Official Report: Minutes of Evidence

The Chairperson (Ms Kimmins): I welcome Brigitte Worth, director of finance; Danielle Mallen, head of financial management; Preeta Miller, investment director; and Linda Carter, head of the capital resources unit. I apologise for the significant delay before your briefing. We have been provided with a number of papers, so I will keep this as brief as possible. If there is anything that you wish to add to that, please do so. I will then open it up for questions.

Ms Brigitte Worth (Department of Health): Thanks, Chair. I will keep it brief. I know that we have limited time. As set out in the paper that you received, the Department entered October monitoring with a pressure of £450 million. Of that, £130 million was required to meet the shortfall on the cost of delivering existing services, with the remaining £320 million required to meet the cost of pay increases in line with those that have been offered in England. We have received an allocation of £350 million, which is £100 million short of the amount that we need to fully meet all our pressures. As a result, the Minister has not been in a position to offer a pay uplift to the trade unions that fully aligns with that of their counterparts in England, and the unions are considering the offer that has been made.

We in the Department and the wider health service are also re-examining our financial position to see whether anything further can be done to bridge the gap. Clearly, in a context where savings that are in excess of £200 million are already required to get to the shortfall that we declared at October monitoring, that will be challenging. I think that you heard more detail from trust chief executives about why that is. It will not be possible, therefore, to find the full £100 million without an all-Executive approach. The Minister continues to engage with his Executive colleagues in an attempt to find a way forward. On that note, I will hand over to Preeta to give you an update on capital.

Ms Preeta Miller (Department of Health): Thank you, Brigitte. I have little to say on the detail of the bids that we submitted. Sadly, we got no funding towards those bids. We remain confident that we can break even this financial year, but it becomes a question of reprioritising and looking at what needs to be funded in priorities. Basically, we are working through that.

The Chairperson (Ms Kimmins): Thank you. I appreciate that you have kept your remarks brief, because I know that that is maybe not what you prepared for. I have two quick questions. We have had further detail on the trusts' savings, and, compared with June, the position now is much better. I recognise that there are still significant challenges, but it has to be noted that a significant allocation has been provided to the Department. We are aware that the trusts are developing their formal recovery plans for any additional savings. Has the Department any sense of what that will look like and what it will mean for the impact across the health service?

Ms Worth: Are you talking about recovery plans into future years?

The Chairperson (Ms Kimmins): Yes.

Ms Worth: We are in the early stages of that process. If we are going to do it properly, it will take time. It may be that we have to set a 2025-26 budget before the process is fully complete, because, if we are going to look at a proper recovery as opposed to a contingency position, which is where we have been this year, we will need time to develop those plans. We want to look at how we change and deliver so that we are talking about delivering things differently, rather than delivering less. We have to recognise that. Some early drafts have come in, but, as I said, a lot more work is to be done before we will be in a position to share detail on where we are with that.

The Chairperson (Ms Kimmins): My second question is a very quick one. I know that your budget has not changed, but, the last time that you were here, I mentioned the community treatment centre in Newry. I have been made aware that, at this stage, it is potentially waiting to be signed off by the Minister. Is that correct?

Ms Miller: No, it is not with the Minister. The trust is working through the revenue affordability of the scheme. That is becoming a bigger and bigger challenge for us. Basically, it is still working on it. I know that the trust is aiming to start design works in January 2025. As soon as it has worked through that with commissioners, we would get sign-off from the commissioners, and that would enable us to take the business case through to approval.

The Chairperson (Ms Kimmins): OK. Do you have a time frame for that?

Ms Miller: January 2025 is when the trust is looking for it to be approved and to start its design works. That will give it the authority to do that.

The Chairperson (Ms Kimmins): OK. I will keep in touch with you directly on that, even outside the Committee. I have been made aware that it is potentially sitting with the Minister. It is concerning that it is more challenging than that.

Ms Miller: It is more challenging than that. That message might have been sent because some weight was attached to looking at an overall capital plan. However, the issue with that is that we do not have any sight of future budgets at this point. We keep lines of communication open with our commissioners and our trust colleagues on it. We have said that the project needs to progress because it has been identified as a priority. I remain optimistic that we will see it progress. We are all basically working together towards a January time frame for it.

The Chairperson (Ms Kimmins): That is fair enough. Thank you for that, Preeta. That is brilliant.

