Public Health Wales Board
Submission
Month 4 2011/12 Finance Performance Report
Author: Huw George, Director of Finance
Date: 12th August 2011 / Version: 1
Purpose and Summary of Document:
To report on the financial position of Public Health Wales as at 31st July 2011. It is consistent with the commentary prepared in accordance with the Welsh Government’s ‘Financial Monitoring Guidance 2011-12’.
Sponsoring Executive Director:
Huw George
Who will Present:
Huw George
Date of Board Meeting:
15th August 2011
Committee/Groups that have received or considered this paper:
Please State if the Paper is for:
Discussion / ü
Decision
Information / ü
Date: 12 August 2011 / Version: 1 / Page: 10 of 10
1 Purpose
The purpose of this report is to inform the Board of the Trust financial position at July 31st 2011 (month 4), highlighting any risks and assumptions made. This report is consistent with the Monitoring Return submitted to the Welsh Government on August 11th 2011.
2 Recommendation
The Board are asked to note the content of the report.
3 Timing
Financial position as at 31st July 2011.
4 Financial Implications
The reported position at month 4 is in line with our current financial plan with a small variance due to operational fluctuations.
This report has identified the current known risks and opportunities that Public Health Wales faces in striving to reduce the deficit. The Trust continues to forecast a breakeven position for the financial year.
5 Board Members are asked to:
Consider and Comment on the contents of this report
6 Introduction
The content of this report is consistent with the Director of Finance commentary which was formally submitted to WG on 11th August by the Trust as part of the full financial monitoring return for month 4. This return was submitted in accordance with the WG deadline.
The report will consider the following key areas:
· Financial Plan (Section 7)
· Income and Expenditure Position (section 8)
· Balance sheet (Section 9)
· Key Financial Indicators (Section 10)
· Capital Programme (Section 11)
· Procurement (Section 12)
7 Financial Plan
In April 2011 the Board approved a balanced budget strategy for 2011/12.
In this strategy a funding gap of £2.847m was identified, which needed to be closed in order to balance the budget. This represents 3.5% of the total budget of the gross budget (£81.452m) or 3.7% of the budget excluding direct grant type funding.
The Trust is also managing considerable cost pressures arising from the demographic changes in the screening programmes and demand pressures in health protection.
The initial approved budget was for a budget of £81.452m and this is adjusted on a monthly basis for changes to income streams.
The overall Public Health Wales budget has increase from a total of £82.285m in month 3 to £84.019m in month 4. This increase of £1.734m is made up as follows:
£000sMonth 3 Budget / 82,285
Additional Non Core Funding (R&D / grants) / 64
Non Recurring Funding (from 2010/11) / 600
Newborn Bloodspot Testing Income / 470
Abdominal Aortic Aneurysm Testing / 600
Month 3 Budget / 84,019
The non recurring funding has been used to fund a contingency reserve for the Trust. As previously approved by the Board this reserve has 3 main priorities
· To fund additional costs of the Voluntary Early Release scheme – this will facilitate savings required in the 2012/13 Budget Strategy. £300k has been set aside for this purpose.
· To meet unexpected costs pressures during the year
· To pump prime change and future savings
The Executive team will review and prioritise available resources in September 2011.
8 Income and expenditure position
8.1 Year to date position (YTD)
The table below highlights the financial performance in the first 4 months of 2011/12. (Public Health Services are split due to the size of budgets.)
