Dyraniadau byrddau iechyd: 2021 to 2022

Introduction

1. This document details the Health Boards allocations for 2021-22.

2. The allocation reflects the Minister for Health and Social Services’ decisions about the distribution of resources to Health Boards.

Action

3. This allocation is made under:
   • Section 174 of the National Health Service Act 2006 and the amounts payable to the Assembly in respect of depreciation charges under section 174(10).   The powers are conferred directly on Welsh Ministers.
      
   • Section 70 of the Government of Wales Act 2006

4. Health Boards and NHS Trusts are expected to develop robust plans to deliver against the priorities for 2021-22 set out in the NHS Planning Framework from within this allocation. This is an initial allocation and additional funding for key priorities will be allocated as appropriate when costs are confirmed. Funding for the following issues are being held centrally until the amounts required for 2021-22 are confirmed:
   • GMS and GDS contractor allocations are issued at this stage at 2020-21 recurrent levels.
      
   • Revenue funding for SIFT, Postgraduate Medical and Dental Education, Research and Development and PHLS will be issued as direct funding to the relevant health boards and NHS trusts. Depreciation funding for these funding streams is included in this allocation.
      
   • Allocations for accelerated depreciation, AME depreciation for donated assets and DEL and AME impairments will be issued as direct funding to the relevant health boards and NHS trusts. This also applies to any increases in depreciation related to approved schemes with confirmed strategic support.
      
   • Funding for the NHS Wales Shared Services Partnership will continue to be met from Welsh Government central budgets in 2021-22. Adjustments have been made in this allocation for agreed transfers (as set out in Table 3).
      
   • Funding will be held centrally within the Welsh Government NHS budget to recognise the impact of NICE mandated Advanced Therapeutic Medicinal Products.
      
   • Funding will continue to be held centrally to fund the costs of purchasing cystic fibrosis medicines Orkambi and Symkevi and to maintain access to Kalydeco.
      
   • Funding for education and training investments in 2021-22 will continue to be provided directly to HEIW from the Welsh Government NHS budget.
      
   • As in 2020-21, funding to cover the increased employers contribution for the NHS Pension Scheme will be held centrally.

Unified budgets

5. This document sets out the allocation to health boards for 2021-22.
    
6. Health Boards are responsible for managing the totality of their budget, and making the best use of all available resources. The only restrictions to virements between different allocations relate to ring fenced HCHS services (see Table B) the totality of the GMS contract and the elements of the Dental Contract (see Table C and F and the explanatory notes enclosed).
    
7. The 2021-22 allocation comprises:
   • Summary: Revenue
   • Hospital and community Health Service (HCHS) and prescribing revenue discretionary allocation (tables A1, A2 and A3)
   • HCHS protected and ring fenced Services (table B1)
   • HCHS Directed Expenditure Allocations (table B2)
   • New General Medical Services Contract Allocation (table C)
   • Revenue Allocation for Community Pharmacy Contract (table E)
   • Revenue Allocation for Dental Contract (table F)
   • Memorandum Tables (tables 1 to 5)
   • Memorandum Table (DDRB)
   • Summary: Capital

8. For Hospital and Community Health Services (HCHS) and prescribing costs, Health Boards are responsible for commissioning services for their resident population for HCHS, with the exception of some cross border flows, referred to in paragraph 53 and on the basis of registered population for the prescribing element. The GMS Contract allocation is issued on the basis of registered populations, and the Community Pharmacy allocation is issued primarily on the basis of numbers of scripts dispensed within Health Board areas.

Equality impact assessements

9. You are reminded of the requirement to ensure you undertake integrated impact assessments of all major spending decisions, including the implementation of efficiency programmes. 
    
10. Health Boards are reminded to ensure compliance with the Welsh Government Code of Practice for Funding the Third Sector, and the requirements of the Well-being of Future Generations (Wales) Act.
     
11. You should ensure that any changes in service provision are impact assessed to ensure the Welsh language is fully considered and you should keep a record of the cost in delivering the service in Welsh.
     
