The Trust was seeking to improve the ownership of budget management in order to deliver sustainable improvements in financial performance year-on-year in a challenging and changing financial environment.
The Board has a clear view that financial management is the responsibility of the whole Board and not solely the Director of Finance and this informed the approach to budget management. The Board established a quarterly Finance Oversight Group chaired by the CEO with minutes going to the Board and the Audit Committee plus monthly one-to-one meetings between the Finance Director and each Executive Director in order to give dedicated time to understanding the finance position and the forecast position of each directorate.
This meant that all financial information presented to the Board was based on information from the relevant Director and was accurate and owned. This structure is now in its third year. It continues to operate even though the Trust is in recurrent balance in order to ensure the development and delivery of an agreed long-term budget strategy which was largely focused on cost reduction not anticipating income gains.
The finance report to the Trust Board was changed to include more specific information on the progress to date and the forecast position of the cost improvement plans including graphical representation.
Planning for budget setting was brought forward to ensure that there was sufficient time to fully involve budget managers, there was a clear set of principles agreed for budget setting and these have been used consistently. All plans for efficiency savings are identified by the budget managers based on what they believe to be deliverable.
The Trust Board gave a very clear message that they would not sign off an unrealistic or unbalanced budget, which meant that all Directors needed to be able to reassure the Board they could deliver safe services within the resources available and that efficiency plans were realistic and deliverable. A dedicated Board away day on budgeting proposals for the coming year was held prior to the Board meeting to allow everyone on the Board to fully understand and challenge the detail behind the proposed budget.
Budget management is a module on the Trusts accredited leadership programme which is aimed at managers and clinicians through the Trust. The benefits are outlined below:
- Real ownership of the financial position and timely action if variances arise has been demonstrated. Each Director, not just the Finance Director, presents the finance position and answers questions for their area. This ensures they are fully aware of the financial issues, potential problems and solutions in their service area in order to do this each month.
- A dedicated time to focus on finance has resulted in a controlled financial position which has enabled the Trust to move from fire fighting to embrace a more forward looking and proactive approach, developing plans for the future.
- Applying clear and consistent guidelines and principles reduced the scope for game playing in budget setting and has developed a more mature corporate attitude to budget management.
- Longer term efficiencies can be planned for the future providing non recurrent savings are identified and delivered that will bridge the gap until recurrent savings are delivered.
- Consistently positive audit reports have been delivered highlighting good practice in budget management.
The Trust has established a Service Development Group which is attended by senior managers and clinicians and has included workshops on SLA and contracting, which has developed an understanding of the links between income and activity and the need as a budget manager to manage both income and expenditure budgets.
There is also greater understanding of the funding flows and the working relationship with PCTs which has increased budget manager corporate ownership across the Trust.
The Trust has a longer term approach to budget management and supports this through the Workforce Modernisation Subgroup whose remit is to implement plans across services with longer term financial impact, as part of the forward financial planning, to ensure each project has sufficient time to realise the maximum benefits, not just the level that can be realised quickly.
There is now greater ownership and understanding by budget managers of the finance position of the Trust as a whole and of that in their own area of responsibility and recognition that the financial position is not solely the responsibility of the finance team.