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Item 5.07 Capital Plan

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Item 5.07 Capital Plan Highland NHS Board 14 April 2015 Item 5.7 FIVE YEAR CAPITAL PLAN & INDICATIVE TEN YEAR CAPITAL PLAN Report by Nick Kenton, Director of Finance The Board is asked to: • Approve the attached five year capital plan. 1 Background and Context Every year NHS Highland is required to submit a Capital Plan to the Scottish Government that sets out our proposed investment in our infrastructure for the coming five years. This year’s Plan includes an indicative ten-year look ahead. This Plan is set in the context of the Asset Management Strategy that was approved by the Board in August 2014 and the Ten Year Operational Implementation Plan that was approved by the Board in February 2015. This paper should also be read in tandem with the Local Delivery Plan paper elsewhere on this agenda. The Plan has been scrutinised in detail by the Asset Management Group (AMG), which is content to recommend it to the Board for formal approval. This Plan highlights all proposed capital expenditure on projects that are either planned or in progress. Also included is likely income form other sources such as disposal of assets no longer required. The Plan includes projects funded from traditional public sector capital (provided by the Scottish Government direct) as well as potential projects to be funded by up-front investment from out-with the public sector and paid for from revenue allocations. The plan should be seen in the context of continuing significant constraint on the NHSScotland capital position. Broadly, the Board’s capital plan is underpinned by four sources of funding: • Formula capital – this is NHS Highland’s ‘fair share’ of non-specific capital funding and the Board has discretion over how this is utilised • Specific capital funding – this is funding that depends on specific Scottish Government approvals, via a business case process • Income from the sale of assets • Revenue funding – this is where funding for an asset is made available via a non-profit distributing arrangement whereby the upfront funding is sourced out-with the public sector and the Board then pays a revenue charge for utilising the asset There is continuing constraint on the first three sources of funding. The formula capital for NHS Highland will be £7,312,000 for 2015/16. This is higher than the £6,732,000 available in 2014/15 but compares with £16,014,000 in 2010/11 (the final year before resources became increasingly constrained). In tandem with this, the Scottish Government has given a clear steer to boards to address backlog maintenance in their property portfolios. In 2014/15 the capital programme very much reflected this guidance and there was a focus on backlog maintenance with a resultant minimal investment in equipment replacement programmes. The 2014/15 plan included £1,000,000 of accelerated backlog maintenance and this has allowed a little more flexibility in investing in equipment in 2015/16. The 2015/16 plan includes £810,000 set aside for estates backlog maintenance compared with £500,000 for medical equipment, £1,385,000 for eHealth and £1,452,000 for Radiology. The Board remains on course to hit the national target of reducing significant and high risk estates backlog maintenance to 10% of the total backlog by 2020. The constraints on formula capital require compromise and risk management across all the key capital streams. The Asset Management Group plays a key role in monitoring the position in-year and agreeing amendments to the plan to deal with unanticipated pressures or slippage. There is specific funding in the 2015/16 plan for Drumnadrochit Health Centre (£1,400,000) and the Raigmore Critical Care & Theatres refurbishment (£3,500,000). The latter is subject to approval of the Outline Business Case by the Scottish Government (previously agreed by the Board in October 2014). As a result of the constraints on publicly funded capital, the Scottish Government has introduced revenue-funding solutions based on non-profit distributing models. The new Tain Health Centre (which opened in 2014) was delivered under one of these models - the ‘hubco’ model. This year’s Five Year Plan includes the redesign projects in Badenoch and Strathspey and Skye, Lochalsh and South West Ross agreed in principle by the Cabinet Secretary. It is expected that these will be delivered via the ‘hubco’ model, as will the Argyll & Bute Mental Health Unit in Lochgilphead. 2 Plan The plan attached is our current understanding of the funding position for the next 10 years. Although the plan has not previously needed to include a 10 year look ahead it is important that we align the plan with the Board’s Asset Management Strategy. This is to allow more complete planning at government level and to ensure consistency across plans. The plan is a development of last year’s plan but includes projects arising from the Inner Moray Firth Master Plan and the other redesign work going on around NHS Highland such as Caithness General hospital. 