By Richard Vize | 27 June 2014
Should public sector finance managers be more open with the public about the effects of cuts in services? Participants at a recent CIPFA roundtable debate on health and social care funding certainly think so
There is a growing consensus that it is time the finance profession found its voice on public spending. Politicians say cuts can be pain-free, but the public are confused about the true financial position and what it means for local services. Informed, impartial professionals are urgently needed to join the debate.
To address this need, CIPFA is holding a series of roundtable debates across the country to give public sector finance managers a platform to speak about public spending policy and practice, and to help the institute develop its own policies.
The first, in May, focused on health and social care – the pressures and opportunities for collaboration and integration. It was held in Leeds and led by Mike Farrar, CIPFA’s strategic adviser on health, and involved more than a dozen finance leaders from across the North of England. Participants expressed strong belief that senior staff have a responsibility to be open with the public about the state of the public finances and what it means for services.
‘CIPFA wants to add to the weight of voices talking about public finances, as there is a level of understanding within the services about the nature of the financial pressures that hasn’t got out to the public,’ Farrar explained.
Keith Griffiths, director of finance at Calderdale and Huddersfield NHS Foundation Trust, compared the need for finance managers to be more open with the duty of candour for NHS clinicians: ‘As finance professionals, how do we deal with candour in the way the medical profession does? Some of the issues we are dealing with we haven’t been quite so open about.’
Farrar highlighted the narrative from politicians that big cuts can be made with little impact: ‘Are we going to perpetuate the idea that we can make £20bn of savings in the NHS, that local authorities are somehow going to manage with 30% less grant and still provide the right care? Have we got that story about public finances right?’
Everyone agreed the national picture was too complicated and abstract to be meaningful to the public; it has to be described in local terms. ‘Don’t bother trying to explain the big picture we work with professionally. We need to construct the narrative around very local issues,’ said Stuart McKinnon-Evans, finance director at Bradford City Council.
The discussion then turned to what the cuts meant for local collaboration between the NHS, local government and other parts of the public sector. There were two threads: integrating services and thinking strategically about all public spending in the area, similar to Labour’s Total Place initiative.
McKinnon-Evans said the time was right to rethink the structure of health and social care, focusing on integrating services round the individual and taking account of telecare and app-based medical developments.
But CIPFA chief executive Rob Whiteman, who also chairs the audit and risk committee at Whittington Health NHS Trust, believed it would be increasingly difficult to deliver a place-based approach to public spending.
‘Total Place was first considered in a time of fiscal growth. We could see all this new money going into different funding streams leading to multiple interventions, and therefore a lot of Total Place was built around “how do we get better value from all this extra money?”. That’s fundamentally changed. In austerity, everyone has accountabilities to balance their own books and make sure their own organisations are sustainable,’ he said.
‘The only way a Total Place approach will happen is if realistic timescales are set – this is about the medium term, not putting things right in a year. And that involves new money if it’s going to be transformational as well; otherwise, government should be more honest and say we can’t afford transformation at the moment – this is about trying to balance the books.’
Jane Hazelgrave, chief finance officer at NHS Bradford Districts Clinical Commissioning Group, saw public sector organisations’ determination to survive as a barrier to a place-based approach. But resistance is weakening: ‘[Locally] there has been a bit of a leap, beginning to set aside these organisational differences and move forward on the things we really need to do. In the public sector, we have no option but to do something big and different.’
The government and opposition have pushed the idea that integrating services can achieve the miracle of improving quality and meeting rising demand while saving money, despite the lack of evidence. In last year’s spending round, ministers announced the Better Care Fund – £3.8bn pooled between the NHS and local government, to be spent on integrating health and social care in 2015–2016. Local plans submitted to the Department of Health indicate that councils and CCGs will pool an additional £1.4bn. But trust managers doubt the schemes will deliver on promises to cut emergency admissions.
Michelle Larkin, assistant director for transformation at West and South Yorkshire and Bassetlaw Commissioning Support Unit, believed the absence of evidence-based models for integrating services had hindered progress: ‘There’s a lot of dipping toes in water because there’s no confidence that the model you’re choosing is the right one. Health is all about evidenced research. There isn’t something great out there that’s worked for a number of years that we can pick up, shift and localise.’
Integration often involves centralising services, but that is difficult to sell to the public. As Nigel Booth, chair of the Yorkshire and Humber branch of the Healthcare Financial Management Association, put it: ‘We can say to people, “If we integrate these services and do it from York, not Scarborough, we will save this much.” [But] the people of Scarborough are not interested in the money because they still want the service. So your narrative around money is always going to be difficult.’
Alongside organisational survival, financial pressures, and uncertainty over the mechanisms and benefits of integration, there was a strong feeling among participants that the competition laws enshrined in the NHS reforms impede public sector collaboration.
The consensus was that while the government talked about integration – and had started imposing duties on public services to deliver it – competition and divisions between local and national healthcare commissioning were causing fragmentation. Local health bodies wanting to work more closely were unable to set aside competition rules even where that would benefit local people.
According to Griffiths: ‘Competition is getting in the way of us doing the right thing for our patients. We are being forced down the path of competition rather than working with partners. The confusion that is creating is significant. We’re struggling to get everyone around the table because those governance and regulatory issues keep getting in the way.’
Assuming barriers to integration can be overcome, and organisations can think in terms of the system rather than just their own organisation, what are the outcomes around which public services will unite?
In deciding outcomes, there are tensions between both national and local priorities and between different local agents. Dr Gordon Sinclair, clinical chair of NHS Leeds West CCG, said: ‘In the NHS, most of our outcomes are determined somewhere up there, and come down in a mandate. In many ways, those outcomes make sense, but how do they connect to what our population think about and the way they live their lives?’
Aileen Murphie, Director of DCLG and local government value for money at the National Audit Office, believed that a place-based approach had ‘never quite worked’, in part because of the difficulty of agreeing what constitutes a good outcome, and because specific organisations were accountable for particular budgets.
‘We’ve got to have a set of outcomes agreed locally that relate to what people want on the ground and what the government wants at the top.
“It’s about bringing the different aspects together in a workable model. We’ve never seen that.’
Jayne Stephenson, head of performance and partnerships at Trafford Council, was convinced outcomes built around service users were the best way to bring organisations together: ‘What is the public service reform around the frail elderly, what is your risk and reward?’
Inevitably, the conversation turned to risk, and the difficulties of discussing it with politicians and the public. Ministers invariably react to failure by imposing more regulation, which, as Sinclair pointed out, drives up costs by fettering professional discretion in a never-ending drive to eliminate risk. The group saw accepting risk as important in getting the best out of staff – particularly giving frontline staff the support, trust and autonomy to come up with solutions.
The roundtable concluded by discussing the role professional organisations such as CIPFA and the Healthcare Financial Management Association should play in the debate on finance policy and practice. As well as being open and honest with the public about the state of public finances and what it means for them, it was agreed that professional bodies should speak out on difficult issues such as regulation costs and support public sector mana-gers who took risks to transform local services.
With the prospect of austerity stretching on until at least 2020, taking risks will be an essential part of the finance manager’s job. As Griffiths put it: ‘None of us are sustainable in our current form.’
Mike Farrar, Jayne Stephenson, Aileen Murphie, Angelina Cannizzaro and Ian Carruthers will be speaking at the CIPFA annual conference in London, 1–3 July 2014
This feature was first published in the July/August edition of Public Finance magazine
