1. finance

HEE Mar 15.6
Finance update
Meeting Date
Report Title
Paper Number
Report Author
Lead Director
FOI Status
24th March 2015
HEE Finance Report: 2014/15 Month 10
HEE Mar 15.6
Jenni Field
Steve Clarke
Applicable
Report Summary
The purpose of this paper is to report the financial position as
at January 2015, including the year to date position, the
forecast outturn, budget movements and measures of financial
control.
Purpose
(tick one only)
Recommendation
Information 
Strategic
Objective Links
This paper sets out how HEE will undertake its key strategic
objective and function of providing robust financial systems to
ensure HEE operates within its resource limits in adherence
with Standing Orders, Standing Financial Instructions and HM
Treasury Guidance and to allocate and account for NHS
education and training resources following the Treasury’s
Government reporting requirements ensuring transparency and
public accountability.
Identified risks
and risk
management
actions
The main risk is not achieving all our financial duties – such as
breaking even on both admin and programme funding and
meeting our obligations under the Better Payments Practice
Code. These risks are currently considered low and mitigated
by regular monthly monitoring.
Resource
implications
This paper reports on the allocated resources and the forecast
outturn against the allocation.
Support to NHS
Constitution
This paper supports NHS commitment to providing best value
for taxpayers’ money and the most effective, fair and
sustainable use of finite resources.
Legal implications
including equality
and diversity
Breach of financial duties if HEE fails to properly manage its
financial transactions.
Approval 
To Note √
Decision 
The Board are asked to note the current financial position,
material budget transfers and measures of financial control.
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HEE Mar 15.6
HEE Finance Report 2014/15 Month 10
(1st April 2014 to 31st January 2015)
Purpose
1. This paper reports the financial position as at January 2015 and a forecast of the
outturn for the year. Measures of financial control are also reported.
Background
2. HEE is accountable for the use of an allocation of almost £5.0 billion for
education and training received from the Department of Health. This includes the
Administration Allocation (running costs) of £82.9 million. There has been no
change in allocation since the last board report although we anticipate a nonrecurrent increase in allocation relating to genomics.
3. A small number of budget movements have taken place since the last board
report. These are summarised in paragraph 15.
Financial position as at January 2015
4. Table 1 shows actual expenditure to 31 January and variances from budget,
analysed by the main categories of spend
Table 1: HEE Financial Position as at January 2015
Category
Future Workforce
Education Support
Running Costs
National Activities
Workforce Developments
Subtotal Education and Training
Non education and training
Restructuring planning Assumption
Grand Total
Budget
£m
3,684.3
99.2
66.4
59.5
179.9
4,089.2
(0.1)
0.0
4,089.1
2014-15 Year to Date
Actual
Variance
£m
£m
% Variance
3,670.4
(13.9)
-0.4%
95.6
(3.6)
-3.7%
60.5
(5.8)
-8.8%
56.7
(2.7)
-4.6%
180.7
0.8
0.5%
4,063.9
(25.3)
-0.6%
(0.1)
(0.0)
0.0%
0.0
0.0
4,063.8
(25.2)
-0.6%
Variances are shown as (negative) for underspends and positive for overspends
5. At the end of January 2015 HEE has underspent compared with the expected
proportion of the budget by £25m. This is 0.6% of the year to date budget.
6. An analysis by LETBs for admin costs and programme funding is attached in
Appendix 1.
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HEE Mar 15.6
7. The running cost underspend of £5.8 million is mostly due to underspends on pay
because of vacancy controls in advance of our Beyond Transition programme.
8. The future workforce year to date underspend has reduced from £17.3m at
Month 9 to £13.9m and is now more in line with the forecast outturn. The main
reasons for the underspend are slippage on trainee recruitment, particularly GP
trainees, and the non-recurrent impact of a change in the start date of dental
trainees
Forecast Outturn as at January 2015
9. As noted previously, we have utilised some of the Transformation fund to support
local workforce development priorities aligned to the mandate rather than redirecting future workforce underspends which remain broadly in line with the
previously reported position.
10. An under spend of £7.6m on running costs is forecast. This will be used to offset
the anticipated £8m cost of restructuring. All voluntary redundancy and other
associated costs will be sufficiently committed by 31 March in order for the costs
to be charged to this financial year.
11. Based on month 10 actuals, we forecast that there will be a year-end
underspending of c£22m summarised in Table 2.
