Report by Chief Finance Officer.
6
The Chief Finance Officer submitted a report relative to the financial allocation and budgets made available to the IJB for 2021/22 by Renfrewshire Council and NHSGGC, outlining the main financial pressures on health and adult social care services.
The Chief Finance Office updated members on the changes to the public sector pay policy for both local government and NHS employees since her report had been published and advised that this did not substantially change the IJB budget for next year as it was built on medium-term case scenarios, as highlighted in the report.
The report intimated that Renfrewshire IJB was a legal entity created by Parliamentary Order following ministerial approval of the Integration Scheme between Renfrewshire Council and NHSGGC. It was accountable for the stewardship of public funds and ensuring that its business was conducted under public sector best practice governance arrangements, including ensuring that public money was safeguarded, properly accounted for and used economically, efficiently and effectively. The budget delegated by the two partner organisations was used by the IJB to commission services which were delivered by Renfrewshire HSCP.
Under the terms of the Integration Scheme, partner organisations should make appropriate arrangements to fund pay awards, contractual uplifts, the impact of demographic changes and determine efficiency targets as part of their respective budget setting processes. The role of the Section 95 Officer, Chief Finance Officer, for the IJB included both the adherence to professional standards as well as compliance with The Local Government (Scotland) Act 1973 and for the IJB this included the requirement to ensure a balance budget was set.
The report set out the implications of the Scottish Government budget for 2021/22, approved on 9 March 2021, and provided an overview of the IJB’s budget allocation for 2021/22.
It was noted that the impact of COVID-19 on services delivered by Renfrewshire HSCP had been unprecedented and had required a significant degree of service change within a short period of time, ultimately having a substantial financial impact, which was likely to continue over the medium-term and at least over the next few financial years. Members would be required to take these very exceptional circumstances into account when setting the 2021/22 budget, recognising that the IJB’s immediate and medium-term priorities had changed considerably over the last 12 months.
The report advised that the Scottish Government had not provided detailed spending plans beyond their draft budget for 2021/22 but had outlined its ongoing priorities within its annual Medium-term Financial Strategy, in particular, continued focus on the NHS. The Scottish Government’s high-level forecast for the future remained uncertain, reflecting the unparalleled fall in economic output at both Scottish and UK level and uncertainty over economic recovery for both Scotland and the UK. In addition, the UK Government’s approach to economic and fiscal recovery would have a significant impact on medium to longer-term public sector spending across the UK.
The Chief Finance Officer intimated that for 2021/22, the adult social care budget offer was £74,358,164 million and the health budget offer was £233,543 million, subject to final adjustments when the out-turn for the 2020/21 financial year had been finalised.
A copy of the letter dated 28 January 2021 from the Interim Director of Health Finance and Governance, Scottish Government, formed Appendix 1 to the report; a copy of the letter dated 4 March 2021 from the Director of Finance and Resources, Renfrewshire Council formed Appendix 2 to the report; and a copy of the letter from the Assistant Director of Finance, NHSGGC formed Appendix 3 to the report;
The report highlighted that the 2021/22 budget proposals had been presented on a ‘business as usual’ basis, however, ongoing and developing COVID-19 issues highlighted that this was not the case and extraordinary costs were being incurred and would continue to be incurred for the foreseeable future. For accounting purposes, those costs would be recorded separately, with the assumption that the costs would be covered by partners and ultimately by government.
DECIDED:
(a) That the delegated Adult Social Care Budget for 2021/22, as detailed in Appendix 2 to the report, be accepted;
(b) That the delegated Health Budget for 2021/22, as detailed in Appendix 3 to the report, be accepted subject to any final adjustments in relation to recurring budget adjustments at month 12 and any further funding allocated by the Scottish Government in respect of the impact of the 2021/22 pay award;
(c) That a drawdown of reserves be approved, if required, in order to fund any shortfall in funding for 2021/22;
(d) That an increase to the IJB’s unallocated reserves into 2021/22 be approved through the appropriate utilisation of permitted financial flexibilities, in order to protect the financial resilience of the IJB in the context of an increased financial risk profile; and
(e) That it be noted that, as detailed in section 11 of this report, the 2021/22 budget proposals assumed ‘business as usual’. The potential financial and economic impact of COVID-19 represented a significant additional risk to the IJB and the wider public sector going forward.