Despite a total funding increase to £10.6bn for 2020/21, an independent analysis by public spending watchdog Audit Scotland has found that a “significant overall budget gap” remains across Scotland’s 30 Integration Joint Boards (IJBs), responsible for the health and care services in Scotland.

Audit Scotland today published its financial review for the period 2020 to 2021, revealing an overall funding increase to the IJBs over this period of 11.9%, representing a 9.8% increase in real terms.

Questions have been raised in parliament about why IJBs have been building cash reserves. Despite reserves tripling to total £581m, the report states that Scotland’s IJBs will struggle with considerable “financial sustainability risks”.

William Moyes, Chair of the Accounts Commission – the part of Audit Scotland that focuses on local government – said that the IJBs must prepare for an “increasingly uncertain future, with mounting financial and service pressures” by developing robust, long-term plans towards sustainable services.

With inflation, increasing demands for service transformation and recovery from the pandemic, auditors looked at the funding and budgets of Scotland’s IJBs and identified a projected budget gap of £151m for 2021/22. While this is a decrease from the £185m overall budget gap in 2020/21, concerns have been raised in Scottish parliament about financial planning.

Jackie Baillie, Scottish Labour Health spokesperson says:

“This report lays bare the bizarre position Scotland’s Integration Joint Boards find themselves in – with sky-rocketing reserves as well as serious long term financial challenges. And early indications suggests that these reserves have increased substantially in 2021/22 as well.

“It is crucial that these unprecedented reserves are used to build a stronger and fairer social care system. It simply is not right to sit on millions of pounds when so many people are struggling.”

However, according to Audit Scotland, 81% of the money held in IJBs financial reserves is already ringfenced for dedicated services. Of this, 26.2% has been ringfenced specifically for covid-19, with the next two largest proportions dedicated to transformational spends on social care (£118m) and primary care and mental health (£106m).

The report states that these high financial reserves reflect unspent covid-19 funding coupled with “the late allocation of non-recurring specific funding for primary care, community, mental health and alcohol and drug support.”

Reviewing the budget gap, Audit Scotland found that £10m of these reserves would be dedicated towards savings, contributing 7% in the planned budget papers.

In terms of overall budgets, significant differences were noted in the likelihood of IJBs breaking even with budget gaps ranging from £0.3m at West Dumbartonshire IJB to £31.3m at Edinburgh IJB.

Long-term budgets needed

With the funding increase of £1.1bn from the Scottish government, in one-off funding to support IJBs to deal with the impact of covid-19, Audit Scotland highlights the need for more long-term financial planning.

Mr Moyes said that when this dedicated covid-19 funding is taken out, the finances of IJBs present “real cause for concern”, adding that:

“Planned budgets are materially greater than forecast income. IJBs need to identify savings, which are mostly recurrent. Credible long-term plans need to be developed. Unless these issues are tackled, the sustainability of services provided by IJBs must be in doubt, particularly given the growth in demand.”

From their review, it is apparent that only 5 of the 30 IJBs have long-term financial plans in place, though there has been an increase in medium-term planning from 26 to 27 of the IJBs in Scotland.

However, the need for clearer savings plans is outlined in the report, with ten IJBs still including “unidentified savings” as part of their budget plans – a total of £22.6m – representing 15% of the total budget gap at the start of the financial year.

Audit Scotland reports that Dumfries and Galloway IJB in particular will have difficulty in meeting its £27.6m savings target in 2021/22 set out in its Annual Audit Report in 2020/21.

Financial sustainability risks have been “exacerbated by uncertainty of future funding, rising demand and the potential impact of a national care service”, according to the Audit Scotland review.

Last week, healthandcare.scot reported on the Scottish government’s introduction of legislation for the National Care Service (NCS), which seeks to address social care needs in Scotland. The legislation seeks to create a network of Car Boards across Scotland but the extent to which these will mirror the current IJBs is not clear.

While some welcomed the bill, others raised concerns about funding and workforce. With staff costs representing the biggest areas of spending of all IJBs and NHS boards, Associate Director for the Royal College of Nursing Scotland, Eileen McKenna said:

“For any social care reform to be effective, the Scottish government must urgently address workforce shortages and deliver fair pay for nursing staff working in all settings.”

Non-recurring streams and the need to transform services while recovering from the pandemic against a backdrop of financial and workforce pressures were identified as key challenges to IJBs.

Mr Moyes said that the plans for a NCS may “significantly change the way IJBs operate”. He added that recruitment challenges, pre-existing rising demand and the unknown long-term impacts of covid-19 contribute to significant pressure on health and social care services.

The review outlines that it is essential for IJBs to create long-term financial plans, to address these unknown impacts and increased pressures from rising demand and inflation.

Although noting that “almost all IJB auditors” reporting financial sustainability in the medium term, the review highlights the challenges facing Argyll and Bute, Aberdeenshire and Dumfries and Galloway IJBs as they struggle to meet savings targets.

 

Read more: NHS faces ‘extraordinarily difficult' budget decisions; Government explains cut in new medicines fund; NHS Highland: ‘worst funding gap seen'

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