Table 2: HEE Forecast outturn for 2014-15
Category
Future Workforce
Education Support
Running Costs
National Activities
Workforce Developments
Subtotal Education and Training
Non education and training
Restructuring planning Assumption
Grand Total
Budget
£m
4,340.7
121.9
82.9
153.3
230.2
4,928.9
0.0
0.0
4,928.9
2014-15 Forecast Outturn
Actual
Variance
£m
£m
% Variance
4,327.2
(13.5)
-0.3%
120.1
(1.7)
-1.4%
75.3
(7.6)
-9.2%
144.8
(8.5)
-5.5%
231.5
1.3
0.6%
4,898.9
(30.0)
-0.6%
(0.1)
(0.1)
0.0%
8.0
8.0
4,906.9
(22.0)
-0.4%
Variances are shown as (negative) for underspends and positive for overspends
12.
The forecast includes an underspending against NIHR income of £2.7m. It is
assumed that the underspending will be returned to NIHR as specified in the
contract.
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HEE Mar 15.6
Budget movements
13. The following budget transfers have taken place since the last Board meeting:
 £411k aggregated from local budgets to one central budget for eportfolio
 £74k transferred from the centrally held specialist recruitment budget - £41k
for West Midlands to manage visa issues (tier 2) and £33k to East Midlands
for Public Health recruitment.
 £36k for pre-degree experience transferred to East Midlands from the central
budgets.
 £36k transferred from the centrally held values based recruitment budget to
Thames Valley.
 £51k for mental health liaison and diversion developments from the central
budget to West Midlands
 £20k for National Tier 2 Dementia transferred from South West to North West.
Measures of Financial Control
14. Appendix 2 provides a summary of our cash position, level of debtors,
performance against the 95% Better Payment Practice Code (BPPC) target and a
Statement of Financial position at the end of January for information. Boards
attention is drawn to our continued achievement of the 95% target against the
Better Payment Practice Code.
Recommendations
15. The Board is asked to note:

The month 10 year to date financial position and forecast outturn

Budget movements as at Month 10.

The status of the measures of financial control
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HEE Mar 15.6
Appendix 1: Summary by LETB / HEE
Month: 10 - January 2015
Running costs
2014-15 Year to Date
Budget
£m
Actual
£m
Programme
Var
£m
Budget
£m
Actual
£m
Var
£m
Total
VAR £m
Admin
actual as %
Total
Total % VAR
Actual
HE North East
3.03
3.03
0.00
214.11
213.11
-1.00
-1.00
-0.5%
1.4%
HE North West
8.49
7.61
-0.89
535.01
532.65
-2.36
-3.25
-0.6%
1.4%
HE Yorkshire and the Humber
6.02
5.14
-0.88
406.39
403.98
-2.40
-3.28
-0.8%
1.3%
HE East Midlands
4.76
4.50
-0.27
298.26
293.62
-4.64
-4.91
-1.6%
1.5%
HE East of England
4.55
3.89
-0.66
308.80
309.44
0.64
-0.02
0.0%
1.2%
HE West Midlands
6.28
5.56
-0.72
405.21
402.10
-3.11
-3.83
-0.9%
1.4%
HE North, Central & East London
5.28
5.02
-0.26
413.22
413.20
-0.02
-0.28
-0.1%
1.2%
HE North West London
2.90
2.78
-0.13
240.27
239.67
-0.60
-0.73
-0.3%
1.1%
HE South London
3.79
3.48
-0.31
368.22
367.37
-0.84
-1.16
-0.3%
0.9%
HE Kent, Surrey, Sussex
3.00
2.77
-0.23
237.72
235.61
-2.10
-2.33
-1.0%
1.2%
HE Thames Valley
1.87
1.55
-0.32
132.21
132.00
-0.21
-0.53
-0.4%
1.2%
HE South West
3.79
3.54
-0.25
276.49
276.35
-0.15
-0.39
-0.1%
1.3%
HE Wessex
Subtotal - all LETBs
2.21
55.98
2.07
50.92
-0.15
-5.06
160.91
3,996.80
160.87
3,979.96
-0.04
-16.84
-0.18
-21.90
-0.1%
-0.5%
1.3%
1.3%
Health Education Central
Subtotal - HEE Central
10.39
10.39
9.60
9.60
-0.79
-0.79
26.03
26.03
23.37
23.37
-2.67
-2.67
-3.45
-3.45
-9.5%
-9.5%
29.1%
29.1%
Grand Total HEE
66.36
60.52
-5.85
* Variances are shown as (negative) for underspends and positive for overspends
4,022.83
4,003.33
-19.50
-25.35
-0.6%
1.5%
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HEE Mar 15.6
Running Costs
2014-15 Forecast Outturn
Budget
£m
Actual
£m
Programme
Var
£m
Budget
£m
Actual
£m
Var
£m
Total
VAR £m
Admin
actual as %
Total
Total % VAR
Actual
HE North East
3.69
3.69
0.00
262.19
261.29
-0.90
-0.90
-0.3%
1.4%
HE North West
9.99
8.54
-1.45
665.21
663.66
-1.55
-3.00
-0.4%
1.3%
HE Yorkshire & Humber
7.23
6.13
-1.10
490.38
488.38
-2.00
-3.10
-0.6%
1.2%
HE East Midlands
5.73
5.36
-0.37
361.69
358.43
-3.26
-3.63
-1.0%
1.5%
HE East of England
5.45
4.70
-0.75
383.90
383.65
-0.25
-1.00
-0.3%
1.2%
HE West Midlands
7.54
6.82
-0.72
490.70
487.33
-3.37
-4.09
-0.8%
1.4%
HE North Central & East London
6.20
5.76
-0.44
440.86
440.86
0.00
-0.44
-0.1%
1.3%
HE North West London
3.56
3.42
-0.14
262.78
262.78
0.00
-0.14
-0.1%
1.3%
HE South London
5.77
5.28
-0.49
401.42
401.42
0.00
-0.49
-0.1%
1.3%
HE Kent Surrey & Sussex
3.60
3.33
-0.27
285.35
282.85
-2.50
-2.77
-1.0%
1.2%
HE Thames Valley
2.24
1.84
-0.40
159.67
159.67
0.00
-0.40
-0.2%
1.1%
HE South West
4.55
4.25
-0.30
331.78
331.78
0.00
-0.30
-0.1%
1.3%
HE Wessex
Subtotal - all LETBs
2.67
68.21
2.50
61.62
-0.16
-6.60
196.34
4,732.27
196.34
4,718.43
0.00
-13.83
-0.16
-20.43
-0.1%
-0.4%
1.3%
1.3%
Health Education Central
Subtotal - HEE Central
14.69
14.69
13.68
13.68
-1.00
-1.00
113.73
113.73
105.13
105.13
-8.60
-8.60
-9.61
-9.61
-7.5%
-7.5%
11.5%
11.5%
Grand Total HEE
82.90
75.30
-7.60
* Variances are shown as (negative) for underspends and positive for overspends
4,846.00
4,823.56
-22.44
-30.04
-0.6%
1.5%
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HEE Mar 15.6
Appendix 2 – Measures of financial control
Cash Position
Cash is drawn down from the Department of Health based on aggregate forecasts
and is controlled at a national level. Every effort is being made during the financial
year to keep the balances to a minimum with a focus on forecasting accurately the
cash requirement to the yearend. The graph below shows the cash balances each
month for 2014/15 compared with those throughout the 2013/14 financial year. The
actual cash balance at the end of January 2015 was £3.3m.
150
100
£'m 2013
50
£'m 2014
0
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Outstanding Debt
HEE raises sales invoices for income that is due with payment of the account due
within 30 days. The table below shows overdue debt at the end of this month and the
previous month. The total debt between 61 - 90 days at the end of January includes
an invoices for £298k raised to the Irish Government for their share of UKFPO; this
invoice was under discussion and has since been cancelled and reissued in
February. Likewise the Welsh government owed £500k (>91 days) but have partpaid the invoice during February, with the remaining value being agreed between
both parties.
Month
January 2015
December 2014
31-60 Days (£k)
33
956
61 – 90 Days (£k)
325
62
>91 Days (£k)
880
772
Better Payment Practice Code
The performance against the target to pay 95% of all NHS and non-NHS trade
payables within 30 days of receipt of the goods or valid invoice is detailed in the
table below. HEE’s performance in 2014/15 maintains achieving the target of 95% on
all measures.
Year to Date
BPPC NHS
BPPC non-NHS trade
Number (%)
96
95
Value (%)
99
97
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HEE Mar 15.6
Statement of Financial Position as at 31 January 2015
Forecast
31-Mar14
£000
31-Jan-15
£000
31-Mar-15
£000
1,674
1,872
3,546
1,674
1,872
3,546
1,874
1,872
3,746
36,890
9,490
46,380
49,926
49,175
3,300
52,475
56,021
36,000
10,000
46,000
49,746
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current assets less net current liabilities
209,266
139
209,405
-159,479
353,179
129
353,308
-297,287
200,000
200
200,200
-150,454
Total assets employed
-159,479
-297,287
-150,454
Taxpayers equity
General fund
-159,479
-297,287
-150,454
-159,479
-297,287
-150,454
Non-current assets:
Property, plant and equipment
Trade and other receivables
Total non-current assets
Current assets:
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
8