1. cipfa.org.ukwww.cipfa.org Accounting for the Integration of Health & Social Care Gareth Davies Policy & Technical Manager CIPFA © CIPFA Networks

2. cipfa.org.uk 2 Opening Quote “Cooperation… begins where competition leaves off” Franklin D Roosevelt 4 terms as president

3. cipfa.org.ukwww.cipfa.org Programme Challenges Financial Reporting Financial Frameworks Resources Integration Scheme Background

4. cipfa.org.uk Audit Scotland Review of Models Data source: Exhibit 4, Changing Models of Health and Social Care, Audit Scotland, March 2016

5. cipfa.org.uk Reform Challenges “any perceived failure to integrate is not as a result of a failure of legislation” CIPFA Submission to SG Consultation on Integration ““Most of the barriers that are.. presented as blockages.. …could be overcome by a can-do approach and a change in behaviours and attitudes.” Scottish Parliament Local Government and Regeneration Committee Public Service Reform Strand 3 (9 th report Session 3)

6. cipfa.org.uk Legislative Policy Objective Improve quality & consistency of services Seamless joined-up health & social care Care in home or homely setting where safe Use resources effectively and efficiently Meet the needs of increasing numbers with longer term & complex needs

7. cipfa.org.uk Public Bodies (Joint Working) Act 2014 Integration Scheme Delegation to Integration Joint Board (IJB – s106 body) Delegation between partners - Integration Joint Monitoring Committee (IJMC) Integration Model Minimum specified but local choices can be made Functions Delegated Service user focus; local engagement; prevention; best use of resources Integration Principles SSI 343/2014 National Health & Wellbeing Outcomes

8. cipfa.org.ukwww.cipfa.org IRAG - IJB Resources [4.1] Adult Social Care [LA] Managed Primary & Community Health Care [HB] Managed Hospital Services [HB] Large Hospital Services [HB] Integrated Budget [Payments ] Notional Budget [Set Aside] IJB can plan & agree transfers between the NB and the IB

9. cipfa.org.uk IJB Financial Model Local AuthorityNHS Health Board IJB Funding contribution £m Commissioning spend by IJB / Income to partner £m Report on IJB discharge of proximate responsibility for SC (eg via APR) Information on the cost of services commissioned Report on IJB discharge of proximate responsibility for Health (eg via APR) Public & Other Stakeholders Cost information for public consultation & engagement, strategic planning group, locality plans, Annual Financial Statement (bdt), Annual Accounts, Annual Performance Report etc Public consultation & engagement feedback, locality feedback, client feedback etc will inform future service and financial plans Information on the cost of services commissioned

10. cipfa.org.ukwww.cipfa.org IRAG - Financial Planning/ Management [4.1] Strategic Plan HB co- ordination cross system NB IB Transfers / virements Shadow Period – Shared Monitoring 3 Year Planning Totals IJB Business Case Negotiations

11. cipfa.org.ukwww.cipfa.org IRAG – VAT Arrangements IJB no VAT registration required – no ability to recover VAT Supply of services (eg administration) to the IJB by a partner Will incur costs if partner obtains compensation Compensation = charge made OR contribution reduced Staff – ‘special legal regime’ for the Chief Officer? VAT regime applicable to services delivered relates to the ultimate statutory responsibility for the service provided: eg ‘health services’ subject to health VAT regime even if delivered by the local authority Apparent LA tax efficiency but this should probably not be the key determinant of Strategic Plan Use of assets Charges for use = VAT burden for IJB Licence to operate not a VATable supply Possible treatment as Managed Healthcare Facility (VAT Notice 701/31 ?)VAT Notice 701/31

12. cipfa.org.uk 12 Financial Frameworks ITEMLOCAL GOVTCENTRAL GOVT ProvisionsNo mitigation – charge to budget (limited exception re voluntary severance & equal pay) AME item when created – only charge to RDEL budget when liability crystalises DepreciationMitigation – replace with statutory debt repayment Ring-fenced (non-cash) RDEL – exceeding ring-fence may have RDEL cash implication ImpairmentMitigation – replace with statutory debt repayment If foreseeable (default assumption)– charge to non- cash RDEL; in some cases charge to AME allowed (may require HMT agreement) PensionsMitigation – only charge payment due in year AME – only charge payment due in year to RDEL Annual Leave AccrualMitigation – do not charge accrual to GF / budget Charge to RDEL (budget cover initially allowed by HMT) OverspendUnplanned use of reservesAdditional Budget Cover / Brokerage

13. cipfa.org.ukwww.cipfa.org LASAAC-TAG Guidance IRAG/LASAAC/ TAG True & Fair View / Materiality IJB 15/16 Accounts IJB – Support Service Costs Agreeing Balances & Transactions IFRS 11 Joint Arrangements – Presumption IFRS 11 Joint Venture treatment – presumption LA & HB 15/16 [IJB acting as principal]

14. cipfa.org.ukwww.cipfa.org Additional LASAAC Guidance Refer to IRAG Guidance etc IJB OnlyTrue and fair viewIrrecoverable VATIJB Running Costs Remuneration Report Voting Board Members / CO Pension Liability Service Expenditure Analysis Authority CIES Presentation Related Party Disclosures Statutory Mitigation Cash / Cash Equivalents

15. cipfa.org.uk Challenges: Audit Scotland Review of Models Level of investment required Focus funds on community based care Identify longer term funding Public engagement / need for change Performance and costs: evidence & evaluation Front line changes not just structures Difficulties agreeing budgets Acute sector targets counter productive Acute / hospital savings Selected items from: Changing Models of Health and Social Care, Audit Scotland, March 2016

16. cipfa.org.uk 16 Closing Quote “Coming together is a beginning. Keeping together is progress. Working together is success” Henry Ford

17. Any Questions? gareth.davies@cipfa.org © CIPFA Networks 0131 221 8644