Official Report: Minutes of Evidence

The Chairperson (Ms Kimmins): I welcome Brigitte Worth, director of finance; David Keenan, head of financial planning; Danielle Mallen, head of financial management; Linda Carter, head of capital resources unit; and Brian Dunlop, deputy principal of capital resources unit. Members, we have about an hour for the session, and the briefing will be recorded by Hansard. I invite officials to make their opening remarks for about five minutes.

Ms Brigitte Worth (Department of Health): OK. Thank you, Chair. As usual, I will start by making some opening remarks on the resource position and then hand over to Linda, who will cover capital.

The paper that you have in front of you sets out the Department's bids for June monitoring. As you will be aware from the budget assessment that the former Minister sent you recently, the trusts are currently projecting a £189 million deficit, following the delivery of savings that they have assessed as low and medium impact. That assessment gave you a high-level summary of the sort of things that trusts have put forward as the only way they have of managing this pressure in the short time that we have available in this financial year.

Work continues on reviewing these proposals and to ensure that they are calibrated appropriately, in particular, so that there is a sense that the definition of what is low, medium or high impact is broadly the same across all the trusts. Once that work is complete, it is expected that further information will be shared on the likely impact, by trust, of both the measures that will be implemented and those higher-level impact measures that the Minister has indicated will not be implemented.

The first bid, therefore, is for £189 million to bridge this gap and make those reductions unnecessary.

In addition to that, in order to fully avoid higher impact measures, the Department also needs to receive the £75 million, which, it was assumed in our financial planning, would be received in monitoring during the year. That assumption was made in order to avoid overexaggerating the likely impact of the opening budget, in recognition that the Department normally receives funding during the year.

The third bid is for additional training places. In order to successfully continue the roll-out of multidisciplinary teams (MDTs) in primary care, we need to ensure that sufficient staff are appropriately trained, and this bid will enable us to secure those places in advance of the outcome of the allocation of transformation funding.

A bid has also been submitted to secure funding to enable a pay offer of 3% to be made to our staff in 2024-25. Whilst we await the recommendations of the pay review bodies prior to considering an offer, securing the funding would enable us to move at pace when those recommendations are made.

Having said that, I am well aware that our bids are in excess of the funding that is likely to be available and that, hence, we are unlikely to be successful in securing all of the funding that we would like to receive. Nevertheless, it is important that we continue to present the full extent of what is required to continue to run the service in its current form in 2024-25.

Finally, we have submitted a bid for depreciation and impairment, that would bring our budget position back to where it was at the end of 2023-24. Whilst this is often regarded as a technical accounting matter, this funding is required to support new capital investment, and if it cannot be secured, it has to be covered from the funding we have for other services.

I hand over to Linda to give you an overview of the capital position.

Ms Linda Carter (Department of Health): Thanks Brigitte. As set out in the briefing paper that we provided, we had slippage of £48·1 million in the mother and children flagship project. That was as a result of changing profiles: those we had in February changed to those we got most recently in May. Because it is a flagship project and it is ring-fenced, we have no option: we are obliged to return that to DOF.

However, as set out in your briefing paper, we have submitted four bids to DOF. The first is for £15 million for additional backlog maintenance. Given that the pressure across the Health estate is currently £1·4 billion, with £249 million deemed as high risk, we allocate £25 million a year for the backlog maintenance but, if we just maintain that annual allocation, it will take about 10 years to address that and the high risk is just going to grow. That is the reason for that bid.

The second bid is for general capital. Funding in this category, while it is not fully contractually committed, is required each year to provide regular ongoing investment to the health service and the Northern Ireland Fire and Rescue Service. One thing that should be noted is that the cost to maintain and upgrade a hospital is much higher than any other public-sector building, mainly because of everything that is behind the walls: the life-saving equipment, medical gases, ventilation systems and things like that. As a result, the Department has to direct a significant portion of its annual budget to this category. Regular and ongoing investment is also required, in particular to purchase ambulances, fire engines and equipment for the Northern Ireland Ambulance Service and Northern Ireland Fire and Rescue Service, the replacement of medical equipment, including MRI and CT scanners, the replacement of flu stocks, for research and development and to provide investment in GP practices across Northern Ireland for the GP improvement scheme.

