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ITEM EX7

EXECUTIVE COMMITTEE – 11 NOVEMBER 2003

HEALTH AND SOCIAL CARE IN OXFORDSHIRE

Report by Director for Social & Health Care and Director for Resources

Introduction

  1. The NHS in Oxfordshire is attempting to implement a challenging recovery plan to avoid a possible £50m deficit during 2003/04. As part of this work they have recently agreed to find further savings totalling £5.3m to ensure NHS organisations break even by 31 March 2004 and have been instructed to bring expenditure back into balance by 2005/6. Considerable progress has been made to identify savings, but there remains a funding gap. It is proposed the County Council contributes an additional £1m to the pooled residential and nursing care budget for the current year. This would give the Primary Care Trusts and other NHS providers more time to restructure services and avoid damaging cuts to patient care, which would have severe implications for Social and Health Care clients. This arrangement would allow the PCTs to withdraw £1m now, when they most need it, and would be offset by the County Council contributing £1m less to the same budget in 2004/05.

    2. Background

  2. The NHS in Oxfordshire has been in serious financial difficulties for some considerable time. This is mainly due to a large overspend in the Oxford Radcliffe Trust. NHS Managers are projecting budget deficit of £50m in 2003/4. The Strategic Health Authority (StHA) has been pressing for a recovery plan, which will bring the services back into balance by the end of 2005/6.

  3. By the end of August 2003, a further £5.3m savings to bridge the £50m funding gap were still needed for 2003/4. The Primary Care Trusts (PCTs) and the NHS Trusts were considering cuts in services, which would have a major impact on residents of Oxfordshire. (e.g. closing wards in hospitals and further restrictions on prescribing drugs).

  4. The StHA has insisted on a properly costed recovery plan being in place by the end of September 2003 so they can have confidence the necessary financial savings will be made in time.

    5. Proposal

  5. I am recommending the Executive to increase the Council’s contribution to the ‘pooled’ Social & Health Care budget by £1m, to be paid in October 2003. This would be recouped by the County Council paying into the same budget £1m less in 2004/05.

  6. This budget was set up under section 31 of the Health Service Act 1999 in 2001. It provides for the County Council (through the Social & Health Care budget) and the 5 PCTs to pool money for the purchase of residential care and nursing home places. The budget for 2003/04 is £54m, which is currently projecting an underspend of £600,000 before the winter pressures are felt.

    7. Impact on Social & Health Care Clients

  7. This extra contribution, by allowing the PCTs to withdraw £1m from the pooled budget in October, will enable the Oxfordshire health and social care system to maintain jointly funded key services such as residential respite care and rehabilitation for older people. This will be of significant benefit to social care clients because it will in many cases avoid the need for more expensive residential care. The PCTs will be able to maintain their current funding of community based intermediate care services which will further reduce the need for the County Council to pay for more expensive packages of care. For example, by being able to maintain drug prescribing at current levels, it will mean clients get the drugs they need to recover sooner and reduce the need for more home support. The PCTs will also be able to develop medical cover to enable the safe discharge of patients from Community Hospitals.

  8. Without this medical cover there is the risk that patients will become ill again and need expensive packages of care from the County Council. Overall, this will give the health services time to restructure their system to comply with the StHA’s requirements, but avoid some of the worst effects on patient services. Oxfordshire residents will benefit greatly from the cooperation between the County Council and the Health system.

  9. To ensure that the objectives described above are addressed, the additional contribution would be made over to the PCTs specifically for:

    • Retaining investment in rehabilitation services;

    • Retaining funds to purchase nursing home places;

    • Maintaining existing levels of approved drug prescribing; and

    • Putting in place adequate medical cover to ensure safe discharge home.

Legal Implications

  1. Section 28BB of the National Health Service Act 1977 gives local authorities powers to make payments to either a PCT or Health Authority towards expenditure incurred or to be incurred by that body in connection with the performance of certain prescribed functions. These functions are prescribed by the NHS (Payments by Local Authorities to NHS Bodies) (Prescribed Functions) Regulations 2000. These Regulations provide that payments can be made for the purchase of health provision including rehabilitation services and services intended to avoid admission to hospital.

  2. Payments under this section may be made in respect of expenditure of a capital or a revenue nature or in respect of both.

  3. Under the provisions of the Act the Secretary of State for Health has issued directions setting out the conditions governing these payments. Before making payment under Section 28BB the Local Authority must be satisfied that the payment is likely to secure a more effective use of public funds than the deployment of an equivalent amount on the provision of local authority services.

    4. Financial Implications

  4. Based on a prudent evaluation of the latest budget monitoring information and the trend in spending, the overall position on the Programme Area Carry Forward Reserve, allowing for the additional contribution to the pooled budget of £1m, is most likely to remain positive at year end. However the position will need to be monitored closely.

  5. The Social & Health Care contribution to the pooled budget will reduce by £1m in 2004/05 and this needs to be factored into the budget.

  6. The mechanism for releasing the £1m would be by virement to the pooled budget. Since the arrangement would be temporary it falls within the Executive’s remit under the established virement rules.

    7. Conclusions

  7. This proposal is brought forward in response to the potentially severe problems for clients and prospective clients of Social & Health Care stemming from the financial position of the local NHS organisations. We see this as the best way of limiting those problems for Oxfordshire people and of avoiding further pressures on the County Council’s own resources. There is considered to be no action that could be taken through direct expenditure by the County Council which would be as effective in addressing those problems.

  8. The arrangements will need to be subject to certain safeguards which must be in place before the County Council makes the extra payment: in particular, a written and legally binding commitment will be required from the Chief Executives of the 5 Primary Care Trusts that the contribution will be used for the purposes specified, and that they will make an additional £1m contribution to the ‘pooled’ budget by 30 June 2004.

  9. The District Auditor has seen a draft of this report. He has commented that the County Council needs to ensure that the arrangements are dealt with in accordance with proper accounting policy and practice and that the variation to the pooled budget is legally binding. The Social Services Inspectorate has congratulated the County Council on the initiative and the Strategic Health Authority has expressed its gratitude for the offer.

    10. RECOMMENDATIONS

  10. The Executive is RECOMMENDED to approve a virement of £1m to the 2003/04 pooled budget to enable payment in that amount to be made in October to the five primary care trusts as described in the report, subject to:

    1. the Director for Social & Health Care monitoring the application of the payment with a view to ensuring that that it is used, within the framework set out in the report, in as efficient and effective a way as possible;

    2. a written and legally binding commitment being received from the Chief Executives of the 5 Primary Care Trusts that the contribution will be used for the purposes specified in the report, and that they will make an additional £1m contribution to the ‘pooled’ budget by 30 June 2004, as well as meeting the other requirements of the Secretary of State's directions;

    3. a corresponding reduction in the County Council’s contribution to the pooled budget in 2004/05.

CHARLES WADDICOR
Director for Social & Health Care

JOHN JACKSON
Director for Resources

Background papers: Nil

Contact Officers:
Charles Waddicor, Director for Social & Health Care (01865 816041)
Peter Clark, Solicitor to the Council (01865 815363)
Jenny Hydari, Assistant Head of Finance (Accountancy) (01865 815401)

October 2003

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