain any additional savings achieved in this way for service development needs.
  7. The Committee remains strongly supportive of the need to address the issues identified in the Bamford recommendations. However, it recognises the potential difficulty in providing adequate services particularly in years 1 and 2 and welcomes the compromise proposal by Professor McClelland that, given some additional resources, would provide additional therapists in primary care.
  8. The Committee accepts that the outcome for DHSSPS in the draft Budget, even allowing for any increased efficiencies above the required 3%, will not enable the Department to implement the much needed new service developments in the Department’s bids and recognises the particular pressures that the Department will face in years 1 and 2. The Committee fully recognises the need for additional funding on health and social care.
  9. One suggestion which emerged from the Committee is that the rate of reduction in over-commitment be slowed down in years 1 and 2 to perhaps £125m and £100m respectively and believes that this potential additional allocation would make a very significant impact on health provision, particularly in relation to mental health and learning disability services.
Iris Robinson, MP MLA
Chairperson
Committee for Health, Social Services and Public Safety