12. Health boards are reminded that any funding decisions take account of the population needs assessments for care and support needs that were published in 2017, as part of the requirements of the Social Services and Wellbeing (Wales) Act 2014.

Recurrent discretionary allocation (Table A)

13. This provides the total discretionary funding available to Health Boards to fund hospital and community healthcare services and primary care prescribing costs. The distribution of the allocation is derived from the 2020-21 baseline, adjusted (Tables A2 (baseline adjustments) and A3 (additional recurrent funding)) for new funding issued and additional agreed top sliced funding.
     
14. Health Board discretionary allocations have been increased by £105 million to meet estimated pay and other inflationary cost pressures for 2021-22.  This equates to a 2% increase on the recurrent discretionary allocation, ring fenced (excluding mental health and depreciation) and Directed Expenditure. This includes funding to cover the first 1% of agreed pay awards for 2021-22.  The HCHS funding is distributed using the needs-based allocation formula updated for recent population and needs indicator data revisions.
     
15. This allocation does not include funding for the ongoing NHS response to Covid-19 in 2021-22. Resource planning assumptions for Covid-19 funding will be shared separately with Finance Directors.
     
16. 2020-21 DDRB and Executive Senior Pay allocations have been included as per the mapping return percentages.  A DDRB summary memorandum table has been included for information.
     
17. Funding has been built into the ring fenced allocation for 2021-22 for organisation specific allocations agreed during 2020-21.
     
18. The 2020-21 allocation letter actioned top slices to fund specific developments, with funding being transferred to ring fenced allocations.  This arrangement continues in 2021-22 with further adjustments for the next year or full year effect for paramedic banding and  111 rollout.
     
19. It is recognised that there will be pressures on prescribing in 2021-22 from the introduction of new medicines and availability of medicines. Health Boards will need to work with their pharmacy professionals to maximise the available opportunities to manage the introduction of new medicines and changes in practice. The Welsh Analytical Prescribing Support Unit will continue to work with the service to model the cost pressures of approved new medicines.
     
20. Health boards should continue to take action to reduce unnecessary and inappropriate prescribing and reduce waste.
     
21. The Welsh Government will continue to hold a budget for the difference between the cost of prescribing and the cost of dispensing (excluding (WP10 (HP) funding, as this was included in the 2016-17 supplementary allocation).

HCHS Ring Fenced Services (Table B1)

22. The second component of the HCHS allocation is the funding allocated for ring fenced allocations. There is no flexibility about the use of this funding, although Health Boards are free to invest additional funding in these services to meet national priorities. Health Boards are reminded that ring fenced funding cannot be deferred into future financial years.
     
23. Additional funding has been top sliced from the discretionary allocation and added to ring fenced funding for paramedic banding.
     
24. Additional Critical Care funding has been added to the recurrent ring fenced allocation as per the letters issued.  Funding has been included Cwm Taf Morgannwg, Swansea Bay and EASC (critical care transfer service).
     
25. Funding for the Treatment Fund has been added to the ring fenced allocation due to ongoing compliance with the requirements in the Directions and the Welsh Health Circular 2017 (001).  The allocation of £16 million has been calculated using 21-22 updated shares, with the same agreed adjustments actioned in 2020-21.
     
26. The DEL depreciation budget remains ring fenced and is a non–cash allocation. In year allocation adjustments will be considered on a case by case basis on a non recurring basis.
     
27. As advised in paragraph 14, the £105 million uplift includes an equivalent 2% uplift on the ring fenced allocations (Table B1) (excluding Mental Health and Depreciation amounts) and the Directed Expenditure Analysis (Table B2).

HCHS Directed Expenditure (Table B2)

28. Additional allocations have been added to the Directed Expenditure table, for agreed items, such as Women’s Health Implementation Group, Community Health Council, Velindre Chief Operating Officer post, Quality & Care, and further 111 top sliced rollout funding.