Our next bid is for leases. Because of the change in the accounting treatment of IFRS (International Financial Reporting Standard)16, leases are now capitalised, and a large lease is required this year for cellular pathology. We do not have the funding for that, so that is why we submitted this bid of £8·2 million to try to address the gap.

Finally, we have a bid for cybersecurity licences and for the purchase of iPads and phones for domiciliary care staff across the trust to use to manage care packages. In this monitoring round, we will receive Department for the Economy funding from the small business research initiative and invest-to-save energy scheme, which trusts can apply for. There is about £15 million available through June monitoring. We will also receive funding from the Department of Education for Sure Start leases.

That is all that I have to say. Brigitte, David, Danielle, Brian and I are happy to take questions.

The Chairperson (Ms Kimmins): Thank you, all. We appreciate your time, because we know that you have been before the Committee a few times. I do not underestimate the challenge that you all have in trying to balance the books on a lot of this. It is difficult for me to get my head around it at times, and it is a moving picture.

To go back to the overall bid — was it for £498 million, in total?

Ms Worth: Yes, including depreciation.

The Chairperson (Ms Kimmins): As you pointed out, Brigitte, the amount expected in June monitoring is well below what was bid for. I want to get some understanding of what plans are in place to identify the critical needs to be met by what has been received. What is the prioritisation of whatever money is received? Obviously, everything is important, but we have to have a plan in place for how to prioritise.

Ms Worth: The £189 million is, effectively —

The Chairperson (Ms Kimmins): For trusts.

Ms Worth: Yes, that is for trusts. With the exception of the depreciation impairment bid, which comes out of a different pot — I will hand over to Linda to talk about prioritisation of capital bids — the four other resource bids are listed in our order of priority. Anything that we get against the £189 million will mitigate the higher-impact savings that the trusts would otherwise have to make. As you said, because we do not have a fully documented plan for exactly what we will need to cut in order to balance the £189 million, anything that we get in June monitoring to offset that will obviously go first towards the things that we deem the highest impact. The Minister referred to "high and catastrophic impacts". We will have some things that are "just" high impact, so the funding will go first towards the things that are deemed catastrophic. I recognise that we are not yet at the point of having a granular level of detail, but that is broadly the principle that we will use.

The Chairperson (Ms Kimmins): When do you expect to see that?

Ms Worth: I expect to see something within the next month. Considerable work is ongoing to get to the point where that can be provided, but we expect that, at the end of the process, each trust will be able to produce a summary of what it intends to deliver on the low and medium impacts as well as what will need to be delivered on the high and catastrophic impacts.

The Chairperson (Ms Kimmins): If that £189 million were received, would it hugely alleviate the potential impacts on patients and service users?

Ms Worth: Absolutely. It is slightly more complicated because of the assumption that we made that we would receive £75 million in-year. We would need to get £264 million to be able to say that all the high impacts could be alleviated. If we were to get the £189 million, we, as a Department, would need to think about whether we might get another £75 million in the October and January monitoring rounds. If we thought that that were likely, we might be able to say that we can cease those plans entirely. If we were concerned that that level of money would not be available later in the year, we may still need to look to implement £75 million of the £189 million, simply because the funding gap would still be there. We would have to make an assessment of how much more might be likely to come in the future, if that makes sense.

The Chairperson (Ms Kimmins): That leads on to my next question, which is on the October monitoring round. We are probably speaking hypothetically, but it is not that far away. With what may be received in the June monitoring round, you may be able to plan what the next bid will be. You are saying, Brigitte, that, if that were received in its entirety — the overall £264 million, which is the £189 million plus another £75 million — we may not need to implement any of those really high-impact cuts. Is that fair to say?

Ms Worth: Yes, although we should bear in mind that that still leaves us without any funding for a pay rise in-year. My sense of the position is that you would not necessarily implement those high and catastrophic cuts in order to fund a pay rise, but, obviously, that will be a matter for the Minister.

The Chairperson (Ms Kimmins): I am not looking for you to answer this question, but, if you want to, you can. My reading of this is that the outgoing Minister presented us with a very bleak and, probably, quite frightening picture but that there is the potential that some of this can be avoided, if the money is received in the in-year monitoring rounds.

