NES NES/15/16

Item 7b (Enclosure)

March 2015

NHS Education for Scotland

Board Summary

  1. Title of Paper

Finance Report to 31st January 2015

  1. Author(s) of Paper

Audrey McColl, Acting Director of Finance

Janice Sinclair, Acting Deputy Director of Finance

3Purpose of Paper

The purpose of this paper is to present the financial results for the year to 31st January 2015 and to indicate the anticipated year end outturn based on performance to date.

4Key Issues

As at 31stJanuary we had spent £4.0 million less than budget and our forecast underspend for the year is £1.4 million, an increase of £392k from last month.

There are several reasons for the movement, with most business areas contributing to the increase in the under spend. Specific details for significant movements are provided in Section 2 of the report.

A number of proposals have been identified to reduce the underspend by £390k which would reduce the forecast year-end underspend to £1,016k, in line with our target outturn. These include:-

Budget Area / Description / Value
£’000
Pharmacy / SLA Support to Boards - regional support for the pre-registration scheme. / 100
Optometry / Additional Independent Prescribing Course and support for the Glasgow Teach & Treat Clinic / 31
IM&T / IT Equipment with a particular focus on support for agile working across NES in addition to replacement of some older items now out of warranty. / 259
Total / 390

There is also the potential to support other non-recurring bids submitted in November where there is genuine benefit to NES and where the service could be delivered before the end of March. Therefore, we are optimistic that we will be broadly in line with the forecast outturn of £1m underspend.

5Recommendations

The Committee is recommended to note the information in this report, and the continued efforts to manage the year end position.

A McColl/

J Sinclair

18/2/15

1.0Summary

The total allocation expected from the Scottish Government Health Department (SGHD) in 2014-15 is £435.5 million including our capital allocation.

Our January allocation letter confirmed funding of £422.7 million. In addition, we have anticipated allocations of £12.8m and we continue to work with colleagues to have these confirmed as quickly as possible.

Current year to date spend and forecast outturn is detailed in the table below by budget area.

The Year to date net revenue spend is £358.0 million producing a £4.0 million underspend against budget for the 10 months to 31st January 2015. The underspend is the result of staff vacancies of £1.3m, a £2.2 million underspend on non-pay items, and higher than budgeted income of £0.5m from various sources but primarily from salary recharges (£260k). HEE funding for St Andrews ACT (£70k), additional course fees in NMAHP (£32k), return of funding from GCU for Optometry courses not delivered (£66k), funding from HIS (£44k) and funding of from Forth Valley HB for Better Care (£35k).

A year to date underspend of £4m plus the current budget for February and March of £73.6m means that in order to meet our outturn target, expenditure of £76.6m will be incurred before 31st March. As this represents 17.6% of our annual expenditure being incurred in 2 months this does not seem unreasonable however directorates will need to closely monitor expenditure to ensure that there is no further unplanned slippage.

We have agreed an outturn target underspend of £1.0 million and are currently forecasting an outturn underspend of £1.4 million, an increase from December of £392k. The reasons for this movement are detailed in section 2 of this report.

In November 2014 directorates were asked to provide proposals for non-recurring expenditure which could utilise any forecast underspend which may arise. From the proposals received since then, the following items have either already been approved since the end of January and so are not reflected in the above table or are currently under consideration, to close the current £392k gap;

Budget Area / Description / Value
£’000
Pharmacy / SLA Support to Boards - regional support for the pre-registration scheme. / 100
Optometry / Additional Independent Prescribing Course and support for the Glasgow Teach & Treat Clinic / 31
IM&T / IT Equipment with a particular focus on support for agile working across NES in addition to replacement of some older items now out of warranty. / 259
Total / 390

There is also the potential to support other non-recurring bids submitted in November where there is genuine benefit to NES and where the service could be delivered before the end of March. Therefore, we are optimistic that we will be broadly in line with the forecast outturn of £1m underspend.

2.0Forecast Analysis

The information in the analysis below is designed to highlight the areas where there has been a significant change since December, and the actions planned to be taken to achieve the forecast position as at end of January 2015.

2.1Medical - Training Programme Management (TPM)

The business area forecast overspend increased by £18k from the previous month, mainly due to increased costs for Study leave of £81k and changes in LTFT (less than full time training grade posts) numbers of £21k. These are offset by a movement for e-Portfolio in relation to previously unexpected income and further underspend on the IT contractors agency costs which total £66k. There were also reductions in planned expenditure for Fellows of £32k; vacancies in TPD/FPDS of £23k; and a reduction in GP training grade forecast of £17k.