Ms Miller: No problem.

Mrs Dillon: This is maybe more of a point than a question, so you can come back to me at a later date rather than give me answers today. I would like to see — you just said, actually, Brigitte, about how we do things differently — how we can save money in the health service by working with other Departments. Every single one of the people who were in front of us before you talked at some point about where the problems originate. Take, for example, when I talked about children's services. The problems there originate with what is happening in homes and with families. Often, it is not a Health problem; it is a poverty or housing problem, or it can be due to addictions and mental health, which are for Health. We need to look more imaginatively at how we divert money into preventing people ending up in your services in the first place. I do not want to see 4,500 children in our care system. I want to see what is happening before that stage to keep those families together or to keep those children in a better, more sustainable family. That may not be with a child's own parents but with other members of their family. It is about how we work together not just with other statutory bodies but with the community and voluntary sector. We need to look at how we, sometimes, divert money from Health to get better health outcomes. We know that the problems often do not start in health but outside it. I wanted to make that point about going forward and how we actually work together. I know that it is difficult in the system of government that we have. I am not saying that that is an easy proposal, but we have to do it.

Ms Worth: We can certainly take that comment back to our colleagues.

Mrs Dodds: I noticed in your briefing that there was a £30 million bid for PPE. I have a letter that my colleague Thomas Buchanan shared with me that says that the current value of the PPE that the Department holds is over £120 million. You are bidding for another £30 million for it. Meanwhile, next year, PPE to the value of almost £50 million of that £120 million will run out of date. When I was in the European Parliament, we used to talk about butter mountains and milk lakes. Do we have a PPE mountain? Why are we bidding for more when, according to the statistics that I have been given, we have stocked up a significant amount of PPE?

Preeta, you are looking for £60 million for depreciation due to capital investment decisions. What proportion of that, if any, relates to the Royal Jubilee Maternity Service?

Ms Worth: I need to take that one, actually, as depreciation falls to me.

Mrs Dodds: Whoever — I am happy.

Ms Worth: I cannot tell you exactly how much of that relates to the maternity hospital, but some of it will.

Mrs Dodds: Can you give me a rough percentage of what relates to the Royal maternity hospital?

Ms Worth: I cannot, off the top of my head, but I can certainly —

Mrs Dodds: Can you come back to me on that?

Ms Worth: — get back to you on it. I certainly can, yes.

Mrs Dodds: That is an enormous amount of money. If a significant amount of it relates to the Royal maternity hospital, given that the Belfast Trust was here before the Committee, we need to know what that amount of money is and how it is impacting on the Department's other capital investment decisions.

Ms Worth: At the moment, we are led to believe that that depreciation shortfall is likely to be met, and therefore that is not having an impact on any of the investment decisions at this time. It is the shortfall of our —

Mrs Dodds: That is a very careful answer.

Ms Worth: It is the shortfall of our more general, non-ring-fenced revenue that is providing more of a constraint at the moment. Every time we open a new facility, we find that a larger facility has larger costs. So, it is not the depreciation element of the budget at the moment but the non-ring-fenced revenue that is the constraint on capital.

Ms Miller: You asked a question on PPE. It becomes one of financial accounting treatment. When we hold a stock of PPE for more than a year, we are supposed to classify it as capital. If we had received that £30 million allocation, there would have been a corresponding easement in revenue that would have really eased the revenue pressures —

Mrs Dodds: Right. That makes sense. Yes.

Ms Miller: It is about the correct classification. It is not that we are looking to buy more PPE, we are looking to correctly classify it, and we cannot afford to do that from the budget.

Mrs Dodds: We understand that, according to the figures that you sent me in your answer to this question for written answer, this year, £13 million worth of PPE will run out of date and, next year, £49 million worth.

Ms Worth: Last year, we had to account for quite a significant amount of PPE. We have to account for the write-off of that PPE when it becomes clear that we are not using it at the rate that we need to in order for it to be used within the use-by date. The funding that we had in last year's budget would have enabled us to write that down to zero in our accounts through the revenue budget. A lot of that stock is not going impact the budgetary position currently, but I appreciate what you say. That has arisen because we bought it at the height of the pandemic, and we were all really worried that we were going to run out of PPE. That is the position that we find ourselves in, and we are now managing that position back down to the more normal levels that we happily find ourselves needing at the moment.