Ms Worth: Yes, I concur with that position, but you have to remember that I do not think that any of us expected as much to be available in June monitoring as is available. It is a lot of money that is available in this June monitoring round compared with what is normally available, in my experience. That has been helped a little by the financial framework — is it? I can never remember the name of it.

The Chairperson (Ms Kimmins): The fiscal —

Ms Worth: The deal that has been done that enables us to get that extra 24% has meant that the pot in June monitoring is much bigger than we could ever have anticipated.

The Chairperson (Ms Kimmins): Again, this is not for you but for members to maybe think about: this time last week, we got the budget assessment from the Minister, when we knew what was, potentially, coming down the tracks, so —

Ms Worth: That is why we assumed that £75 million would be received in-year. Based on past experience, that was a reasonable assumption of what might come in-year. That is why we said, "Let us make that assumption up front so that the impacts that we are sharing are not £264 million but are only £189 million". We tried to do that. We still do not know whether the Department will get more than £75 million in this monitoring round.

The Chairperson (Ms Kimmins): Absolutely. Everything has a caveat, and I completely understand that. After he wrote a letter to the Health Committee and we talked about it in the Chamber, I said very clearly to the Minister that, to anybody listening outside the Assembly, it was presented in such a way that this was happening. That is not the case because we have to see what happens, and there is potential that it could be avoided if the moneys are available. We cautioned that at every stage. What we have heard today gives us a wee bit of hope that things can change and change in a very short time. We are talking about June monitoring now. We are almost halfway through June — time is moving fairly quickly — and we are preparing for the next two monitoring rounds. There is definitely hope there, and we need to get that message out. My experience from speaking to people on the ground is that people feel that there is no health service, given the messaging that has surrounded it. I am not saying that we have a panacea and that everything is solved; absolutely not. However, some things will, hopefully, be offset. It was good to get that clarity.

I have one other question. You talked about depreciation and impairment. Are you able to give us a breakdown of some of the most critical depreciation and impairment needs of the arm's-length bodies? You mentioned that the bid for that is £26 million.

Ms Worth: As I mentioned, that brings us back up to the level of depreciation that we would have spent in 2023-24. That need had increased in that year largely because quite a few capital investments had come online during 2023-24, Encompass being the most significant. Once that asset comes into use, you start needing to charge the depreciation. It is a symptom of those assets coming into use during 2023-24. We will have to revisit the estimate in-year to see whether more more is required, if you see what I mean, once we see what the likely profile is of capital assets coming into use during 2024-25.

The Chairperson (Ms Kimmins): OK. Thank you for that.

Mr Donnelly: I struggle to get my head around the numbers, to be honest. I went round and round them a couple of times, and, given the lack of detail and without seeing what things cost, where we are and what was being spent where, I find it very hard to understand. This has helped me today. As I understand it, your second priority is the £75 million bid that you already assumed you were going to get.

Ms Worth: That is correct. I suppose that there is a little bit of false numbering between 1 and 2 in a way, because, to a certain extent, it does not really matter which way round those ones come because they are all going towards plugging that deficit. We felt that it would be easier to understand if we presented it as two separate bids: one for the £189 million and one for the £75 million. If we had given you one bid of £264 million, you would be saying, "The budget assessment says £189 million. The bid says £264 million. Which is it?". Hopefully, this way, you can see that it is the £189 million. We have said to trusts, "You have to manage with this amount", and that is how much they have said is a shortfall, but, in telling them how much they got, we had assumed an additional £75 million already.

Mr Donnelly: At times, I find it hard to get my head around the numbers. In future, just for clarity, I would like to see a bit more information about the numbers. Thank you. That has helped.

Ms Worth: If it would be helpful to engage offline on what sort of thing would be useful, I am more than happy to do that.

Mr Donnelly: That would be great, yes. Other Committee members probably feel the same. The trusts are coming to us with detailed plans as well, so we will look forward to those. Hopefully, that will shed a bit of light on this for us as well.

Ms Worth: It should, because that should give you more granular detail on what is under that £189 million.

Mr Donnelly: We have heard that requested around this table again and again. We want to understand. We want to know what things cost, how much money is there and what can be delivered. I have heard a bit of hope here today. That is good. We have heard despair and gloominess previously, so it is good to hear that there is hope that things can be mitigated. That is encouraging.

