Andrew Burns on strategic finance, the ‘care cap’ and commissioning for outcomes

Andrew Burns has been at Staffordshire County Council since 2006, originally as director of finance and now as director of finance and resources including HR, property and ICT. He was previously at Walsall council for three years to help transform it from worst council in the country and also at Warwickshire and Birmingham.

Room 151: How did Staffs become involved in the government’s Commissioning Academy?

AB: Well there was a Cabinet Office initiative and they launched this Commissioning Academy at the end of January. Nick Bell, who is chief executive here expressed Staffordshire’s interest and desire to get involved in shaping the Academy and providing potential candidates to go through it. We have had three of our senior leadership team members in the first cohort who are going through to design and shape the Academy along with people from East Sussex, Oldham and Barnet and one or two others.

So we have been in there to both shape the content and get benefit from the first iteration. The plan is that the rest of the management team including myself will be candidates for the next cohort.

We’re putting in a very clear investment of time and capacity to try and help support it because it fits in with what we are trying to do in Staffordshire around focusing on outcomes for the people and the place. Our priorities are around economic prosperity for Staffordshire as a place and improved health and wellbeing for the people of Staffordshire: two sides of the same coin really.

So that is why we got involved. We had some of our guys down at the launch and have been involved over the last nine months visiting other places and people coming here to see what we’re doing. The other part is our regional improvement and efficiency partnership, which has done some joint work with us and the Cabinet Office. One of the things we helped shape was a commissioning framework explaining what commissioning is and isn’t.

The one message that we’re using to describe how this is different to what people have previously been doing is to say that rather than being a commissioner or purchaser of services the emphasis should be commissioning for outcomes. We have had a mixed economy in Staffordshire of local authority, in-house and external delivery in things like health and social care and highways, so we are moving that way for service delivery. For example the vast majority of our residential care homes are now private, we’ve had a partnership around our highways management and maintenance. We were probably 70% in house delivery six years ago and are now under 50%.

Room 151: What was it that put you in a position to be able to do this?

AB: Our politicians had the view that this broader influencing role of improving Staffordshire as a place was something that we couldn’t do on our own.

We’ve had a joint commissioning unit with our public health partners for four or five years. Our thinking and actions have been further advanced in health and social care than they have been in other parts of local authority. We have one of the biggest integrated trusts in the country because our adult social care services joined the provider arms of the ex-Primary Care Trusts (PCTs) in Staffordshire to make a Community Foundation Trust, which is a £300m NHS organisation.

We TUPE-transferred 1000 of our social care staff into what is – I think – the biggest integrated trust in the country. We did that just over a year ago, it was two or three years in the planning. It came out of doing joint commissioning work four or five years ago with the PCTs in Staffordshire. That approach has seemed to have worked in terms of improving outcomes and saving money and I guess what we did with the Commissioning Academy and elsewhere was say, ‘if it can work there, in that complex arena of health and social care, it can work in others’.

That’s our biggest success but we are trying to follow up in other areas with commissioned or contracted service delivery. Highways and one or two other things we’re looking at but we don’t pretend that that is commissioning for outcomes. The move now is toward the outcomes of improving health and wellbeing. Sometimes that is about the council getting out of the way actually. Stepping back and encouraging others to do things.

Room 151: The integrated community foundation trust came about a year ago did you say?

AB: Yes. There was an NHS initiative, transforming community services, and as part of the abolition of the PCTs they had to divest themselves of their provider arms: all the occupational therapy, district nurse-type services. So they had to find a new home and in lots of parts of the country they have gone to things like mental health trusts and acute trusts.

In Staffordshire we thought, well, the service users in receipt of occupational therapy, district nursing services, they are the same people who get social care support, particularly older people, from the local authority. So we thought rather than the home for the ex-provider arms of the PCTs being another health entity why not make it the county council, or rather create, through TUPE transfer, a new entity which is a combination of adult social care for older people and the provider arms of the ex-PCTs. We have two PCTs in Staffordshire, North and South, so in effect it was those two plus one county council into one new body.

There was about £150m-worth of our cash that went into that along with the 1000 people. It was in fact £150m worth of gross expenditure offset by £50m-worth of income that we collected from cost of care charges. About £200m of PCT spend also went in: the non-prescribing budgets bits of the ex-PCTs responsible for provider services (the most obvious ones being occupational therapy, district nurse type equipment).

By April last year the PCTs had to divest the provider services but work had started a couple of years in advance. Torbay is the other model that is similar. From our knowledge here no one else the size and scale of Staffordshire has created an entity like this. It is working well for us and the health partners.

Room 151: Where did your £150m come from?