Within the year-end forecast, the directorate is planning to spend £340k on recruitment in Feb and March. Study leave expenditure is expected to follow normal patterns with an upsurge of claims being processed at the year-end. In 2013/14 £485k was processed in Feb and Mar, and this has been built into the forecast figures above. Other additional expenditure of £100k has been identified for Simulation Training which will be delivered by the end of March. In addition, the directorate is currently reviewing the level of payments to the Boards for SMT recruitment. The forecast is based on expected costs of £200k, but there is a possibility that this may increase to a maximum of £350k based on 2013/14 payment.

2.2Medical -Quality

The YTD underspend is reflected as £548K. This primarily relates to Medical ACT where we are reviewing bids from Boards to enable the transfer to take place. It is expected that these disbursements will be reflected in the February finance report.

2.3Medical -Professional Development

The forecast underspend has increased by £164k since December. The reduction in expenditure is primarily made up of the following:-

  • £57k reduction in costs for CPD Connect arising from the correction of income recognition of £25k which had been counted twice, and the procurement of a CPD website which has been moved to 2015/16.
  • £44k income for Clinical Skills / Patient safety offset by payment to StrathclydeUniversity of £23k. Net underspend impact of £21k
  • £15k reduction in costs for SAS adviser posts – low uptake of Study leave and resignations have contributed to the change in the forecast.
  • £55k of study leave costs for GPTS had previously been charged to Prof. Dev. However, the budget lies in TPM above. This error caused the prior month’s forecast to be inflated.

In further discussions between finance and the business area, it has been noted that the CPD Connect underspend may move by an additional £30k by the year-end, which has not been reflected in the above figures. This has been identified from a review of the methodology used to forecast year-end, taking into account the YTD actual position and known costs to be incurred before March 15.

2.4Dental

The business area forecast underspend has increased by £59k from December. The bulk of the movement was caused by the reversal of old GRNs to the value of £151k, on the assumption that invoices would have been paid directly to the supplier without reference to the PO. An exercise is currently underway to verify whether any of the reversals should not have gone ahead, and early indications are that these GRNs will not be reinstated. The forecast has been revised for costs which were not in the budget in respect of £60k for student Travel & Subsistence costs for Outreach Clinics and for £34k expenditure for START. Falling income from the Portal for fees has contributed £32k to a reduction in the forecast underspend.

2.5Knowledge Services

The business area forecast underspend has increased by £62k from December due to reduced costs arising from the renewal of subscriptions, and to reduced staffing and training costs. The business area had plans approved in December to utilise the YTD underspend of £310k.

2.6Healthcare Scientists

The business area forecast underspend has increased by £46k from December due to a reduction in trainee numbers in Medical Physics. The YTD underspend is now £226k, with a forecast of £314k underspend. Any further attrition of student numbers could increase the value of the forecast underspend but is outwith the control of the business.

2.7Optometry

The business area has reduced the forecast underspend by £11k to £13k due mainly to increased running costs and travel and subsistence. Additional expenditure has now been approved of £31k in total to increase the numbers on the Independent Prescribing Course (£13k); and to support the Glasgow Teach and Treat Clinic (£18k).

2.8NMAHP

The business area is now forecasting an underspend of £69k, a movement of £34k from the forecast of £103k in December. The movement in underspend is primarily caused by improved forecasting in relation to the AHP Fellowships expenditure. It should be noted that the YTD underspend is now £669k, an increase of £323k in the month. The directorate is still confident that the current year to date underspend is primarily due to budget phasing and plans are being finalised to secure delivery of services before the 31st March.

2.9Leadership

The business area is now forecasting an underspend of £53k, a movement of £43k from the forecast of £11k in December. The movement in underspend is due mainly to slippage in professional training and coaching fees of £10k, and recruitment efficiencies within the Management Trainee Scheme of £30k. YTD the Directorate is £136k underspend but is confident that much of that is due to the phasing of the budget and therefore the forecast outturn position is achievable.

2.10Workforce

The business area is now forecasting a year-end underspend of £44k, a movement of £37k from the forecast of £7k in December. The movement from December is due to:-

  • £12k for the departure of a senior member of staff within Education & Workforce Development at the end of January;
  • Fall in demand for referrals to Occupational Health and Staff Well Being, accounting for £10k of the movement
  • Spend on disclosures have also fallen by £6k; and
  • A reduction in Travel costs of £8k

Due to the unpredictable nature of charges for the above items, it is possible that there will be further movement on these forecasts before the year-end.

3.0Recommendations

The Board is asked to note the contents of this report and the continued efforts to manage the year end position.

J Sinclair/

A McColl

18/2/15

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