Agenda item

To provide the Health and Wellbeing Board with an overview of the financial challenges facing Surrey County Council following the final local government finance settlement and those facing Surrey’s six Clinical Commissioning Groups (CCG) in light of the CCG allocations 2016/17 – 2020/21.

Witnesses:

Rob Morgan, Chief Finance Officer, Surrey Heath CCG

Sheila Little, Director of Finance, Surrey County Council

Key points raised during the discussion:

1.    An updated version of the Surrey County Council and Clinical Commissioning Group Financial Challenges Summary report was tabled at the meeting. The updated report has been attached as Annex 1 to these minutes.

2.    The Director of Finance for Surrey County Council (SCC) provided an overview of the Final Local Government Finance Settlement (Final Settlement) and the impact it would have on SCC over the course of the five year settlement period. The Board was informed that the County Council had secured an additional £24.1m in transitional funding from the proposals put forward in the Provisional Local Government Finance Settlement without which it would not have been possible for SCC to put forward a balanced budget. Despite this SCC would still face significant financial challenges which it would seek to mitigate through measures such as a Public Value Transformation review and utilising some of the Council reserves.

3.    The Chief Finance Officer for Surrey Heath CCG provided an outline of the financial challenges facing Surrey’s healthcare commissioners in 2016/17. Members were advised that, across both commissioners and providers, the County’s healthcare economy was in deficit and that CCGs and providers were working together to eliminate this deficit. The Board was informed that, on average, CCGs in Surrey had been allocated an additional 4.6% in funding from the Department of Health (DH). As well as using this growth funding in order to both respond to increased pressure on health services through demographic changes and change the way in which care was delivered throughout the County, it would be necessary for each CCG to use a significant proportion of this extra money to meet the business rules that were attached to the allocation of funding by the DH. The Board was further advised that CCGs which had posted a deficit in 2015/16 would be further required to use some of this additional funding in order to pay back the DH. 

4.    Members asked the Director of Finance to provide further detail on accessing the Council’s reserves in order mitigate some of the financial challenges facing SCC and how much money it would be necessary to use from the reserves in order to deliver a balanced budget. The Board was told that SCC had a reserve pot of £80 million which could be used to support service delivery, budget projections suggested that £20 million from the reserves over the next two years would be required to achieve a balanced budget. It was anticipated that SCC would gain access to some additional funding through budget equalisations and a reduction in the amount of money necessary for the Council to hold in its insurance reserves which could result in the Council being able to use less money from its reserves than had been forecast. The Director of Finance did state, however, that SCC was unable to use funding which has been earmarked for private finance initiatives and that it was expected that the Council should maintain a minimum general reserve balance of £21.3 million. 

5.    A member of the Board asked whether there were opportunities for CCGs to collaborate on back office functions as a means of saving money. The Chief Finance Officer stated that the introduction of Sustainability and Transformation Plans (STPs) by the NHS necessitated reflection on the whole and health and social care system within a specific area which could reveal insights into where CCGs could achieve greater integration of back office functions. Members were informed that CCGs in Surrey had already integrated some of their back office functions in order to reduce expenditure but that 98% of money spent by CCGs in Surrey goes towards service delivery and, as such, the tendency has been to focus on where commissioners can save money in this area. 

6.    The Board stressed the need to engage with patients and residents in order to clearly understand how health and social care services can continue to be delivered effectively in a challenging financial climate. Members asked that the Health and Wellbeing Board Communications Sub-Group should consider how patient insights into service delivery could be collected and fed into the work of health and social care commissioners. Members further highlighted the need to develop a coherent message when it is necessary to decommission specific services. Residents are understandably concerned when CCGs or SCC indicate that they wish to decommission a particular service and it is important to be clear on the reasons why it is necessary to withdraw this service. 

7.    A member of the public asked whether it was necessary to have six CCGs in Surrey and if there was any potential to reduce the costs of sustaining the bureaucracy of commissioning health services in the County. The Board stated that STPs have just been announced by the NHS and that these could impact on back office functions although this would become clear once CCGs have had the opportunity to properly consider the implications of the STPs. Moreover, the Government requires all CCGs to deliver annual reductions within their back office and executive functions. 

RESOLVED:

The Health and Wellbeing Board noted the financial challenges facing both Surrey County Council and the County’s six Clinical Commissioning Groups.

Actions/ further information to be provided:

i.      Agree a date for STP plans to be considered by the Board (Action Ref: A4/16).

Utilise Health and Wellbeing Board Communications Sub-Group to elicit suggestions from the public and patients on service delivery and prioritisation in light of the financial challenges facing SCC and the CCGs (Action Ref: A5/16).