Warning of cash shortfall in key public sector reform

The financial experts overseeing the Scottish Government's key policy to merge health and social care have warned that there is not enough money to deliver the multi-billion pound reform.

Deputy Labour leader Alex Rowley says report is a serious warning
Deputy Labour leader Alex Rowley says report is a serious warning

A document produced by the chief finance officers in charge of the merger claims reductions to health and council budgets combined with pressure to make savings and the expense of paying the living wage means there is a cash shortage.

Integrating health and social care is a major public sector reform, which has been introduced in an attempt to ease pressure on the NHS by caring for more elderly people in the community.

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Analysis of the policy has been carried out for a report submitted to the Scottish Parliament’s Health Committee by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the CIPFA IJB Chief Finance Officer Section – a group comprising of Scottish integration authority chief finance officers.

The report notes that £8.3 billion has been allocated to integration authorities for their 2017/18 budgets. The cash comes from Scottish Government budget resources which is distributed to NHS Boards and local authorities.

The report said: “There is emerging evidence which indicates that the current level of resources is less than that required to meet current cost and demand pressures.”

It goes on to warn that the shift in the balance of care from hospital to community will take longer to achieve as a result.

A number of integration authorities have estimated how much more money they require. The estimates vary from a 2.65 per cent increase required for Midlothian in 2018/19 to the 14 per cent required over two years in North Ayrshire.

However, the experts acknowledge that “realistically” the the policy will have to be delivered using existing resources and warns this will speed up the reduction in cash available to hospitals.

The report said: “Additional resources will be at a premium and potentially resources will have to come from within the current financial envelope. This will, however, accelerate disinvestment in acute hospital services accompanied by a consequent transfer to community based services.”

The group recommends that in order to financially support the integration agenda, there needs to be a long-term financial strategy established by the Scottish Government. In planning for this, the Government should also examine whether integrated authorities should receive a direct allocation of funding to maintain progress.

The Chair of the CIPFA Integration Joint Board (IJB) Chief Finance Officers Section, Sharon Wearing, said: “With emerging evidence of current budget deficits of integrated authorities between 3 per cent and 14 per cent, there is a careful balance to be struck between the level resources necessary to manage current demand while planning for system redesign.  It is of crucial importance that there is integration, however it needs to be properly planned for to ensure the sustainability of services.”

Head of CIPFA Scotland, Don Peebles, said: “ It is illogical that there is no medium to long-term financial strategy for the integration of services in Scotland already in place. We urge the Government to outline funding plans for future years to ensure outcomes can be boosted for the benefit of communities.”

The pressures on the system are illustrated by a report to Fife Health and Social Care Partnership, which predicted that the number of people aged over 75, living alone and with the greatest care needs could increase by 41.62 per cent by 2027.

Scottish Labour’s deputy leader Alex Rowley said: “This is a very serious warning that SNP ministers must take seriously.

“We have a staffing crisis in our NHS, and a funding crisis in local government. The SNP has cut £1.5billion from local services since 2011, including £170million this year alone.

“That has a major impact on services such as social care.

“The SNP needs to stop passing on Tory austerity and support Labour’s proposals to invest in our communities.”