Annual Budget £000s / YTD Budget £000s / YTD Actual £000s / YTD Variance £000sCorporate
Income / -23,861 / -7,961 / -7,832 / 129
Non Pay / 1,591 / 530 / 528 / -2
Pay / 4,099 / 1,374 / 1,309 / -65
Corporate Total / -18,171 / -6,057 / -5,996 / 62
Public Health Development
Income / -3,859 / -1,286 / -1,283 / 4
Non Pay / 3,105 / 1,035 / 1,015 / -19
Pay / 18,401 / 6,133 / 6,107 / -27
Public Health Development Total / 17,647 / 5,882 / 5,839 / -43
Health Protection
Income / -22,363 / -7,399 / -7,339 / 60
Non Pay / 6,492 / 2,110 / 2,111 / 1
Pay / 17,115 / 5,704 / 5,644 / -60
Health Protection Total / 1,244 / 415 / 416 / 1
Screening Services
Income / -33,937 / -10,414 / -10,430 / -16
Non Pay / 20,988 / 6,100 / 6,106 / 6
Pay / 12,228 / 4,074 / 4,019 / -55
Screening Services Total / -720 / -240 / -305 / -65
Grand Total / -0 / -1 / -46 / -45
The Trust has a small under spend (£46k) at the end of month 4. There are no significant variances but explanations for some of the key issues which exist are:
8.1.1 Income (£175k YTD under-recovered against budget)
The main reasons for this variance are:
· Lower than anticipated deanery income for the SpRs and SpTs due to vacant posts which are not funded (£129k). This is offset by an underspend within the staff costs.
· Delays in invoicing within Microbiology (£59k). No variance is anticipated by year end.
· Higher than anticipated income within Screening Services (-£13k)
8.1.2 Pay Variance (£220k YTD underspent against budget)
The main reasons for this variance are:
· A year to date underspend of £78k on medical and dental staff as a result of non recurring savings on several consultant posts, currently in the process of being recruited to and vacant SpR posts which are not funded .
· An underspend on scientific, therapeutic and technical staff as a result of general turnover and maternity savings
· The variance of £42k is a result of vacant posts within the Trust Board.
8.1.3 Non Pay (£14k YTD underspend against budget)
The main reasons for this variance are:
· There are small underspends against most non staff budgets due to the fact we are still in the first half of the year, which is consistent with normal expenditure patterns.
· It is anticipated that any higher than expected expenditure will be covered by non recurring funding during 2011/12 and so no overspends are anticipated at year end.
8.2 Savings Plans
The table below gives the savings on All Wales classification. The savings schemes developed fully address the funding gap described in section 7.
Savings by Category / Public Health Services / Public Health Development / Corporate / Total£ / £ / £ / £
Management Costs / 0 / 352,219 / 28,000 / 380,219
Workforce Modernisation / 235,574 / 504,321 / 25,000 / 765,895
Procurement / 416,139 / 14,488 / 0 / 430,000
Shared Services / 0 / 0 / 0 / 0
Energy and Estates / 0 / 30,000 / 62,000 / 92,000
Externally Commissioned Services / 255,000 / 371,688 / 553,000 / 1,179,688
Total / 906,713 / 1,272,716 / 668,000 / 2,847,429
A full detailed report on the individual schemes will form part of future Board reports. Managers are currently reporting that schemes are on target and this is reflected in the actual financial position.
8.3 Risk Management
We continue to monitor both risks and opportunities as part of our monthly processes. There are no significant risks that the Board should be aware of at the current time.
As previously outlined the Trust maintains a contingency reserve of £300k (under 0.5% of budgets) in order to manage any unforeseen costs.
8.4 Forecast Position
In light of the month 4 financial position, the progress on savings schemes and the management of risks, the Trust continues to forecast a breakeven position.
9 Balance Sheet
The major movements in the balance sheet for month 4 (from the 2011/12 opening balance) are shown in the table below, along with explanations for the movements:
£'000 / ExplanationProperty, plant and equipment / 397 / Discretionary Capital additions
Inventories / -2
Trade and other receivables / 2,682 / Debtors have increased as a result of quarterly invoices for non-core projects and Microbiology invoices.
Cash and cash equivalents / 340
Trade and other payables / -3,542 / The increase includes accruals for NHS recharges not received for Screening Services and there are also timing differences on payroll taxes which were pre paid at the year end.
Provisions / 170 / Reduction in provisions due to closure of cases.
Total Net Movement / 45
There are no issues which currently give concern in the balance sheet and the Trust forecasts that it will be able to hit its cash targets this year.
10 Key Financial indicators
10.1 Public Sector Payment Compliance
The month 4 performance figure for non NHS invoices by value has remained over the 95% target at 98.10% in month and 96.13% on a cumulative basis.
