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bjbj Can we turn to the update on the running cost position, and I believe that a paper
has been uploaded to the website this morning to amend a page that was previously there
because of some technology errors. Do you want to introduce that? Paul Baumann: Indeed,
so Board members have got that; if members of the public need it, it s on the front row
over there, so apologies for a slight technical glitch. Update on End State Running Cost Position
of the NHS Commissioning Board 2013-14 and 2014-15 Paul Baumann Director of Finance Background
This is really just for the Board to note formally today some changes to the running
cost estimates. The details of this were sent out to Board members at the beginning of May
and you will have had a chance to look through all of the details of those changes, but perhaps
a reminder of the background to this paper before covering the changes. Running costs
One of the key parameters that we have to live within is the running cost limit for
the Commissioning Board. This was brought in, obviously, as part of the government s
wider intent to reduce administrative costs in the public sector and the Commissioning
Board took the lion s share of the reduction in health running costs in order to free up
as much as possible the capacity for CCGs to have the running costs that they need.
So, we absorbed in our original plans a 50% reduction compared to the original resources
that these particular functions consumed. Obviously, that is why we now have a need
to construct a very lean way of operating across the national, regional and local area
matrix. Finalising structures s worth also pointing out that within the best part of
500 million resources that we will have, the National Support Centre is less than a quarter
of the total resources that we have got. The bulk of that money is going into resources
much closer to the CCGs and the operational part of the system in the regional offices
and in particular, in the area offices. So, as the paper points out, we are still in the
process of finalising all of our structures and you ve heard a little bit about that in
the earlier part of the meeting finalising the structures which we are going to operate
with and therefore this is an update rather than the final story. Running cost position
So, if you turn to the table that you have in front of you, since February we have recognised
a number of technical adjustments and we have also assumed a variety of additional functions
into the Commissioning Board, which together amounts to around about 120 million of additional
cost pressure. Now, we ve been able to cover the bulk of this by releasing some of the
contingency that we took at the start of this journey, prudently as it turned out, for precisely
this sort of issue, and secondly by reducing the allocation of discretionary, non-pay costs
that we had in the original budget. The remaining amount, amounting to 35 million, has been
provided in the form of additional resource, effectively, or limit from the Department
of Health, predominantly to recognise the much more technical aspects of the changes
I have just been talking about. Areas of further development So, the detail of this is set
out in the more comprehensive document on the website and which has been sent out, but
obviously Bill and I will be happy to deal with any specific issues which Board members
have today that they want to talk about. We will keep you posted, obviously, as this story
develops. There are two main areas of further development, which are pointed out in the
note. Firstly, the detailed design of national, regional and local structures will, we hope,
confirm both the final shape of the organisation and equally importantly for this purpose at
least, confirm that the running costs estimates that we ve put together are ones which will
deliver us the quality of performance and service that we need. And secondly, as the
paper says, there are a number of elements of our budget where the precise definition
of how running costs will be defined is still a matter of clarification and clearly, we
will work on that with some urgency because we need to get a degree of certainty about
that. Again, I will update the Board as and when there are any further developments on
that. So, that s really what I wanted to say about the paper, unless there are any questions
or observations. Ed Smith: Thank you, Paul. Are there any questions for Paul on the paper?
David Nicholson: I would just reinforce the point that Paul made at the beginning, and
it kind of links to what I think Jo and Bill were saying about this being a new kind of
organisation. It s the first time in history that the NHS has had a single organisation
responsible for all of these things and not only do we want to recognise that and get
value out of it, we also want to make sure that it operates in a different way. If you
think about it, we start off by the point is if you think about all the functions we
currently are going to get, and how they are done now, it is going to cost half as much,
and that is a big change in itself. And also, this thing about having a relatively small
national support centre to help support and enable the NHS, but most people being distributed.
The other two things I would say about that: even in the national support centre, the kind
of heart of the national support centre is the work around the domains in the outcome
framework, so clinicians in particular being involved in all of that at the centre support
and right the way through the system, you can see doctors, nurses, other health professionals
being engaged in that, which I think hopefully will create something not only smaller or
leaner, but also in terms of the way it functions, a very different way of functioning. Ed Smith:
Thank you. Ciaran? Ciaran Devane: Can I ask a question on flexibility? It s impossible
to get it perfectly right, first time out, so if we find there s a pinch point here but
actually we are doing quite okay over here, what degree of freedom is within the pot?
Paul Baumann: I guess there are two types of freedom, one of which is: it s for us to
determine if we want to change the balance of where we invest as we go forward, so that
freedom is absolutely there and I know there are hinge points that are emerging that we
will have to deal with and we will take those forward as we need to do so. Secondly, we
have still got a contingency. I am not minded to give up the contingency at this stage of
the struggle, because we ve still got a fair few months before we go into final go-live,
but we have a contingency. We ve got a substantial amount of flexibility around the discretionary
spend, so I think I can reassure you we ve got enough flexibility for the moment. Ed
Smith: Bill? Bill McCarthy: First, that point I think as Paul sets out, the internal flexibility
is really important. We need to retain it. I think also an external discipline is going
to be important over the coming months. There are still discussions with different bits
of the current system who would quite like us to take on additional bits of jobs or roles
that they have started, which aren t currently ours. I think the only circumstances now in
which we could take anything else on would be if it fitted with what we are about, our
values, but also if it s backed by the right resource, and that will be a set of discussions
we will have to keep having, I think, Paul. Ed Smith: Thank you. The Board is asked to
note progress on this. I think it s fair to say that it s good to see that the increasing
granularity of analysis and the shifting around of costs is now beginning to bed down and
actually really take Bill s point that we have to be very careful about taking on additional
tasks without associated funding, and I think all of us as non executives are very strongly
encouraged by the disposition of the cost towards the local areas rather than having
significant cost in the centre. So, with that, thank you very much, Paul. [Content_Types].xml
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