Official Report: Minutes of Evidence

The Chairperson (Ms Maeve McLaughlin): Folks, you are very welcome. We have before us from the Department Julie Thompson, deputy secretary, resources and performance management group; Jackie Johnston, director of secondary care; and Bill Pauley, investment director. Julie, I assume that you are taking the lead. Please make your opening remarks.

Ms Julie Thompson (Department of Health, Social Services and Public Safety): We have provided the Committee with a briefing paper. Thank you for the opportunity to provide evidence to the Committee on our approach to both capital and current expenditure in the January monitoring round.

We have considered a range of factors for current expenditure, the most significant of which continues to be the financial context for 2014-15. Committee members are fully aware that the £80 million received in the June and October monitoring rounds did not fully address the full scale of pressures in 2014-15 and that a range of measures has been implemented right across the Department and its arm's-length bodies to constrain expenditure where it is possible to do so.

However, it is also acknowledged that the availability of funding in this monitoring round is likely to be very limited, in the light of the wider constrained funding environment and the pressures being experienced by all Departments. Given where we are at, the Minister's view is that bids should be submitted in the January monitoring round. They need to reflect areas in which funding can realistically be spent before the end of March 2015, which is a key requirement for the utilisation of in-year monitoring funding. In that context, we are proposing to make two revenue bids. We propose to bid for £10 million to be allocated to trusts to provide further assistance in minimising the impact of their contingency plan proposals and to support the provision of domiciliary care and unscheduled care through the remainder of the winter period. A further £13 million will be used to deliver additional elective care capacity across a range of specialties. It is anticipated that that level of funding will enable 4,000 inpatient and day-case treatments for those patients currently paused in the independent sector and allow a further 7,500 patients to benefit from reduced diagnostic waiting times, while 4,700 new outpatient assessments and 900 inpatient and day-case treatments could also be delivered by the trusts. Members will note that those bids have been prioritised, in line with DFP requirements.

Mr McCarthy: Chair, may I ask whether we have a record of those bids?

Ms Thompson: Yes, it is all in the briefing paper.

I will move on to capital expenditure. We have surrendered some £5 million related to financial transactions capital (FTC) for a scheme for GPs and dentists, as the expenditure will not be incurred in 2014-15 and cannot be reutilised within the Department. We have submitted a bid of £5 million for a range of issues, including the purchase of medical equipment; addressing minor works; improving the clinical environment; improving transport; and addressing ICT needs. We have also submitted a bid to retain additional asset disposal receipts of £1 million, which will provide increased spending power for the Department.

In conclusion, we strongly recommend that the Department's bids are considered favourably by the Committee, and we are, of course, happy to take questions from members.

The Chairperson (Ms Maeve McLaughlin): Thank you, Julie. I want to ask specifically about the financial transactions capital issue. In the paper, you refer to a scheme for GPs. Is that to do with the Health and Social Care campuses?

Ms Thompson: No. It was for something more along the lines of GP minor schemes, if you like, which they would have effectively bid for and which would have provided an element of support to them. It was not for the GP infrastructure of primary care hubs and spokes, which I think you are referring to.

Bill, do you want to add anything further?

Mr Bill Pauley (Department of Health, Social Services and Public Safety): It was for relatively small loans that would be secured on premises that GPs wished to improve. They would pay back the loans. The scheme opened on 1 December, when the board issued all the necessary paperwork to GPs, and we are now awaiting their applications, which will not return in time for the money that we have to spend in this year.

The Chairperson (Ms Maeve McLaughlin): There will be £5 million returned. Is that so?

Mr Pauley: Yes. Some £2·5 million was for a GP scheme and £2·5 million for a scheme for dentists. The hoped-for scheme for dentists was slightly different, in that, instead of for going for premises, it was mainly designed to help them buy equipment, where the equipment was of lesser value than the type of infrastructure that we had hoped GPs would invest in.

It has not been possible to bring forward a scheme for the dentists' equipment, largely because there has been difficulty in meeting the regulations from the Financial Conduct Authority (FCA). The dentists' loans were to be smaller, which meant that they would be unsecured. That created additional risks that would have had to be managed, and the FCA raised a number of questions and issues that precludes us from bringing forward that scheme within the year.