AB: Well it was the money that the county council used to spend on employing people to provide homecare and some residential care. Eighty percent of it is contracts where we are buying from the private sector. The £50m income is the contributions we collect from service users toward the cost of their care, homecare charges and residential care fees. We are still collecting that on the behalf of the trust through a service level agreement because they didn’t have the capacity to do it. For two years until the trust develops that capability itself they are buying that back-office service back from us.

The cost of the services that were previously in the council’s budget is now given to the trust and we’re commissioning them to provide that service on our behalf.

Room 151: What savings do you make doing it this way?

AB: In the medium term financial strategy we set last year we were looking for £20m in savings over the first three years and we are broadly on track for those to be delivered. Some of the savings are cost avoiding savings, so managing the number of people in receipt of care, but some of it is cash producing. We have agreed with the trust and enshrined in a Section 75 partnership agreement that they will deliver these services to us and by the end of year three that will be costing us £20m less than it was at the start of the contract.

What they have been able to do as a trust is look at the county council budgets alongside the previous PCT budgets and make efficiencies both in management overheads but also in things like avoiding duplication of care. There are examples where individual service users were receiving a district nurse visit and an occupational therapy visit and a home care visit. By going into a single trust the argument stopped being about who is paying for what and started being about using the resources available to support the overall outcome.

Room 151: It has a bit of a Community Budgets flavour to it.

AB: Absolutely. Albeit not for the whole of the budget but what was previously the LA spend on this type of care along with the ex-PCT spend in the same areas for the same people.

Room 151: Is the cap on care going to create big expense for councils?

AB: I think it is too early to say. The devil is going to be in the detail but if you take it on face value, they say it is fully funded by the Treasury. So that means that costs currently being funded by individuals are going to get funded by the Treasury or Department of Health. I think that is what they are saying, but are they going to allow or account for that in the allocations that we get for these services? Are they going to pass these costs on to local authorities? Is Treasury going to bear the cost? Until we see the small print it is difficult to say.

Taken at face value what this care cap means is that people who are currently paying privately toward the cost of care the state will pay for it after £75k. There is a potential risk that some of this funding will be in one of three places: local authority, Treasury or individuals. The relationship between the three is going to be key, and the insurance industry is also expected to step in and insure some of these costs. When Dilnot came out one of the things was that above a government cap the insurance industry would step in and create products.

The government did use this phrase ‘fully funding’ and that implies that the costs are not going to be passed on to local authorities. We are feeling a costs shunt towards local authorities. It might not be the case with this one, but we would need to see the detail before being able to comment definitively.

The other thing that is unknown here is that under the current arrangements there are people who come nowhere near the local authority for their care because they have sufficient capital or resources that keeps them above the current – reasonably low – threshold of £23,500. If this cap is at a much higher place people who are nowhere near us for cost might suddenly be nearer: a new cohort of self-funders might come to the council for health and support.

Some people say they don’t want the ‘stigma’ of seeking state or local authority support, but if this is a national insurance type scheme it has less stigma. It’s seen more like NHS than social services so you might get some people who are attracted to the support in a way that they are currently not attracted because there’s still some stigma around getting social care support that doesn’t apply to getting NHS support.

Room 151: How is the finance department evolving to meet the strategic needs of the local authority?

AB: Well the journey that we have been on in Staffordshire in recent years is one where we have been adapting our size and shape to meet the needs of an emerging commissioning organisation. And it applies to all of our back office, not just finance but HR, IT and all back office.

In simple terms a back office at a large council has got three roles. One is strategic: to advise members about what it should be doing to meet its statutory and other responsibilities. Whether delivery is in house or external you still need that strategic bit, a S151, a director of social services, children’s services etc.

Another chunk of activity is increasingly being described as business partnering, decision-making support. That is helping committees and managers make good decisions about use of resources. Do we make it or buy it? Use this supplier or that one?

The third chunk is transactions or routine processes that are done on behalf of the local authority so payroll, collecting income, running IT infrastructure. Some of that will change in size and shape depending on whether services are delivered internally or externally. When we TUPE transferred 1000 people out of social services into the new trust some overhead went with them – some finance staff, some HR staff, some back office staff. As part of the direct service transfer we had to support it. So the size and shape of the back office is evolving to meet the changing size and shape of the organisation.

As we become a commissioner for outcomes there are two things we are considering. Have we got the size and shape of our strategic and business partnering bit right? And is there scope for the back office to be not just the council back office but can it become back office for our districts and boroughs, police, fire? We are doing some exploratory work to see whether we can share costs and services around the transaction areas to make the money go further.

I provide payroll for the county council and three of our districts now, for example. I provide procurement for another couple of the districts and internal audit and treasury management for police and fire. We’re having an incremental shared services approach I would say. We’re looking at these collaborations to make money go further, essentially.