3 Contribution to Board objectives The projects listed in this plan will help to ensure the continuity of services by the planned replacement of equipment and assist the efficiency agenda by delivering the new facilities that the Board needs to modernise its service delivery. 4 Governance Implications • Staff Governance There are no particular staff governance issues around the overall Plan, each individual project will have its own staff engagement. • Patient and Public Involvement Each project will have appropriate patient and public engagement. • Clinical Governance Each project will comply with clinical governance as part of the project delivery. • Financial Impact The capital aspects of the Plan are reflected in the attached schedule. There will be revenue consequences of the Plan – these are dealt with on a project-by-project basis in accordance with the business case process. 5 Risk Assessment The individual projects have there own risk assessment and risk governance arrangements. For the significant projects, this will be detailed in the Asset Management Strategy. The risks associated with the backlog in maintenance and equipment replacement will also be in the Asset Management Strategy. 6 Planning for Fairness This will ensure equity of access to patients by improving the sustainability of services in NHS Highland. 7 Engagement and Communication A communication plan is in place to communicate to staff and patients what is planned and appropriate press releases will be prepared at the key milestones to inform the public. Nick Kenton Director of Finance 02 April 2015 2015/16 - 5 YEAR DRAFT CAPITAL PLAN NHS HIGHLAND 2020 - 2025 - indicative for info only CORE CAPITAL 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 £000's £000's £000's £000's £000's CENTRAL FUNDING NHS Highland Capital Allocation (Formula) 7,312 7,312 7,312 7,312 7,312 7,312 7,312 7,312 7,312 7,312 Radiotherapy replacement Drumnadrochit Health Centre 500 Raigmore Critical Care & Theatres 3,500 11,000 7,000 Capital to Revenue Virement (250) Revenue to Capital Virememt Retained Capital Receipts 0 0 700 0 250 CRL adjustment for Disposals Prior Year Brokerage 2,000 PFI Lifecycle Costs (topslice to Core RRL) (498) (524) (568) (752) (710) (600) (600) (600) (600) (600) CORE CRL FUNDING 10,564 19,788 14,444 6,560 6,852 6,712 6,712 6,712 6,712 6,712 PFI Lifecycle Costs ODEL funding 498 524 568 752 710 600 600 600 600 600 SG Funding 11,062 20,312 15,012 7,312 7,562 7,312 7,312 7,312 7,312 7,312 Asset Sales 514 1,487 0 0 0 Total Agreed Funding 11,576 21,799 15,012 7,312 7,562 7,312 7,312 7,312 7,312 7,312 Proposed - Under discussion with SG Raigmore redevelopment 2nd stage Raigmore feasibility/ public consultation 150 New Craigs redevelopment (completion 2018/19) 1,570 RNI Hospital Environmental Maintenance 450 Ross Memorial Environmental Maintenance 780 Golspie reconfiguration & demolition 390 Inverness office rationalisation Inverness primary care premises 10,000 1,000 Rural Primary Care 100 1,000 1,000 1,000 1,000 1,000 Invergordon Hospital redevelopment Caithness General Hospital Reconfiguration 2,400 Raigmore Tower block cladding 2,000 9,000 Rothesay Replacement Hospital 10,000 Islay Dental 300 Rothesay Dental 290 Total Proposed Funding 0 2,460 14,970 2,000 3,000 10,000 11,000 0 0 0 Estimated Funding 11,576 24,259 29,982 9,312 10,562 17,312 18,312 7,312 7,312 7,312 2015/16 - 5 YEAR DRAFT CAPITAL PLAN NHS HIGHLAND 2020 - 2025 - indicative for info only CORE CAPITAL 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 £000's £000's £000's £000's £000's Expenditure/Commitments PFI Lifecycle Costs 498 524 568 752 710 600 600 600 600 600 Drumnadrochit Health Centre 1,400 Raigmore Critical Care & Theatres 3,500 12,500 7,000 Argyll & Bute Mental Health Unit Subdebt 276 Argyll & Bute Mental Health Unit Equpment 700 Eigg Community Base 120 Argyll & Bute Intensive Paediatric Care Unit 288 Raigmore Out Patients Dept/Cafe 275 Capital salaries 50 50 Sub Total commitments 6,131 14,050 7,568 752 710 600 600 600 600 600 Rolling Programmes Estates Backlog Main. 810 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 Medical Equipment 500 950 950 950 950 950 950 950 950 950 Defibrillators 150 Dental Replacement 100 100 100 100 100 100 100 100 100 100 eHealth Replacement 1,385 1,100 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Radiology 1,452 1,100 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Community Equipment 50 50 50 50 50 50 50 50 50 50 Radiotherapy 534 Detecting Cancer Early 85 Catering Equipment - Trollies 200 123 Sub Total Rolling
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