The Chairperson (Ms Maeve McLaughlin): Could there have been more planning or management of the scheme done from the Department's perspective?

Mr Pauley: The complexity of financial transactions capital has surprised us all, including those from other Departments who are developing financial transactions capital schemes. There is the need for Financial Conduct Authority approval. With the GP scheme, we have had to have a new legislative direction. We have also had to have loan agreements put in place, arrangements to receive the repayment of those loans over a period of up to 20 years and arrangements by which we would take security on the assets against which we are making the loans. The complexity of small loan schemes has meant that it has taken us longer than we had initially hoped to put that all in place.

The Chairperson (Ms Maeve McLaughlin): I accept that, and I think that, with FTC processes, there is a pattern across Departments. What more can be done?

Ms Thompson: We have been very much working with DFP and the Strategic Investment Board on that, sharing our experiences and learning about the work involved. How FTC is used in the future can perhaps be better informed through that work.

To be fair, as Bill said, the GP scheme is now up and running, and not being able to get the expenditure through this year was just a question of timing. However, that money will be spent as we move into 2015-16, whereas the dentists' scheme will not proceed. We are working with the central parts of the system to share that learning so that FTC can be used in the future more easily and in a way that suits the projects more appropriately.

The Chairperson (Ms Maeve McLaughlin): Was there some conversation that FTC could be used as a lever for processes around European Investment Bank funding?

Mr Pauley: As part of the draft Budget for next year, the Finance Minister outlined his infrastructure fund. I think that he has some ambitions that FTC will form part of that fund and that the European Investment Bank, along with other private-sector investors, will contribute to that fund. All those quite large investments would create a substantial fund to which people could apply and then finance what would be much larger investments.

Our experience with the complexity of the scheme relates to the quite small loans among and across a large number of GPs. I think that everyone would acknowledge that the larger investment projects of the type that you mentioned might be more appropriate for what is a complex financing mechanism.

Mr McCarthy: Julie, thanks very much for your presentation. You were going so fast that I missed some of it, but I have the stuff that you gave the Committee.

It is almost a case of, "Here we go again", in that we are depending largely on the January monitoring round. I very much hope that something comes around, particularly on the elective stuff. Could the Department have done anything a number of months ago to avoid having pressures at this time?

Ms Thompson: That goes back to the overarching financial position. From several sessions on the Budget for 2014-15, the Committee is well aware that we came out of the October monitoring round some £70 million adrift of where we would have liked to have been. We have been working hard to try to resolve that position as we look ahead.

Equally, it is absolutely a possibility that money could be spent on elective care between the middle of January and the end of March. Therefore, the Minister thought it appropriate to bid to the centre for those funds, which would help people get treatments across a range of procedures.

I do not want to mislead the Committee. To be fair, there are significant pressures across the block in 2014-15, and it will be a challenge to make successful bids in the January monitoring round. Nonetheless, if money became available, we could spend it, and I think that the Committee would view that as good expenditure, as we would be able to put the money to good use. That is the approach that we have taken. Of course, we do not want to be relying on the in-year monitoring round moneys, but that is the scenario that we are in.

Mr McCarthy: Finally, I am looking at the consequences if transactions are not approved and am particularly concerned about domiciliary care expenditure restrictions. The previous time that you were here, I think that you informed us that a proportion of the £31 million out of the £80 million would go to domiciliary care. What is happening there? Has that been blown already?

Ms Thompson: I think that I advised the Committee that £8 million out of the £31 million was set aside for domiciliary care. The simple fact of the matter is that we could spend more on domiciliary care packages between now and the end of the year and help to relieve some of the pressures in the system. The Minister took the view that a bid was therefore appropriate at this stage.

The trusts are under pressure, and part of the concern that you raised the previous time concerned the pressures in the domiciliary care packages and the fact that we might be able to do more. We have absolutely raised that as something that we could put resources into to help alleviate the situation. We will wait to see what happens.

Mr McCarthy: Even having received that £8 million, you are telling us that, unless you get more, domiciliary care will be restricted.

