Financial Plan for EMT and Board - Financial Year 2016/17
Health Research Authority
1. Introduction
This report outlines the following:





Income and expenditure plans for the Authority for 2016/17;
Details of workforce plans on which the financial plan is based;
Plans for efficiency savings for 2016/17 and beyond;
Capital plans for 2016/17;
Key risks to financial plans for 2016/17
2. Income plans
The HRA income envelope is based on the assumptions presented in table 1 below.
Table 1: HRA Income plans 2016/17
Detail
Confirmed
(£k)
Indicative DH revenue resource limit
12,630
Total expected grant in aid
12,630
Non cash revenue resource limit (depreciation)
Other income - Devolved administrations
Grand total
12,630
2016/17
Under
negotiation
(£k)
2017/18
Total (£k)
Indicative
(£k)
12,630
11,841
0
12,630
11,841
450
200
450
200
450
200
650
13,280
12,491
An initial indicative grant in aid and opening revenue resource limit for 2016/17 has been received
which is based on the 2016/17 and beyond spending review return and subsequent business
planning round. Until this is confirmed there is still a risk that this may change.
Plans are also based on additional income receipts from other government departments and the
devolved administrations, the planning assumptions for which amount to a sum of £200k. This
represents a small decrease of £6k on 2015/16. This is based on long standing assumptions but
there is a slight risk until the position is finalised for 2016/17.
Recurrent income related to the business case for HRA Approval has reduced significantly in
2016/17 in line with plans, and all funding linked to this activity has been allocated out into
expenditure budgets.
The revenue cash limit is likely to match our final agreed revenue resource limit for the year. The
HRA made good progress in reducing its cash balances of £3.7 million in March 2015 down to
circa £3.4 million at the end of 2015/16.
3. Expenditure Plans
Expenditure plans are presented in a table format to allow comparison with the prior year. The
approach to budgeting this year has been a challenging one due to the following:
 Late change in forecast under spend position for 2015/16.
 HRA Approval planned funding reductions for final year of programme.
 Requirement to deliver spending review savings.
 Uncertainties until late on of the impact of the pay awards.
 New approach to portfolio prioritisation.
 Uncertainties on timings linked to organisational change plans which will be ongoing
throughout 2016/17.
Table 2 presents a summary of expenditure plans based on current reporting directorates along
with expected income sources.
Table 2: Summary of income and expenditure plans based on current directorates
Department
Income
2015/16 £'000
Forecast
Annual
Outturn
Budget
2016/17
2017/18
Plan
Plan
Grant in Aid
196
270
13411
196
270
13411
200
450
12630
200
450
11,841
Total Income
13,877
13,877
13,280
12,491
2016/17
2017/18
HRA income
Non Cash Income - Depreciation
Department
2015/16 £'000
Forecast
Outturn
Annual
Budget
Plan
Indicative
Plan
4,522
4,697
4,354
4,082
Corporate Services
1,811
1,838
1,857
1,858
1,903
1,821
1,784
1,707
Finance, Procurement and Estates
including reserves*
1,103
1,864
1,291
1,251
Research Systems, Standards
and HRA Approval Prog
3,487
3,601
3,911
3,667
Total Expenditure
12,761
13,877
13,280
12,491
Surplus (Deficit)
-1,116
0
0
0
Expenditure
Operations
Chief Executive inc. Corp Sec &
Policy
* Reserves
626
Table 3 below presents the allocation of HRA Resources in 2016/17 across our key areas of
activity.
The largest share of resources (33%) continues to be invested in operations - Research Ethics
committees and CAG, as we aim to maintain the high standards of performance and confidence in
these services.
Alongside this, significant expenditure (29%) continues to be invested in the
directorate hosting HRA Approval which will have completed rollout by the end of March 2016 and
will continue as a programme based activity until early 2017. HRA Approval is an integral part of
our work and a dual priority will be to bed it down as a service and for further refinements to be
made as required in light of learning and reflection on benefits of the new approach before we
implement organisational change to align it with our other operational services.
After allocating budget to Chief Executive (Policy, corporate secretariat), important support
services within the Corporate Services Directorate and Finance, Procurement and Estates
services, the remaining resources have been allocated in line with our first cut priority portfolio plan
which has identified key projects within the directorates, some of which have significant project
costs, for example the website redesign, and monies have been retained in reserves ahead of
submission of Project Initiation Documentation and further approvals .
Reserves are being retained as single allocation in 2016/17 – and will be used to fund agreed
expenditure linked to business planning objectives, the above areas of prioritised activity or any
unexpected cost pressures or eventualities that arise. All HRA Approval business case funding
has now been allocated out.
Appendix 1 sets out the financial sections of the business plan.
4. Pay - further focus
The directorate pay base budgets include the unavoidable costs of the 2016/17 pay award which
amounted to £60k and the increase in national insurance rates for employers as a result of the