Healthcare Agreements between Health Boards and with NHS Trusts

29. Health Boards and the Welsh Health Specialised Services Committee are expected to pass on an appropriate levels of funding for relevant pay, non-pay inflationary cost increases and growth funding in the Healthcare Agreements for services provided by other Boards and NHS Trusts, equivalent to the additional funding provided to commissioners. With the exception of centrally funded services and any agreed in-year funding, Welsh Government will not be allocating funding for pay awards and other inflationary costs increases directly to provider organisations, as this is an appropriate requirement for commissioning organisations to discharge.
     
30. The financial values of Agreements should be confirmed promptly to enable provider organisations to confirm their Integrated Medium Term Plans. Welsh Government will require evidence that these Agreements are in place during its reviews of IMTPs. As per WHC/2019/014 the deadline set for the signing off of LTA/SLA documents is by the last working day of March, with the submission of arbitration cases, from both parties, set as the first working day of April. Organisations are also to report on the status of obtaining signed agreements via the Financial Monitoring Return process.

GMS Contract (Table C)

31. Contract negotiations have not been finalised for 2021-22.  The GMS allocation is issued at this stage on the same basis as the 2020-21 allocation with adjustments being made for known recurrent 2021-22 changes:
    • DDRB agreed pay and expenses increase from 2020-21;
    • Immunisation funding (Pertussis for pregnant women);
    • Increased rent for completed primary care scheme.

32. A supplementary allocation will be issued when the 2021-22 contract agreement is confirmed.

Community Pharmacy Contract (Table E)

33. The Community Pharmacy contract negotiations have not been finalised for 2021-22 although there is in principle agreement to continue the redistribution of existing funding to further support the delivery of clinical services most notably increasing availability of independent prescribing services, alongside wider reform of funding arrangements.  The allocation for 2021-22 is issued with a 2% increase to the community pharmacy contractual framework (CPCF) funding for 2020-21.
     
34. Details of the total contractual funding and the distribution of funding between core services, enhanced services, quality and workforce elements will be clarified after the allocation is issued.

Dental Contract (Table F)

35. Contract negotiations have not been finalised for 2021-22 in time for this document.  The allocation has therefore been issued based on the 2020-21 final allocation with adjustments being made for the following recurrent changes:
    • DDRB pay and expenses increase from 2020-21
    • Further adjustments to reflect in year allocation changes made in 2020-21 (recurrent amendments) for patient charge revenue) for patient charge revenue and Gwên am Byth funding.

36. The allocation will be re-issued for 2021-22 when contract negotiations have been concluded, and agreement is given for a contractual uplift.
     
37. Health Boards are reminded that in terms of the ring fenced Dental Contract budget arrangements will continue as follows for the next year:
    • for Health Boards without two consecutively approved IMTPs, the ring fence will continue for 2021-22;
    • for those Health Boards with two consecutively approved IMTPs, the ring-fence is removed provided they continue to have their IMTP approved; and
    • to continue to ring-fence the Designed to Smile and Gwên am Byth oral health improvement programmes for all Health Boards in 2021-22.

38. We will continue to monitor and review the expenditure analysis provided by Health Boards and we will make adjustments to ring fenced dental contract allocations should explanation on expenditure be considered inadequate.

Capital

39. The NHS infrastructure investment comprises strategic schemes delivered through the All Wales Infrastructure Programme. The investment includes land and buildings, but also other significant physical assets including vehicles, medical and Information Management Technology equipment. The infrastructure investment covers all healthcare settings including acute, primary and community care.
     
40. Discretionary capital is that allocated directly to NHS organisations for the following priority areas:
    • meeting statutory obligations, such as health and safety and firecode;
    • maintaining the fabric of the estate; and
    • the timely replacement of equipment.

See Summary: Capital for values of baseline discretionary funding.

41. Officials continue to work with organisations in respect of funding for individual schemes in 2021-22.  Funding is approved for the continuing redevelopment and modernisation works at Prince Charles Hospital along with the completion of the neonatal works at Glangwili Hospital.
     
