www cipfa org uk Accounting for the Integration

www. cipfa. org. uk Accounting for the Integration of Health & Social Care Gareth Davies Policy & Technical Manager CIPFA © CIPFA Networks

cipfa. org. uk Opening Quote “Cooperation… begins where competition leaves off” Franklin D Roosevelt 4 terms as president • 2

Programme Background Integration Scheme Resources Financial Frameworks Financial Reporting Challenges www. cipfa. org. uk

cipfa. org. uk Audit Scotland Review of Models Percentage Increase in Demand 2013 -2030 Long-stay Care Home Residents Homecare Clients (>10 hrs/wk) Emergency Bed Days Acute Emergency Bed Days (3+ admissions) Practice Nurse Consultations Acute Emergency Admissions Acute Day Cases GP Consultations New Outpatient Appointments 0% 5% 10% 15% 20% 25% 30% 35% 40% Data source: Exhibit 4, Changing Models of Health and Social Care, Audit Scotland, March 2016

cipfa. org. uk Reform Challenges “any perceived failure to integrate is not as a result of a failure of legislation” CIPFA Submission to SG Consultation on Integration ““Most of the barriers that are. . presented as blockages. . …could be overcome by a can-do approach and a change in behaviours and attitudes. ” Scottish Parliament Local Government and Regeneration Committee Public Service Reform Strand 3 (9 th report Session 3)

cipfa. org. uk Legislative Policy Objective Improve quality & consistency of services Seamless joined-up health & social care Care in home or homely setting where safe Use resources effectively and efficiently Meet the needs of increasing numbers with longer term & complex needs

cipfa. org. uk Public Bodies (Joint Working) Act 2014 Integration Scheme Integration Model • Delegation to Integration Joint Board (IJB – s 106 body) • Delegation between partners - Integration Joint Monitoring Committee (IJMC) Functions Delegated • Minimum specified but local choices can be made Integration Principles • Service user focus; local engagement; prevention; best use of resources National Health & Wellbeing Outcomes • SSI 343/2014

www. cipfa. org. uk Integrated Budget [Payments ] IRAG - IJB Resources [4. 1] Adult Social Care [LA] Managed Primary & Community Health Care [HB] Managed Hospital Services [HB] Large Hospital Services [HB] IJB can plan & agree transfers between the NB and the IB Notional Budget [Set Aside]

IJB Financial Model Funding contribution £m Local Authority Information on the cost of services commissioned cipfa. org. uk NHS Health Board Commissioning spend by IJB / Income to partner £m Information on the cost of services commissioned IJB Report on IJB discharge of proximate responsibility for SC (eg via APR) Report on IJB discharge of proximate responsibility for Health (eg via APR) Cost information for public consultation & engagement, strategic planning group, locality plans, Annual Financial Statement (bdt), Annual Accounts, Annual Performance Report etc Public consultation & engagement feedback, locality feedback, client feedback etc will inform future service and financial plans Public & Other Stakeholders

www. cipfa. org. uk IRAG - Financial Planning/ Management [4. 1] Strategic Plan Negotiations HB coordination cross system NB<=>IB Transfers / virements IJB Business Case 3 Year Planning Totals Shadow Period – Shared Monitoring

IRAG – VAT Arrangements www. cipfa. org. uk • IJB no VAT registration required – no ability to recover VAT • Supply of services (eg administration) to the IJB by a partner • Will incur costs if partner obtains compensation • Compensation = charge made OR contribution reduced • Staff – ‘special legal regime’ for the Chief Officer? • VAT regime applicable to services delivered relates to the ultimate statutory responsibility for the service provided: • eg ‘health services’ subject to health VAT regime even if delivered by the local authority • Apparent LA tax efficiency but this should probably not be the key determinant of Strategic Plan • Use of assets • Charges for use = VAT burden for IJB • Licence to operate not a VATable supply • Possible treatment as Managed Healthcare Facility (VAT Notice 701/31 ? )

Financial Frameworks ITEM LOCAL GOVT cipfa. org. uk CENTRAL GOVT Provisions No mitigation – charge to budget (limited exception re voluntary severance & equal pay) AME item when created – only charge to RDEL budget when liability crystalises Depreciation Mitigation – replace with statutory debt repayment Ring-fenced (non-cash) RDEL – exceeding ring-fence may have RDEL cash implication Impairment Mitigation – replace with statutory debt repayment If foreseeable (default assumption)– charge to noncash RDEL; in some cases charge to AME allowed (may require HMT agreement) Pensions Mitigation – only charge payment due in year AME – only charge payment due in year to RDEL Annual Leave Accrual Mitigation – do not charge accrual to GF / budget Charge to RDEL (budget cover initially allowed by HMT) Overspend Additional Budget Cover / Brokerage Unplanned use of reserves 12

LASAAC-TAG Guidance www. cipfa. org. uk IRAG/LASAAC/ TAG LA & HB 15/16 True & Fair View / Materiality [IJB acting as principal] IFRS 11 Joint Venture treatment – presumption IJB 15/16 Accounts IFRS 11 Joint Arrangements – Presumption IJB – Support Service Costs Agreeing Balances & Transactions

Additional LASAAC Guidance Refer to IRAG Guidance etc Service Expenditure Analysis Authority CIES Presentation IJB Only Pension Liability Related Party Disclosures True and fair view Irrecoverable VAT Remuneration Report Voting Board Members / CO IJB Running Costs Statutory Mitigation Cash / Cash Equivalents www. cipfa. org. uk

cipfa. org. uk Challenges: Audit Scotland Review of Models Level of investment required Focus funds on community based care Identify longer term funding Public engagement / need for change Performance and costs: evidence & evaluation Front line changes not just structures Difficulties agreeing budgets Acute sector targets counter productive Acute / hospital savings Selected items from: Changing Models of Health and Social Care, Audit Scotland, March 2016

cipfa. org. uk Closing Quote “Coming together is a beginning. Keeping together is progress. Working together is success” Henry Ford • 16

Any Questions? gareth. davies@cipfa. org 0131 221 8644 © CIPFA Networks