KEY SKILLS FOR BUDGET MANAGERS MODULE 1: Background

Finance Training 1: Background 2: Buying goods and services (NWSSP) 3: Employing and paying staff (NWSSP) 4: Setting and Managing Budgets 5: Savings 6: Countering Fraud

MODULE 1: BACKGROUND

You will learn The financial context and structure of the NHS; Allocation of funding to the NHS and to LHBs; Service demands; The funding streams; The requirement to break-even; The key role of Standing Orders and Standing Financial Instructions; Role of internal and external audit; The role of the Board, Chief Executive and accountable budget managers.

Who said this? “We shall never have all we need.... expectations will always exceed reality” Aneurin Bevan, Minister of Health, 1948 As true today as ever?

Financial context: tax Taxes collected from Home Nations and paid into HM Treasury

Financial context: tax and spend

Financial context: Barnett Funding allocated out to Devolved Nations based on the Barnett Formula

Financial context: Barnett A “temporary measure” ….from the 70’s. Based on population shares Not based on health or social need, or on measures of deprivation Devolved Nations then decide on local application of resources Effectively a Devolved Nations flavour within a National Health Service This is not how the English Regions are funded – their funding takes into account measures of need The case for changing the formula and potential reasons why this has not happened

Financial context: Barnett Lets say that a function which is devolved (ie Health, Education, etc) nationally gets £100 million extra funding

Allocation of funding: WG budget

Allocation of funding: WG decisions Ring-fenced Allocations Funding for Health Boards Resident population Population health needs Historic health costs BCU Allocation in 14/15 is £1.2 billion (£1,200 million) Protect services / elements of the budget Annual service targets incrementally change the emphasis of spend The bulk of spending remains relatively constant – public and political pressures resist change Periodic discussions on amending/influencing the Wales allocation formula – fraught with difficulties

Allocation of funding: LHBs

Service demands, an example Average annual cost per person Expected growth in >65’s by 2025

Funding streams Revenue Resources WG allocation Private Patient income Overseas Visitor income Out of area income External contracts Grant funding R&D funding

Funding streams Capital Resources Awyr Las (Charitable Funds) Separate WG allocation Major Capital – WG managed Discretionary Capital – LHB control The role of Business Cases Awyr Las (Charitable Funds) Held for the purpose donated Charity Commission Regulations

Govenance Breakeven Standing Orders Standing Financial Instructions 3 year planning cycle Duty to breakeven over the planning period Health Board one-year operational plan Standing Orders Governs Board, and delegates authority Standing Financial Instructions Main financial policy

Governance Internal Audit External Audit Support management Reports to the Audit Committee External Audit Wales Audit Office Reports to the Audit Committee, Board and Welsh Government Reports to the Public Accounts Committee Duty to the public

Governance Chief Executive Delegation Accountable Officer Executive Directors Chiefs of Staff Budget Managers

Further information Further information from: Key skills for budget managers document Budget Manager handbook Standing Financial Instructions Finance intranet pages: http://howis.wales.nhs.uk/sitesplus/861/page/41995