42. In addition to the above, capital funding has also been approved for the delivery of the Primary and Community Care Pipeline across Wales as well as the continuing support for IM&T and diagnostic Programmes.  Funding has also been identified linked to decarbonisation and maintenance of the NHS Estate. All approved funding amounts are agreed with individual organisations based on scheme delivery profiles.

Mental Health

43. Mental health services will continue to be ring fenced in 2021-22. Compliance of individual organisations with the ring fencing requirement will be monitored on an annual basis. Any organisation whose expenditure on mental health services falls below the ring fenced quantum will be required to account for the shortfall in expenditure. Table 2 details the total amount of the mental health ring fence, shown by relevant allocation stream. This funding forms a floor, below which expenditure on core mental health services must not fall. This does not exclude mental health services from making efficiencies, but these savings must be re-invested in these services to meet cost increases and new developments.
     
44. £13 million has been added to the ring fenced mental health allocation in the LHB revenue allocation for cost growth uplift, which provides health boards with additional funding. This funding will contribute to funding unavoidable cost growth in mental health services and includes funding to cover the first 1% of 2021-22 pay awards. Work is underway to develop a new resource allocation formula for mental health allocations. Until this work is completed, growth funding will continue to be allocated on the basis of historic shares.
     
45. Funding of £8.853 million has been transferred from central budgets for Mental Health Service Improvement fund (£7.000 million), Eating Disorders (£0.500 million), Prison Health funding (£1.277 million) and Gender Services – Peer support (£0.076 million).
     
46. In addition, for 2021-22 an additional £20 million has been agreed and held centrally for mental health.  Further detail will follow on the 2021-22 element.
     
47. This increases the total mental health ring fenced allocation to £726.782 million in 2021-22.  The detail is shown in Table 2 of the allocation, and the corresponding explanatory notes.
     
48. Funding for infrastructure SIFT has been included as a Directed Expenditure Allocation. This funding must be used to support medical undergraduate education, and recipients of this funding will still be required to account for its use as part of the annual SIFT accountability agreements.

Substance Misuse

49. The substance misuse allocation remains ring fenced in 2021-22 and the table shows an agreed increase of £0.960 million.  Funding will be withheld from Health Boards until confirmation is received from the Chair of the relevant Area Planning Board (APB) that the use of these resources complements the delivery of the Welsh Government Substance Misuse Strategy three year implementation plan, the Health Board local delivery plans and local substance misuse action plans. Health Boards and APBs are reminded that the planning of both the LHB ring fence and the APB Substance Misuse Action Fund (SMAF) revenue grant should be conducted in partnership and that the Welsh Government will expect to receive conformation of this as part of the approval process. HBs and APBs should develop detailed spending plans with agreed performance and outcomes before submitting this for approval, where HB request SMAF from the APB the rationale for this requirement over and above the ring fence allocation should be clearly outlined in the submission to the Welsh Government. For further information please refer to the APB SMAF revenue guidance.
     
50. These resources should not be used to fund General Medical Services (including National, Local and Designated Enhanced Services) or Community Pharmacy Contracts as these should be funded from Table C and Table E respectively.

Public Health

51. Funding for services provided by the Public Health Wales NHS Trust, including screening services, is retained as a central budget by the Health and Social Services Group. The Public Health Wales NHS Trust core funding grant for 2021-22 is issued simultaneously with this allocation.

Health Education and Improvement Wales Special Health Authority (HEIW)

52.  Core funding for HEIW for 2021-22 is not being issued with this allocation.  A separate funding letter will be issued.

Cross Border Financial Flows

53. An adjustment was made in the 2012-13 discretionary HCHSP allocation to reflect cross border commissioning responsibility, where Health Boards in Wales have English residents registered with their GPs and vice versa, in line with the Protocol agreed with the Department of Health.
     
54. The impact of the 2021-22 tariff on LHB plans will be considered once the tariff is published by NHS England.

Queries

55. If you have any queries about this Circular please contact Julie Broughton (0300 025 5747).
     
56. Further information surrounding specific policy issues and contact details are provided in the explanatory notes.