1. KEY SKILLS FOR BUDGET MANAGERS MODULE 1: Background

2. 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

3. MODULE 1: BACKGROUND

4. 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.

5. 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?

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

7. Financial context: tax and spend

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

9. 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

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

11. Allocation of funding: WG budget

12. 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

13. Allocation of funding: LHBs

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

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

16. 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

17. 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

18. 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

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

20. Further information Further information from:
Key skills for budget managers document
Budget Manager handbook
Standing Financial Instructions
Finance intranet pages: