Financials
Summary Financial Statements for the year ended 31 March 2011
The Parliamentary and Health Service Ombudsman’s 2010-11 funding arises from a three-year settlement sanctioned by HM Treasury, with annual Estimates based on this settlement approved by Parliament. Our three-year settlement for the period 2008-11 was sanctioned in 2007. Subsequently, additional funding was sought and approved in 2008 to address the changes in the complaints landscape arising as a result of the Health and Social Care Act 2008. Taken together, PHSO had access to total gross resource funding for 2010-11 of £34.562 million, less income of £0.420 million (a net resource requirement of £34.142 million).
PHSO also had access to capital funding of £2.100 million for 2010-11 but elected to draw down only £1.350 million, with the remaining £0.750 million classed as unallocated provision in response to the known issue with capital funding levels (and associated funding for depreciation costs).
As has been reported in previous years, the baseline for the capital element of PHSO’s settlement was established on the basis of our four-year (2007-11) Capital Investment Strategy. The Strategy was developed following a major programme of refurbishment that was required after a period of under-investment in our infrastructure.
It was based on maintaining our current, in 2006, model of information technology and on a regular programme of accommodation refurbishment. However, in the years since the settlement was agreed, PHSO’s information technology investment has increasingly moved away from desktop personal computers to server-based systems that are more cost-effective.
In addition, planned investment in our Knowledge and Information Management programme will be lower than we originally thought, and will now be completed in 2011-12. Finally, aside from refurbishment required to new premises acquired in Manchester to accommodate new staff following the move to the new two-stage NHS complaints system, PHSO’s accommodation has proved robust and has required little on-going refurbishment.
As a result, PHSO expected that in 2010-11 there would again be a significant underspend against the approved level of capital funding for the year and, as a consequence, against that element of our non-cash resource funding provided for depreciation.
This issue has been addressed in PHSO’s financial settlement and in our 2011-15 Capital Investment Strategy from 2011-12, but is reflected this year in our use of unallocated provision described previously and in the outturn performance against our long-standing financial targets.
This year, we met only three of the seven financial management targets in our Corporate Business Plan. The performance on each was as follows:
- our net resource underspend of £1.297 million was outside our target limit for underspending of less than £0.500 million;
- our total capital underspend of £0.503 million met our target of not exceeding the net capital investment expenditure limit for the year sanctioned by Parliament;
- we recovered 74% of our Appropriations-in-Aid income provision in the year against our target of 100%;
- we remained within the Net Cash Requirement sanctioned by Parliament;
- we paid 99.7% (99.2% in 2009-10) of supplier invoices within our target of 99% of correctly presented invoices paid within 30 days;
- our resource budgets were managed to within 4% of agreed allocations, exceeding our target of limiting variance to no more than 2%; capital budgets were outside our 5% tolerance at 37%; and
- our month-on-month budget forecast variances also exceeded our tolerances of 2% for resource budgets and 5% for capital budgets.
Although we met only three of our seven financial management targets and the level of underspend seems
high, there was no significant, direct impact on the delivery of our service or our objectives for the year as a consequence of not fully utilising the financial resources available to us. Nevertheless, we will continue to focus on improving our financial management performance.
2010-11 was the last year of our approved parliamentary funding settlement for the period 2008-11 and it was necessary for PHSO to undertake work to put in place a new financial settlement, sanctioned by the Treasury, for the period 2011-15. To that end, we instigated our Spending Review 2010 project (the SR2010 Project), the scope of which was to undertake a full financial review of PHSO’s resource and capital requirements for the spending review period 2011-15. This work ran parallel to, but was not part of, the government’s Spending Review 2010.
The SR2010 project involved detailed examination of PHSO’s operational and administrative requirements for staff and other resources in the light of robust assumptions about future workloads. It sought to demonstrate PHSO’s commitment to value for money by taking into account, as far as practicable, the public sector fiscal position and by undertaking work to benchmark PHSO’s administrative and support functions against bodies of a similar size and composition.
A settlement submission was made to Treasury ministers in September 2010 and sanction was received in October 2010. A new four-year financial strategy to give effect to the terms of settlement and to deliver the efficiency savings we have committed to achieve was agreed by PHSO’s Executive Board on 7 April 2011.