Ms Thompson: I think that the member is well aware that there are a lot of pressures across the system, and domiciliary care is one of the areas that trusts have had to look at to see what can be done to contain expenditure. If that bid were successful, it would allow that money to be replaced within the system.

Mr McCarthy: I must draw it to your attention that — I said this to the Minister in the Chamber yesterday — if domiciliary care is further cut back, we will end up for more people looking to be admitted to hospital, unfortunately. That is exactly what you are saying. It seems to be a contradiction in terms that you will not provide the extra funding for domiciliary care yet are prepared to take the risk of allowing people to enter hospital.

Ms Thompson: We allocated £8 million out of the October monitoring round moneys to domiciliary care and are working as hard as we can to maximise the use of those resources and to ensure that the maximum number of people can get the packages. If more money became available through monitoring, we would be able to put more money into the area between now and the end of the year to help alleviate pressures through the winter period. We have invested what we can, but we have £70 million less than we would otherwise have wanted from October monitoring. The document shows that we could spend £10 million on addressing some of the pressures between now and the end of the year.

Mrs Dobson: I also thank you for your briefing. Like Kieran, I will start with elective care and the bid for £13 million. I note your request for £2·2 million to:

The word "in-house" is underlined. I also see that you have referred to:

Will you explain exactly what those are and how patients who are facing lengthy waiting times will benefit?

Ms Thompson: I will ask Jackie to take that question.

Mr Jackie Johnston (Department of Health, Social Services and Public Safety): As you know, we have an upward trend for waiting times, particularly for first patient appointments and inpatient waiting times. As you said, the proposal for the £2·2 million would help to provide additional in-house activity during February and March, bearing in mind that we will not know the outcome of the monitoring round until January. That would result in 4,700 new assessments, such as diagnostics for people waiting and 900 inpatient and day-case treatments during February and March. We hope that that will have some impact on the upward trend for waiting times.

Mrs Dobson: I note that you said that those have been rising since the end of June 2013. As I said, the word "in-house" is underlined. Why have you specified in-house activity rather than third-party private providers?

Mr Johnston: We have separated it out and are suggesting that there are currently 4,000 patients with the independent sector who have had their treatment paused since October this year. Therefore, the bid has £9 million earmarked for that activity, to try to get those people waiting before April starts. The £1 million is aimed specifically at increasing the in-house capacity to deal with the other people waiting.

Mrs Dobson: Specifically, they would benefit quite early in February or March.

Mr Johnston: February or March is the plan, yes.

Mrs Dobson: Why is your request for the health service to have a Microsoft software contract included in the monitoring round? I know that you touched on that, Julie, one of the previous times that you were up. Why is it included in the monitoring round rather than accounted for in the Budget? The figure of £3·25 million is not an insignificant sum of money. What negotiations with Microsoft have you factored in to ease the pressure of that amount? Surely it is such a significant amount that there are negotiations to be had.

Ms Thompson: I can make a start on that and perhaps ask Bill to comment as well. You are absolutely right that we talked about that before, in the context of October monitoring. At that stage, we made a bid for £12 million for ICT and a range of other pressures. Of that, we got £4 million, so we are coming back now to say that we can still spend that £5 million if it were to become available at the block level.

Our understanding — to be clear about the distinction between the two — is that capital moneys are likely to become available at the centre. As our briefing sets out, we have advised DFP that we could take that £5 million. We will do our utmost to spend that money between now and the end of the financial year. There is a risk that we will not, but that is still viewed as better, if you like, than having the money sitting at the centre and us not trying to get it spent. Therefore, we are warning DFP that we may not be able to get the money fully spent between now and the end of the year, but we will do our utmost to do so. That is the positioning. We bid for £12 million before. We got £4 million and are now going back looking for £5 million. On the actual processes involved, you will be aware of the need to have licences in place for ICT. We looked at how that might happen. Bill, perhaps you can explain a bit about whether that would fall in this year or the next year as part of the debate.

Mr Pauley: I will start with what negotiation has gone on. The actual procurement contract that ICT is bought under is one that was put in place nationally through the Office of Government Commerce.

Mrs Dobson: There was no negotiation.

Mr Pauley: There was national-level negotiation —

Mrs Dobson: But not local.