change to contracted our rules £157k. It is estimated that the latter point alone adds 4% to the on
costs for staff who are members of the pension scheme. The pay budgets are also based on the
Agenda for Change 2016/17 pay scales and expected increments, which are expected to cost circa
£86k in 2016/17.
EMT and the Board are asked to note the following relating to the calculation of the pay budgets for
2016/17.
1. A 2% vacancy factor (£150k) has been applied so far to pay budgets within Operations,
Systems and Chief Executive budget areas (including policy, corporate secretariat)
a. Operations - £63k
b. Systems - £62k
c. Policy, corporate secretariat - £25k
d. A vacancy factor for Corporate and finance areas will be agreed and notified.
2. A stock take of administrative support and capacity in this area will be completed by the
end April 2016 and the budgets presented here are ahead of the findings of that work.
3. Within the operations budgets, there are 3 posts and costs of circa £100k invested in the
Central Booking System ahead of decisions on developing e-booking services, the timing of
which is linked to research system priorities and requirements of the Devolved
Administrations.
4. Within the corporate services budgets – further work is required to ensure
a. Organisational change plans are resourced adequately
b. Communications services are resourced adequately, and in light of changes within
the team, proposals will be presented alongside plans to develop the website.
c. The Programme Management Office resourcing requires further review, analysis
and decision.
5. Within the Chief Executive’s budget areas, there is provision for additional investment
pending organisational change which may have an impact later in the year. There has also
been investment in the policy area in terms of additional support for project work and
administrative support.
6. Within the Finance Directorate, resources continue to be set aside for estates related and
procurement advice along with a finance trainee (which may convert to an apprentice
depending on timing of HRA decisions in this area). Further work is required to review
capacity and resources within the finance directorate and a separate paper is being drafted
for EMT Review.
7. In line with the prioritised portfolio, resource has also been invested in the following areas.
a. Support for collaborative work – Collaboration and Development Support Officer.
b. Research Information Systems posts with a view to bringing these important roles
onto the payroll.
c. HRA Approval Performance Manager to support the important benefits realisation
work, metrics and management information.
d. Administrative support for continued projects within the Systems, Standards and
HRA Approval Directorate as fixed term posts.
8. Pay budgets for all areas have been reviewed carefully. All vacancies at the time of budget
set have been adjusted to recurrent part year effect budgets to reflect recruitment activity.
This is in addition to the vacancy factor.
9. Further analysis of pay budgets will be required alongside the organisational change work
planned for 2016/17.
5. Non pay Expenditure Plans
During 2015/16 significant investment was allocated to technology such as digital telephony.
In line with the HRA estates strategy and in recognition of the reduction of major change
activity, staff travel budgets have been reduced.
Additionally, all staff are required to re-assess their need to travel to internal meetings and only
travel if there is a valid reason for requiring a face to face meeting. Additionally, a maximum
cost of internal meetings will be set which will assume more off peak travel and less travel to
London, thereby enabling teams to meet but at reduced cost.
Plans to adjust the mix of training activity for external learning continue into 2016/17 and will be
finalised. Budgets have been reduced to reflect plans to
a. Reduce the number of face to face events
b. Availability of e-learning packages
2016/17 will be a year of continued transition for this activity and costs will be kept under
review.
Further work is required to finalise project plans for the final phases of the member portal
rollout project.
6. Workforce assumptions
Pay represents the majority of the costs incurred in year. The financial plan is based on the
workforce plans summarised in table 5 below which show the estimated actual WTE in March
2016, planned WTE in March 2017 and early estimates for March 2017.
Table 4: Workforce planning assumptions
Actual
WTE Feb
2016
Planned
WTE
March
2017
103.74
105.99
Chief Executive inc. Corp Sec &
Policy
15.38
14.68
Corporate Services
19.05
17.45
Systems and Development
57.25
69.96
6.40
201.82
6.60
214.68
13
Directorate
Operations
Finance
Total WTE
Movement
7. Efficiency savings for 2016/17 and beyond.
The HRA plans to deliver efficiency savings of at least 6% as part of the 2016/17 business plan
with further savings required thereafter. The table below sets out the main savings assumptions
on which this plan is based.
Table 5
Main Cash releasing savings and efficiencies plan accounted for in the plan
Description
Vacancy factor and PYE adjustments
Estates strategy
Digital technology eg member portal
Training delivery models
Efficiency review
Total savings and efficiencies
identified
2016/17
Plan
£000s
237,214
111,000
TBC
20,250
64,846
433,310
With a view to 2016/17 and beyond, the following further areas for savings are proposed for
investigation during 2016/17:





Review of actual impact of e-submissions and electronic review on staffing numbers to
release efficiencies linked to staff photocopying time, copying, stationery and postage
costs.
Review of timing and impact on workloads of e-booking to consider if any further
efficiencies are possible.
Organisational change to embed Approval and develop more effective organisational
structures for Approval, REC and CAG.
Estates strategy to release efficiencies with a view to achieving the 7 desks to 10 staff ratio.
Continued focus on realising benefits from investments in video conferencing through
travel, hotel, time savings.

Review of benefits realisation work and measurement of the impact of assessment within
HRA Approval on the number of REC provisional opinions and other savings from improved
quality of applications received.
8. Capital plans for 2016/17 and beyond
The HRA opening capital resource limit has not been confirmed by DH, however the business plan
for 2016/17 set out a request for circa £0.9m. The main area of investment is IRAS and includes an
initial assessment of plans for including further advice and guidance through that system, in line
with the remit for the HRA to support the simplification and coordination of the regulatory system
for health research.
EMT and the Board are asked to review the plan and approve the high level allocation. In line
with the Authority’s standing orders, the Board must approve capital expenditure in due course.
Table 6: Capital Spend Plans.
Description of investment
Research Information System developments
Total capital investment plan
9.
2016/17 2017/18
Initial
Plan
plans
£000s
£000s
910
810
910
810
Risks to the financial plan 2016/17
The financial position will be much tighter this financial year. EMT and the Board are asked to note
a number of risks related to this.
Summary of key risks to HRA financial plan 2016/17 - to be added to the HRA Risk Register
Risk summary
Risk description detail
Indicative budget received from
Grant in Aid may be reduced
DH, may be under pressure to
further reduce
Devolved Administration
Agreement on final recharges is
Recharges may reduce
still outstanding.
Social Care, CAG, Website,
Organisational Development,
strategic plan are key areas of
Inadequate resouce levels
work for 2016/17. Resourcing
required for prioritised areas
assumptions need regular
of work
review alongside PIDs and
project monitoring to ensure
they are adequate
The financial position will be
much tighter in 2016/17. It will
be very important that all
Directorates own, work closely
Reputational risk - Unexpected with their finance leads and
shift in financial position.
report on their financial
positions to ensure that the HRA
steers a steady course in 2016/17
with no unexpected shifts in the
position.
Timing
Likelihood
Impact
Score
Imminent
3
3
9
Imminent
3
2
6
Imminent
3
3
9
Medium
term
3
4
12
To further strengthen the forecasting regime and to mitigate against the reputational risks of an
unexpected shift in the financial position, it is recommended that attendance at the budget
manager training provided by finance is mandated.
Additional tools ahead of the Health Group Internal Audit on budget management include:
a. a budget manager manual,
b. a strengthened budget manager meeting checklist alongside a requirement for
budget managers to review and agree their profiled spend plans following
discussion with their Director.
c. For cost centres which appear to be reflecting a forecast under spend but for which
budget managers are predicting a break even - spend plans will also require
additional review in year and formal sign off by the budget managers line manager.
10.
Cash plans and handling for 2016/17;
The cash flow forecast for the year will be presented on agreement of the financial plan and
included within quarterly financial reporting.
There will be close monitoring of both expenditure, forecasts and cash throughout the year.
11. Recommendations
That the Executive Management Team (EMT) approves the financial plan prior to reporting to the
HRA Board.
That the EMT and the Board note the position relating to







Income assumptions
Expenditure assumptions.
Workforce planning assumptions.
High level capital plan.
Risks associated with the financial plan.
A reconciliation of the movement between years for the Operations Directorate will be
provided shortly.
Further information related to 2017/18 budgets and plans will begin to be compiled
alongside discussions on the HRA strategy to enable a longer term strategic financial plan
to be presented.
That the EMT and the Board approve the following:


High level capital plan requirements in the context of the governance arrangements set
out.
Attendance at the budget manager training provided by finance is mandated.
Debbie Corrigan
Director of Finance, Procurement & Estates
26 March 2016
Appendix 1
Health Research Authority Financial plan detail
2016 - 17 Business plan by cost category
Revenue costs (classed as Admin revenue departmental expenditure limit DEL excl depreciation)
2015/16
2016/17
Plan
Plan
£000s
£000s
Admin Expenditure
Pay
9,509
8,368
Temporary Staff/Contract Services
250
250
Consultancy Services
0
0
Other e.g. stationery, travel etc
3,773
4,139
Audit Fees
73
73
Total Admin Expenditure
13,605
12,830
Admin Income
Devolved Administration*
Scotland
Wales
Northern Ireland
Total Income from Devolved Administration
Admin Income from outside NHS/DH/ALBs
Total Admin Income
TOTAL ADMIN NET OUTTURN and GIA
(132)
(81)
(45)
(258)
0
(258)
13,347
(103)
(61)
(36)
(200)
0
(200)
12,630
2015/16
Plan
£000s
270
0
270
2016/17
Plan
£000s
450
Other Revenue costs (classed as Adm in
ring fenced DEL)
Description
Depreciation and Amortisation
Impairments
Total Admin Ring Fence DEL
450