I have a couple of questions based on that. I am very aware of agency spend, and a reduction in agency spend is absolutely key to us progressing. Can you tell me a bit more about what you are doing to further reduce our reliance on agency workers?

Ms Worth: The work that is under way on nursing agency spend will continue. As that new arrangement only came into effect midway through last year, we expect there to be, naturally, a 12-month impact from that, whereas, in 2023-24, the impact was maybe only seven or eight months from the reduction in nursing agency spend. It is similar with the reduction in social work agency spend. The key for us this year is to try to do something similar around medical locums, because that is the next biggest area of spend for us to target. We want to look at how we can take forward the principles that we use for nursing agency spend, such as getting more of the locum spend on to on-contract arrangements. That is a very strong and significant part of the low- and medium-impact savings that the trusts have put forward in arriving at the £189 million.

Mr Donnelly: No problem. With nursing in particular, it is the off-book agencies that you have effectively cancelled at this point.

Ms Worth: Yes, the vast majority of that off-contract spend has now ceased.

Mr Donnelly: OK. Are you doing anything on the other side? You talk about a reliance on agency, but are you building bank staff levels in trusts?

Ms Worth: Yes. Although our spend on agency workers has come down, you will see, on the other side, an increase in spend on permanent staff, bank staff and things like that. You still need the member of staff, but you are getting them in a more cost-effective way. You are also getting a permanent member of staff who is more familiar with working in the particular location with a more solid team around them. There are operational advantages, I understand, in having permanent members of staff rather than agency workers. It is one of those situations where it is cheaper but also better, which is what we all really like to see.

Mr Donnelly: Chair, I declare an interest as a bank nurse. What incentives are you offering to encourage people to come over from agencies to bank?

Ms Worth: I am not directly involved in that project work, so I am not in a position to give you that detail today. I am sure that colleagues could provide it, if you would like us to do that.

Mr Donnelly: It is very encouraging to hear that that work is ongoing. It is certainly key to making those savings, so thank you.

A few things that it was suggested might happen may not happen now, which is reassuring. It was suggested that, as a result of cost savings, drugs and therapies that were approved in GB could be restricted here, that support services here could be reduced and that vaccination programmes here could be suspended. Can you outline what those might be? What vaccination programmes were you talking about?

Ms Worth: Those are options. We are not saying that all those things will definitely happen. The Minister has in front of him the £189 million worth of options from trusts. The sorts of things that you described are the only other options that are available to us, instead of that £189 million. It would potentially be things like delaying the introduction to Northern Ireland of a new drug from GB. By definition, those are new drugs, so, while there are forecasts of what those might be based on past experience, we do not really have a list of what they could be.

When it comes to vaccination programmes, it would be things like deciding to restrict the seasonal flu vaccination to a smaller cohort. I am not saying that any of those things will happen. They are options. We have the option to do more or less on all our ongoing vaccination programmes in order to reduce costs and enable us to not do some of the things that would have high and catastrophic impacts on the trusts. I am absolutely not suggesting that those things will happen. They are options that are available for the Minister to consider. It is for him to decide whether he thinks they should be done.

Mr Donnelly: I have been reassured today that those things might not happen, but it is concerning to read that, in particular, vaccination programmes might be affected. I hope that is not the case.

Ms Worth: The Minister has indicated that he may not go ahead with some of those things, but, in the interests of doing a full assessment, we are saying, "There is £189 million of potential reductions from trusts; what are the other options?". We did a full assessment of all the options, despite the fact that a lot of them are counter-strategic. The reason that we do vaccination programmes is because we know that they are proven to keep people out of hospital. Therefore, you could be saving money here and costing more over there. The fact that those things are on the table at all illustrates how few options we have in the short term, but they are comparable to potentially reducing the number of acute beds or domiciliary care hours. Ceasing a vaccination programme is comparable to other things that we really do not want to do. I hope that makes sense.

Mr Donnelly: No problem. Thank you very much for that.