Mr Pauley: — for a contract across the UK so that we were a bigger customer in the deal that could be had with Microsoft. We would be a larger customer dealing with a very large corporation in the deals that could be bought and the discounts that would apply, compared with being a much smaller business for each individual licence that would apply. Therefore, ICT has been bought under that contract. Our understanding is that the Office of Government Commerce contract expires in early April next year, so, if we can purchase it in-year, we will get discounts that apply under that contract. There is no guarantee that those discounts will be available when the national-level arrangement for purchasing Microsoft products expires.

Mrs Dobson: It could be significantly more than that, then.

Mr Pauley: The expectation is not so much that prices will go up but that the discounts offered will not be as favourable as they are under the existing contract. We have not yet seen the existing contract, however, so I cannot say for certain what those discounts will be. In considering the business case for that expenditure, we took central advice and worked with our colleagues in Enterprise Shared Services in DFP on the approach to buying licences across the public sector in Northern Ireland as well as for our arm's-length bodies.

Mrs Dobson: That ends in April, and you do not know the cost after that.

Mr Pauley: There have been significant discussions with Microsoft about the cost of it and what deal we could get if we procure it now as opposed to waiting until the next term. We have not received, nor will we know for certain, the exact deal that Microsoft would give us next year, but we need licences, and a certain number of them, to start the next financial year.

Ms Thompson: To add to that, DFP has been very supportive of both the approach of the business case and the approach on procurement. As indicated, we understand that there is capital money available at the centre. There is no guarantee that we will definitely get the money, but the indications from DFP on this particular one have been very positive.

The Chairperson (Ms Maeve McLaughlin): To pick up on one of the points that Jo-Anne raised on elective care, we are talking about £13 million, of which £9 million would be to the independent sector. Is elective care more expensive in the independent sector?

Mr Johnston: It comes down to the complexity of the condition of the patients who are paused in the independent sector at the moment. It is difficult to give you a definitive answer. We are not comparing like with like. The cost per patient and per treatment depends on the specialty and the nature of the case.

The Chairperson (Ms Maeve McLaughlin): We can calculate how many procedures could be carried out with the less than £3 million that is left in-house.

Ms Thompson: I think that the issue around the £9 million is to do with patients who are ready. This is about the utilisation of money between now and the end of the financial year. Those patients have been assessed and are ready to have their inpatient and day-case procedures. The capacity exists in the independent sector, so it is about utilising that sector and the people who are there, determining how they have been assessed and then processing them in February and March. That means that the money could be spent. Therefore, it is a combination of the conditions that people have and being able to spend the money between February and March. Those patients have already been assessed and are effectively ready to be treated as inpatient and day cases in the independent sector.

The Chairperson (Ms Maeve McLaughlin): If we can calculate that the £3 million in-house will result in x number of procedures, we can do the same calculation for the £9 million in the independent sector, I assume. Therefore, there is your calculation.

Ms Thompson: It will get down to the different types of procedures and what is being treated in which sector. However, we will know the costs in both the independent sector and in-house, although you will not be comparing like with like because the same procedures will not necessarily be done on both sides.

The Chairperson (Ms Maeve McLaughlin): Can we have that information shared with the Committee?

Mr Johnston: Yes. We can ask for it.

Mr McGimpsey: I am trying to get my head around the sums. You are surrendering £5 million and asking for £23 million. Is that right?

Ms Thompson: What we are surrendering —

Mr McGimpsey: Not capital.

Ms Thompson: — is capital. On the capital side, we are surrendering £5 million in FTC, and we are asking to get back £5 million of capital and £1 million of assets receipts that we anticipate that we can get. On the revenue side, there are no surrenders, and we are requesting £23 million.

Mr McGimpsey: How does that affect the £70 million-odd pressure that we have been hearing about in the past few weeks? Will that come off that?

Ms Thompson: The £70 million would mean that elective care would now be able to be done that was previously not able to be done. As Jackie has already pointed out, we paused the independent sector, and that money would allow those people to be treated again, so that would help. Secondly, the £10 million would help the general trust pressures that are out there. It would minimise the impacts of the proposals that are in play and be invested in domiciliary care, so that would all help in that context.

