I am conscious that the two previous speakers have covered many of the points that our board would also like to mention, so I will be as brief as possible. In recent years, the Western Health Board has overseen very significant capital expansion in at least two of our hospitals. They are bringing with them new services, particularly in areas such as cancer, cardiovascular disease, and radiotherapy. The planning for these kinds of services span many years and, as with other boards, it can be difficult to fine-tune matters with the result that some development funding can be carried over from one year to the next. However, we always try to ring-fence it for the service area for which it was intended.
On the issue of accountability legislation, a number of points have already been made. I wish to emphasise that any carryover is a double hit in the following year. If one overspends by one euro in one year, it has a double effect in the next year, and would mean looking at the curtailment of services.
The tone of the letters of determination changed significantly in 2002 and 2003 compared to previous years. There was reference to the changing economic climate, the critical importance of control on spending, no additions to the employment ceiling and to the importance of staying within the authorised ceiling. That is all part of the environment in which the boards plan their services.
The change in the Supplementary Estimates process in 2002 and 2003 was very significant. In 2001, at the end of the year, there were a number of areas where a board could expect to get additional funding. That was curtailed in 2002 and the letter of determination in 2003 said that without exception, there would be no Supplementary Estimate. In that context, the boards had to be very prudent in the way in which they approached their financial management and control for the year. As with other boards, not alone did we achieve our service plan and the activity we had set out to do in those two years, but in contrast to the existing level of service stipulation under which we were operating, in some key areas we exceeded activity. We did this by achieving efficiencies in various measures.
While the letter of determination is a key point in planning our services for the following year, in the course of the year some additional funding becomes available. This may be in response to plans that we had submitted, ongoing discussions with the Department or areas that were flagged in the service plan on which we had been invited to make submissions, such as health and safety or clinicians and management. It means that adjustments are being made during the year. For example, in 2002, we ended the year with a credit balance of €9 million, which is 1% of our allocation. This was primarily due to recruitment delays in areas such as consultant staffing which is a lengthy process, as well as difficulties in getting grades such as the therapy grades, of which there is a great shortage.
At any time we would have a long list of minor capital areas with which we would like to deal. As we came into 2003, we engaged in lengthy discussions with the board and with staff through partnership and decided that a good use of that credit balance would be to deal with many of our minor capital priorities. However, as the year progressed, the Department made some funding available for minor capital issues, which addressed some of our more urgent priorities. There were other schemes that we would have liked to have been able to do, but, because of issues such as delays with planning permission or the need for detailed planning, we were unable to proceed with them. We would have had some delays in development in 2003 and would also have been curtailed by our employment ceiling. Our credit balance, coming into 2004 and relating to 2003 figures, was €7 million, less than 1% of our revenue budget for the year.
We acted on management's advice to the board and put aside the cumulative credit balance of €16 million for contingency in 2004. Normally, we would put aside a certain proportion - at least 1% and usually between 1% and 2% - of our allocation in the letter of determination, for contingency funding as we come into the year. This year, for the first time, we were in a position to disburse all of our allocation to the services to maintain them at their current level because we had a credit balance that we carried forward and which we can use as a contingency fund. As with other boards, if we had not been in that situation, we would be facing a very tight year.
In 2004 there are ongoing demands for services. Similar to other boards, we always have pressure in the acute sector, as we have an older population than many other boards. Nursing home subvention is a pressure for us. We are commissioning new services such as orthopaedic services in Mayo General Hospital. These are all very legitimate service pressures and we have to make provision for them. If we did not have the credit balance that we currently have we would be in a very difficult position in 2004, and we would be trying to identify services where we could cutback. In contrast, we are very much able to protect our services for older people and our acute sector level of activity, in particular our cancer services, and we will be able to deliver on our planned developments for next year
The issue of contingency is difficult for some people to understand, but we know that if an outbreak of winter vomiting or flu happens on 15 December, we have to be as well able to cater for it on that date as we would on 2 January. That means inevitably we are carrying a certain amount of contingency right through to the end of the year. We believe the best use of that money is to carry it forward as a credit balance into the next year and spend it in a very planned way to meet priority issues and identified patient need. It is not a matter of trying to achieve an artificial break-even position for the sake of optics. We have very similar accountability structures as in other boards, with regular monthly meeting and regular reporting and we will continue to manage our affairs with the probity we have shown in the past two years.