The Chairperson (Ms Kimmins): Before I bring Nuala in, I have two quick things that I missed. One comes on the back of what Danny said. It is around the suggestion that domiciliary care hours or acute beds could be cut. That is of concern to everyone, because, if it were to be implemented, it would lead to a greater cost because of the pressures that it would add to our hospitals and all of that. When we talk about the high-impact costs, I assume that those kinds of proposals are considered as part of that.

Ms Worth: Yes. I know that the Minister said that he does not intend to take the decisions to do those things, but it is incumbent on us to present the Minister with the options that are available to us. Those are the options that are available. In his speech earlier this week, however, he indicated that there are certainly options that he is not prepared to take.

The Chairperson (Ms Kimmins): If he decides not to take those actions but the money is also not received, what would the consequences be?

Ms Worth: The accounting officer of the Department would ask the Minister for a ministerial direction, because, obviously, that would go against his duties as accounting officer to balance the budget. After that, such directions require approval by the Department of Finance. In this climate, I suspect that that direction would probably need to be taken to the Executive for a decision. I do not know what the outcome of that would be. The upshot is that the accounting officer cannot go against the policy direction of the Minister, even if the ministerial direction is not approved. Ultimately, all the accounting officers across the system need to satisfy themselves that they have done everything they can to get as close to break-even as possible. If that means that there is a breach of the Budget for the block as a whole, there would potentially be consequences for the financial package, with funding being deducted from future years' Budgets. I do not imagine that it is a decision that the Minister would take lightly.

The Chairperson (Ms Kimmins): What you are saying, then, is that, because of previous agreements with the Tory Government, if that is breached, given that it is part of the financial package, it could have implications.

Ms Worth: It could have significant implications for the next financial year. As I say, I am sure that the Minister will take that into consideration when he looks at the options, when we get to the point of presenting those to him.

The Chairperson (Ms Kimmins): OK. Thank you for that, Brigitte. Sorry, Nuala.

Miss McAllister: Thank you, Chair. You asked the question that I was going to ask. [Laughter.]

The Chairperson (Ms Kimmins): Sorry.

Miss McAllister: No, it is OK.

We have officials up here every week to answer questions. I recognise that a lot of this is political and that, given the policy direction, it is difficult for you, the finance team. It is also difficult for the trusts, given that they are told, "Here's £180 million. Give us your options for savings", and they are obligated to provide options. Those options are then put into the public domain — "These are what could be cut: x, y and z" — and you have the not-nice job of presenting them to the Minister, which is unfortunate. However, to make savings, it has to be done.

We are part of the Executive, and we voted for the Budget because we were where we were. We argued for a better package in coming years. We have worked as a team to push that forward since the Executive got back up and running. However, we hear, today, that the UUP Health Minister might decide not to show what the priorities are and not lead in the way that all other Ministers are leading, in very difficult circumstances, because they have been left with no other option for the time being. I must emphasise "for the time being", because there are monitoring rounds. I would like to see a change of Government, and it seems that it is heading that way. There will be a spending review and, hopefully, multi-year Budgets soon. To hear that a Minister might do that, which would have a consequence for future Budgets, is really alarming.

I do not really have a question, because my original one has been answered. It just raises this question: what is the point of the UUP being in the Executive if it is going to derail the Executive, in their entirety, and the future of all Departments, not just Health? I understand the importance of the Health budget and the difficult position that officials have been put in.

The Chairperson (Ms Kimmins): Danny, do you want to come in? I have another question, but it is separate from that.

Mr Donnelly: It is just a quick question on something that we have raised here before. We asked the previous Health Minister about the transformation fund of £47 million a year that the Minister of Finance outlined. We asked the Minister about that, and he talked in his answer about increasing training places. Do you have any specific bids ready for that fund?

Ms Worth: We have been asked to provide bids by a week tomorrow. Those bids are being prepared. Obviously, we would need to agree with the Minister what the priorities are before I would be in a position to comment on that.

Mr Donnelly: OK, but preparation has been done.

Ms Worth: Absolutely. Rest assured that we will try to make sure that we secure funding from wherever we can. As Linda mentioned, our trusts have done a very good job at securing invest-to-save capital from the Department for the Economy's energy fund.

Mr Donnelly: Can we get sight of those bids after they are made? Is that possible?

Ms Worth: The transformation bids?

Mr Donnelly: Yes.