Mr McGimpsey: Thanks. Therefore, in September 2014, you are saying, 73,000-plus people were waiting nine weeks for outpatient appointments. How will that money affect that, or will it? There are around 20,000 inpatients who were waiting for 13 weeks. I am thinking of the targets: there are 73,000 over the target of the notional nine weeks.

Ms Thompson: The bid would allow us to treat 4,700 new outpatients, who would come off that 73,000, and it would mean that 4,900 would come off inpatient and day cases, as well as another 7,500 off diagnostics.

Mr McGimpsey: The magic question is this: to get the figure of 73,000 down to where it should be — at nine weeks, notionally — what sort of money are you talking about? While you are thinking about that, what about your inpatients?

Ms Thompson: We would need to work out what funding would be required for the 73,000. We had to bear in mind what we can spend between January and the end of March. Hence we have the £13 million bid.

Mr McGimpsey: I am thinking of next year, when you will be carrying all this.

Ms Thompson: There are pressures in elective care next year. We will come back to that in the context of the 2015-16 Budget. Blatantly, a considerable number of people will still not be able to be treated, even if we did get the funding. That is simply a reflection of what is able to be spent in February and March.

Mr McGimpsey: It is not a very pretty picture.

The Chairperson (Ms Maeve McLaughlin): I have a comment on the bid for £10 million for front-line pressures. One of the issues coming out of our work on scrutinising the Budget is that there is a lack of a definition for what front-line services are. The definition is quite vague. How will that money be allocated and spent?

Ms Thompson: When we had a discussion about this before, it was in the context of the draft Budget 2015-16, in which the Executive said that there would be moneys available for front-line health and social care services. If I recall, the discussion was also about asking about other front-line services, such as the Fire and Rescue Service. The discussion at that point was about this being the way in which the Executive draft Budget had been agreed, which meant that only the health and social care elements of front-line services had been effectively viewed as being funded. For this one, we are talking about trusts' front-line pressures. Therefore, we are talking about moneys going in to assist in patient and client care through the trust system. This money, if we get it, will go into trusts only, not any other body. It will be allocated to services affecting patients and clients. That is why the things are listed in the actual bid.

The Chairperson (Ms Maeve McLaughlin): I take issue with that. When the direct question was asked in an evidence session, the permanent secretary told us that the Department did not have a definition of "front-line services". In fact, it is an issue that we have highlighted in our response to the draft Budget. He was very clear that he did not have a definition.

Ms Thompson: There is no definition of what the Executive meant by "front-line health and social care pressures", which is the wording in the draft paper. We are saying that front-line pressures are within the trusts. They are absolutely viewed as being within the trusts and for the treatment of patients and clients.

The Chairperson (Ms Maeve McLaughlin): I can accept that this part is within the trust, but I maintain that it was very, very clear that the question was about a definition of "front-line services". The direct question was asked. Indeed, we have taken a recommendation forward in our response.

Julie, the other issue raised for us concerned the over-reliance on monitoring rounds. I take it from today's evidence that it has been accepted that there has been that over-reliance and that, in 2015-16, there will be a commitment that the Department will live within its budget.

Ms Thompson: Without getting into the substantive debate on 2015-16 , I know that you will be aware that we are proposing that we could achieve a break-even position in 2015-16 based on the draft Budget allocations. However, that comes with two very strong caveats: we still need to achieve significant savings to do that, and there would be no moneys available for service developments as we look ahead, which would be a significant concern.

As we discussed before on 2015-16, we then need to understand what happens then. We will have further conversations with DFP on the final Budget and working through that. However, as the permanent secretary advised, the aim is to identify a balanced plan going into 2015-16. We need to identify a source of money for service developments, and that source does not exist at this stage. We need to look at identifying that balanced plan, and we are committed to trying to do so. However, looking forward to 2015-16, I know that it will be significantly challenging. I suspect that you do not want to reopen that debate.

The Chairperson (Ms Maeve McLaughlin): In conclusion, we want more detail on the calculation of the breakdown of the cost of the independent sector versus in-house. More detail on the breakdown of the £10 million allocated to front-line pressures would be useful as well. Thank you all for your time today.