Health and Social Care (Re-committed) Bill

Memorandum submitted by the Chartered Institute of Public Finance and Accountancy (HSR 30)

CIPFA welcomes the opportunity to contribute to the developing proposals for health service reform in England. Given its position as the only professional accountancy body specialising in the public services, CIPFA is well placed to support the proposed transition of the NHS.

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. Our 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed.

As the world’s only professional accountancy body to specialise in public services, CIPFA’s portfolio of qualifications are the foundation for a career in public finance. They include the benchmark professional qualification for public sector accountants as well as a postgraduate diploma for people already working in leadership positions. They are taught by our in-house CIPFA Education and Training Centre as well as other places of learning around the world. We also champion high performance in public services, translating our information and guidance, courses and conferences, property and asset management solutions, consultancy and interim people for a range of public sector clients.

Globally, CIPFA shows the way in public finance by standing up for sound public financial management and good governance. We work with donors, partner governments, accountancy bodies and the public sector around the world to advance public finance and support better public services.

Summary

CIPFA would advice that each Clinical Commissioning Group should have an Accountable Office and Chief Financial Officer that are Board level appointments

This submission focuses on the governance of Clinical Commissioning Groups;

1 Schedule 2 of the Bill requires Clinical Commissioning Groups to appoint Accountable Officers. We note that the Schedule envisages that an Accountable Officer may be appointed to a role covering more than one Consortium. It may be that the Accountable Officer is neither an employee of the Consortium, nor a member (in his or her own right) of that Consortium. Because of the critically important role of the Accountable Officer, not only in terms of ensuring compliance with the Consortium’s obligations, but also in terms of ensuring value for money, CIPFA believes that there should be a formal requirement for the Accountable Officer to be appointed as an executive Board member of the Consortium.

2 We support the comments made by the House of Commons Health Committee in its Fifth Report of 2010/11 that key governance matters should be dealt with by way of secondary legislation rather than by local NHS management decision, to ensure compliance with minimum professional standards. We strongly recommend that the status of the Accountable officer should figure within this requirement.

3 We note that Schedule 2 goes on to deal with a number of specific powers and responsibilities, including such matters as trust funds, external financing agreements and keeping proper accounting records. However, the Schedule is silent on the essential matter of ensuring that an appropriately qualified person is appointed to lead the technical function. CIPFA would advise that a further requirement of secondary legislation is that there should be a Chief Financial Officer (CFO) for every Clinical Commissioning Group, and that this post should automatically be at executive Board member level.

4 Accountable Officers need to be able to rely on the professional skills of their CFOs.

5 In summary The CFO will not only need to hold the financial reins of the Group, and ensure that resources are used wisely to secure positive results but to manage the financial challenge related to the ageing population and improvements in technology and pharmaceuticals. (the £20bn national challenge)

6 CFOs require the knowledge, skills and experience to be able to articulate to Accountable Officers and Board Members – who may not have in depth experience in corporate management the requirements of financial stewardship and corporate governance, relating to a wide and multi-disciplinary remit.

7 As well as demonstrating top class skills personally, CFOs will need to develop properly resourced teams that are capable of managing a complex structure of formal and less formal relationships, including partnerships with other Consortia, and voluntary and community groups.

8 In more depth the role of the Clinical Commissioning Group CFO can be expected to be varied and complex from

§ Statutory duties relating to accountability, probity and governance,

§ Understanding how the Clinical Commissioning group’s financial allocation has been prepared; how this will change in terms of expected population and age profile changes within the local population and preparing a 5 year financial plan to manage underlying cost pressures, service change, innovation and transition

§ Managing an in year resource allocation of between £1bn & £2bn

§ Payments and collecting receipts

§ Maintaining the integrity of financial systems

§ Treasury management

§ Counter Fraud

§ Providing comprehensive financial reports for the Board

§ Preparing the annual report and accounts and statement on internal controls

§ Leading on standing orders, standing financial instructions and a scheme of reservation and delegation.

§ Having a comprehensive understanding of the NHS Finance regime and mechanisms such as how Commissioners make payments to Providers under the Payment by Results Tariff.

§ Establishing Bank Accounts

§ Ensuring support services are specified and evaluated

§ Ensuring Internal & External Audit arrangements in place

§ Input into supply side strategies

§ Input into service specifications and market development strategies

§ The costing of Workforce and Education strategies

10 A number of the transactional roles could be undertaken within a shared service arrangement but the statutory lead for financial management, financial reporting, financial planning and advice should remain with the Chief Financial Officer and the Accountable Officer, both Board level appointments.

July 2011

Prepared 11th July 2011