The in month position for invoices paid by number has increased from the month 3 position and is now above the target at 95.4%, but has remained slightly below the target on a cumulative basis at 94.3%. Work is ongoing to improve our processes to ensure that this improvement is further continued.
10.2 Agency Expenditure and WTE movement
Month 4 agency costs have reduced by £6k and the overall, both in-month, and year to date remains below target figure of 0.8% of staff costs.
The Whole Time Equivalent (WTE) figures have been broken down by the Electronic Staff Record (ESR) heading as requested by WG. The following table summarises the movement in establishment for staff – contracted, worked and paid - along with the summary reasons for any movement.
June WTE / July WTE / MovementReason
Contracted Staff in Post / 1,051.21 / 1,054.17 / 2.95 / New starters in Microbiology (included in establishment)
Worked Staff in Post / 1,026.79 / 1,026.36 / -0.42
Paid Staff in Post / 1,031.42 / 1,029.86 / -1.55 / Staff reducing to half pay (sick leave) and maternity pay
10.3 Management Costs
This year we are required to report our management costs (as defined by WG) as a percentage of our staff costs. The management costs are 7.46% of the year to date staff costs.
We also continue to analyse in the traditional manner in order to make comparisons across the organisation. This methodology looks at the relationship between management costs and total budgets (allocating corporate overheads on a budget basis).The average for Public Health as a whole is 4.73% and the table below breaks this down across service areas.
% Management Costs (after apportionment of corporate costs)Public Health Development / 3.34%
Screening / 6.68%
Health Protection / 4.38%
11 Capital Programme
The table below shows the current status of the Trust’s capital programme for 2011/12.
SOURCES OF FUNDS / Total2011/12
£000's
All Wales Capital Funding - Replacement Mobiles / 211
All Wales Capital Funding - Enabling Works / 829
All Wales Capital Funding - Physics QA Equipment / 61
All Wales Capital Funding - PACS / 2,700
Discretionary Capital / 1,000
Discretionary Capital - CRL Transfer to C&V for Specimen Reception Room / (18)
TOTAL SOURCES OF FUNDS / 4,783
APPLICATION OF FUNDS
SCHEMES WHICH HAVE IDENTIFIED CAPITAL FUNDING SOURCES
Screening Services - Replacement Mobiles / 211
Screening Services - Enabling Works / 829
Screening Services - Physics QA Equipment / 61
Screening Services - PACS / 2,700
Sub-Total Schemes Which Have Identified Capital Funding Sources / 3,801
DISCRETIONARY CAPITAL SCHEMES
Outstanding Retentions & Slippage
Health Protection Service - Temperature Monitoring (Swansea) / 8
Screening Services - Cervical Screening Wales Infrastructure Phase 2 / 5
Corporate - Fixed Asset Register / 10
2011/12 Schemes
Health Protection Service - Rotorgene / 25
Health Protection Service - MGIT Analyser / 36
Health Protection Service - 2 Bead Retrievers / 26
Health Protection Service - 4 Gravimetric Diluters / 20
Health Protection Service - 2 WASP Spiral Platers / 30
Health Protection Service - 3 Safety Cabinets / 24
Health Protection Service - Freeze Dryer / 8
Public Health Development - Temple of Peace Electrical Works / 100
Screening Services - HPV Infrastructure Works / 86
Screening Services - BTW Wrexham Telephone System / 10
IT - Screening Virtualised Server Infrastructure Removing Single Points of Failure / 25
IT - Screening Services Data Backup System Replacement / 11
IT - Screening Services Virtual Infrastructure Hardware Replacement Phase 1 / 40
IT - Breast Screening Replacement Servers / 40
IT - Non Clinical Servers / 38
Capital Contingency Fund / 50
Sub-Total Discretionary Capital Schemes / 592
TOTAL APPLICATION OF FUNDS / 4,393
UNDER / (OVER) COMMITMENT / 390
This table shows a considerable capital programme available this year of £4.783m which includes a discretionary programme of £1m.
A process of prioritisation has taken place across the organisation in order to ensure that the allocation of the discretionary capital is made in an equitable way and meets all clinically urgent and health and safety requirements.