We welcome this opportunity to make a presentation on our administration of the scheme in 1998 and subsequently. The context in which this occurs is within the parameters of the 1970 and 1996 Health Acts which imposed obligations on us to stay within our accountability obligations. Despite the allocation of a fixed budget in respect of subventions, external factors and the legislation itself contributed initially to extreme difficulties in managing the scheme because it was seen from the outset from an executive perspective as a demand-led scheme and the funding should perhaps have reflected that. This has been our experience since the inception of the scheme in 1993 and the difficulties since then have been exacerbated by increases in nursing home costs in recent years. It is in this context I wish to outline the board's position regarding its implementation of Article 8.2.
We had to review more than 7,500 files and concluded total cost of arrears in respect of Article 8.2 as £342,000. To date, 82% of these have been paid. We have engaged in continuous efforts to identify the legal beneficiaries of the remaining 76 cases. It is expected this process will be completed by the end of February, with the exception of a very small number of cases where it will not be possible to identify next of kin.
Following the implementation of this legislation in September 1993, there were general difficulties in interpreting Article 8.2 of the 1993 regulations. During that period, the board clearly followed the advice of the Department of Health and Children and did not allow the one fifth non-contributory old age pension in deciding the level of actual subvention payable. Following further discussions and subsequent legal advice, the Department wrote to boards in December 1996 informing them that the subvention regulations would be amended to state clearly that, in determining the amount an applicant should receive in subvention, a health board must disregard a sum equal to one fifth of the non-contributory old age pension for personal use. These new arrangements were immediately implemented by the board from the next payment period for cases in receipt of subvention on 31 December 1996.
The allocation of £950,000 made by the Department to the board was to cover arrears of payments under Article 8.2, the additional expenditure arising as a result of the family regulations in 1996 and expenditure shortfalls arising from increasing demands under the scheme.
Regarding our position on delays in payments of arrears, as the Comptroller and Auditor General rightly said, we addressed the question of current residents in nursing homes in 1998. This involved significant work in assessing the level of arrears in individual cases. The work was completed in late 1998 with the actual payment made at the next available pay period in June 1999. The payments in question amounted to £142,000 and were in respect of subventees resident in nursing homes at the time. However, the arrears payments were not made at the time to former residents as we engaged in discussions with legal advisers and there were collateral discussions with the Department of Health and Children on the legal and administrative obstacles with regard to these people. These included potential inquiries as to the identification of the beneficiaries, the possibility of multiple claims from family members, which is a continuing issue, and the high cost of administering each individual claim.
In 2001, and up to recent weeks, following a further examination of over 7,500 files, the board has concluded that arrears of approximately £200,000 were due to next of kin of former subventees. This brought the total arrears under article 8.2 to £342,000 which is, in effect, 411 cases. To date, 82% of this amount has been paid, £60,000 remains outstanding and the board is continuing in its efforts to identify the legal beneficiaries of the remaining 76 cases. I am now advised that all of these people have been contacted. The board expects the process to be completed by the end of February subject, as I have said, to situations where next of kin may not be identified.
With regard to the application of funds, £950,000 was supplied for elderly care services in respect of nursing home subvention arrears in addition to expenditure in regard to article 8.2, the shortfall in the core subvention budget, the upgrading of substandard nursing home units, accommodation for public and staff, the discharge of elderly care patients which, in effect, was the use of funds to provide aids and appliances to people who would otherwise have been delayed in being discharged from hospitals, and other associated offsets regarding elderly care during that year.
As stated by the Comptroller and Auditor General, the board's financial statement for 1998 did not properly reflect the outstanding arrears position. However, it is our view that the £155,000 does not materially affect the veracity of the financial statements. The comptroller also referred to £133,000 in the 1999 accounts.
In summary, the original decision regarding the application of article 8.2 between 1993-96 was in compliance with the interpretation advice of the Department of Health and Children. When advised of the new interpretation, the board immediately applied the same to the benefit of all existing cases on a current basis. This decision resulted in arrears owing to subventees and-or their next of kin from 1993-96. Payments were made to existing cases as early as possible in January 1999. Difficulties were encountered as we mentioned in administering the arrears process and the board very much regrets delays in respect of payments to next of kin of some former subventees. I wish to use this opportunity to express our apologies on behalf of the board to individuals and families involved. Thank you, Chairman.