Mr McGrath: I thank the panel for the update. I have said this before: people often say, and rightly so, that those in the front line of health services are in the firing line, and they do the hard work. However, I also think that you should be acknowledged for trying to make all the figures in the budget stretch round and work. It is always very difficult.

While you are here to talk about the October monitoring round, I wonder whether we can start, at this stage, to look to next year's budget. We do not know how much we are going to have in next year's budget, but have you done an exercise to work out how much we need? Have you even a percentage figure for how much more we will need next year to stand still? I ask that so that we can start to prepare, as we work towards the budget-setting process, and have an idea of what we are looking out for.

Ms Worth: We have started to look at next year's budget, both revenue and capital. We have made a submission to the Department of Finance. It is complicated at the moment by the fact that, when we made that submission, we did not know what we were going to receive in October monitoring, so we need to reassess where we are at with that as a result of October monitoring.

We generally find, as Maureen Edwards said earlier, that the increase from one year to the next, to give us that standstill position, is normally around 6%. That is when pay inflation is running at 2%, which is obviously not something that has been happening in recent years. That should give you a flavour of where things are, but, obviously, we are also working with the trusts to see how much in savings can potentially be delivered towards that. Again, that is very challenging, given how much they delivered this year and the fact that some of that is not necessarily repeatable.

I do not know whether you want to say anything about capital. [Inaudible.]

Ms Miller: I am sorry, Colin. Not to cut across you, but I want to say briefly that, just for our programmes and projects on the ground, we would need £386 million in capital. So, when compared against an allocation this year of £395 million, you can see that we are getting very little in additional funding to take forward new projects. That means that our crumbling estate will continue to deteriorate. We really need the investment to effect change.

Mr McGrath: That is grand. Thank you, panel.

Mr Donnelly: Thank you for your presentation. I will be quick. It is good to see the £200 million in savings over the year. You mentioned that some of that will be recurrent and some will not. Do you know roughly what the split is and how much from those savings might be seen in upcoming years?

Ms Worth: The expectation of trusts that we have set is that, if a measure that they have implemented this year is not recurrent, they will look for something to replace that measure in the following year. We are still in the early stages of working out how feasible that is, but that is my sense of what, at a minimum, we would need to do to keep driving forward on sustainability.

Mr Donnelly: So, you will look for and expect another £200 million of savings next year.

Ms Worth: No — sorry — I will look for the £200 million that has been delivered this year to be delivered again, and we will then talk about what might be delivered on top of that.

Miss McAllister: I got a bit confused with that question; maybe I will follow it up afterwards. I completely respect and understand that you may not know where we are with negotiations, which may be confidential, but notwithstanding that, should things go to plan, what will be the trajectory of the finances and of bidding for the January monitoring round, albeit that they may not be quite as significant as in the previous round?

Ms Worth: I hope that I have vaguely understood your question as this: where are we, generally, with this year's budget, and what might we expect for the rest of the year?

Miss McAllister: I will put it simply. If things are settled on the current arrangement — I cannot say "agreement" as it has not been agreed — what would the shortfalls look like? Is it about balancing the books at that stage or will we still be looking for more money for Health? At what point will we be able to balance the books?

Ms Worth: There are several answers to that. At the moment, we are in a position where it is possible to balance the books. Doing that will require us to make an offer to the trade unions that falls short of what colleagues in England have offered. It is physically possible to balance the books if our offer on pay falls short of what our trade union colleagues expect. In order to fully meet their expectations and balance the books, £100 million is the starting point, but, as I said in my presentation, we are looking at what we can do to bring that number down, and the Minister is engaging with Executive colleagues to see whether we can expect any help with that from other Departments.

Miss McAllister: Is that the current offer to the unions that is on the table?

Ms Worth: An offer has been made that would be affordable. I will leave it at that.

Miss McAllister: That would enable you to balance the books.

Ms Worth: Yes.

Miss McAllister: I cannot do the maths, anyway.

Ms Worth: Sorry. By "affordable", I mean, "That would enable us to balance the books".

The Chairperson (Ms Kimmins): Thank you all, and, again, apologies for the delay. We probably drew out a lot of the minutiae in our questioning of the trusts, but we can also follow up with you.