Ms Worth: Yes. Obviously, the Minister would have to approve that, but I expect that it would be possible.

Ms Flynn: On capital, Linda, I have a question about the £15 million for backlog maintenance. You said that that is sitting at £1·4 billion overall, but that £249 million was deemed as being high risk. Hopefully, you will get the £15 million to offset some of that, but that still leaves a huge amount. Can you explain the "high risk" part for me? Does that mean that parts of the hospital and Health and Social Care estate are dangerous?

Ms Carter: I got that from our property management branch. I could probably get you more detail from that team. Estate surveys are carried out. The whole estate is worth £3 billion. There is £1·4 billion of backlog maintenance, of which £249 million is high risk. All we can afford to give is £25 million a year. It was a lot higher, and it has continued to come down over the past few years. There are, however, some elements that are high risk.

Ms Flynn: Maybe we could get a breakdown in writing of what "high risk" actually means. It is worrying. You need a huge amount of money to resolve all that, but £15 million is not much.

Ms Carter: No. That would give us £40 million this year, but you are right that it is not a lot.

Ms Flynn: Yes. I am just wondering whether that means that there are parts of our Health and Social Care estate that are potentially dangerous and, basically, cannot be fixed up?

Ms Carter: No. The last 'State of the Estate Report' was published in 2022-23, and the detail will be in that. The 2023-24 report has not been published as yet, although those figures are from it. I can get you more information, if you want it.

Ms Flynn: On the cybersecurity licences, it says that £9·1 million is for a number of ICT schemes including the renewal of cybersecurity. What is the cost of cybersecurity? That sounds like a lot of money, but I have no idea about these things. They are obviously extremely expensive. How much of that £9·1 million is for cybersecurity? I assume that you are getting the best price for those things.

Ms Carter: It is for licences for this year — the licences run out in March 2025 — and it is £7·8 million. The full cost of the cybersecurity project is £36·6 million over five or six years, but that is the cost of it for this year.

Ms Flynn: OK. Do we use the same sort of programmes or models as they do in Britain or the South? How do we do it? It just sounds like a lot.

Ms Carter: I can get more detail on that. Yes, it is a lot of money, but, as you know, recently, there were cybersecurity attacks in London and a massive one in the South. I think it cost them about £100 million to fix that. It is something that we cannot not do.

Ms Flynn: Yes, it is necessary, of course. Thank you. I just wanted to ask about that.

The Chairperson (Ms Kimmins): I want to ask one more question. I probably should have asked this first, given the briefing that we had prior to this session. My understanding is that, at present — you can correct me if I am wrong — no funding is attached to the children's social care review. Is that factored into the budget going forward, that you know of?

Ms Worth: That is down to the fact that we are looking to plug the gap that we have before we fund new investment. We need, first, to consider getting to a position where we can fully fund our current activity. At the moment, it is hard to see how we could invest anything more in 2024-25. I am sure that, as with any report, there are recommendations that can be progressed with existing staff, at low cost, so that you are ready for when, at some point in the future, there is, hopefully, capacity to invest.

The Chairperson (Ms Kimmins): Maybe you cannot answer this today; I am conscious that I am coming at you cold. Is there any prioritisation of that such that, if and when money becomes available, it would be on a priority list? I am essentially saying that it is part of transformation and, therefore, should be up there.

Ms Worth: We have a significant list of things that we would like to do if funding became available, and that would certainly be on that list. The list is not in any particular priority order. You will appreciate that the new Minister is only in, and his priority order might be different from that of the former Minister. Part of engaging with him on what he believes are the priority bids for the transformation fund is about getting a sense of what he thinks we should put forward first. Putting something forward first does not mean that we think that other things are unimportant. Inevitably, though, we will have to focus on some aspects to make sure that we target scarce resources at achieving something in an area rather than spreading it so thinly that it does not make as much of a difference in any area.

The Chairperson (Ms Kimmins): Absolutely. I understand. It was just to get an understanding of where that sits, based on what we have just heard, so it is good to have that.

Thank you all for coming today. We really appreciate your time. As more information becomes available, we will, hopefully, be able to get a good look at what is going on. Hopefully, we will be in a better position fairly soon. We have to be optimistic.