news focus Lurking behind an apparent funding increase are warnings of 'an incredibly challenging year'ahead for financial managers. In their eyes, this is not the season to be jolly, hears Lyn Whitfield

Published: 20/12/2001, Volume III, No.5786 Page 16

Nothing puts health secretary Alan Milburn in a better mood than being able to play Santa.

But finance directors are not renowned for singing tidings of great joy, even when the government announces a 9.9 per cent average funding increase for health authorities (with none getting less than 9.3 per cent) next year.

If delegates at the Healthcare Financial Management Association annual conference came across as having something of Scrooge about them, perhaps they were just doing their jobs.

This meant pointing out that NHS inflation is much higher than the headline figure of 2.5 per cent in the economy generally, for example, so 'real growth' is less than Mr Milburn likes to imply.

All the talk in the coffee breaks was about 'real problems', 'real pressures' and 'managing expectations', which means telling staff the money is heading for their paypackets and national priorities.

Clearly it is not heading for much more capacity, 'sexy' clinical developments outside the areas of cancer and coronary heart disease, or cherished local projects - things that would make the front line believe the NHS is awash in cash.

NHS finance director Richard Douglas tried to buck everybody up. Not only was the money 'well above any real-terms growth we have had in the past 10 years', but the Department of Health had tried to take account of concerns about how it was allocated last year, so that 22 per cent rather than 36 per cent had been 'earmarked' for national clinical programmes and priorities such as mental health and IT.

But Mr Douglas had some tougher messages. Deficits were not an option. 'Financial balance is not just a target, it is a statutory duty, ' he said.

Maintaining financial control through the huge changes set out in Shifting the Balance of Power in the NHS and getting the new organisations working meant 'an incredibly challenging year' ahead.

He gave them a coded - but unmistakable - warning: audible gloom would not be welcome. 'It is easier to find problems than solutions' and finance staff 'have a tendency to look on the bleaker side - I know, I do it myself ', but 'I am quite confident we can deliver and maintain financial stability'.

Mr Douglas also suggested that the shared payroll and human resources system set to roll out across the NHS could release finance directors from some of their duller chores.

Current thinking is that 10-25 'shared-services centres'would be needed. The system was starting immediately at one test site, University Hospital Birmingham trust, and would then be installed at 15 pilot sites.

Mr Douglas argued shared services were essential if the devolution of power was to work - it would just not be possible for 400 primary care trusts to maintain their own HR and finance departments. But he argued it should mean more 'exciting' jobs for finance staff, who would spend less time on routine paperwork and more on strategic issues.

In the long-term, Mr Douglas said, NHS funding would depend on the Wanless report for the Treasury. He declined to predict how the NHS would be structured, but argued the present reforms at least had 'the potential to be sustainable'. And he argued shared-services centres would be so well established that 'we will have forgotten what we used to do in the past'.

In short, he seemed to see the glimmerings of an almost rosy future. Optimism. It'll never catch on. l Old hand at the helm: HFMA chair John Flook John Flook is one of the most respected finance directors in the NHS - as chair of the Healthcare Financial Management Association's audit committee he led ground-breaking work on fraud.But he is known for preferring background roles to the limelight.He joined the NHS in 1970 as a graduate trainee, and has been director of finance in Darlington since 1985.His employer has changed repeatedly as the internal market came and went and organisations changed and merged with it.

Challenges for finance will be to find enough staff for 'a record number of statutory bodies', and help to 'educate'hundreds of new non-executive directors about financial matters and maintaining financial control.

'And in the middle of all that, we have got to take this huge increase in resources and make sure they go where they are meant to go.'

The HFMA has changed considerably since the mid-1990s: initially forging a clearer identity as part of the Chartered Institute of Public Finance and Accountancy and then striking out on its own.

Under the last chair, Mark Millar, it got a new headquarters and a new, professional staff 'who are absolute deliverers', but Mr Flook would like to see further developments.

For instance, he would like the HFMA to do some work on comparative healthcare systems so finance staff are involved in the current debate on the future of the NHS.

And he would like to build on the finance function's tradition of training and support by developing a mentoring programme as part of a new HFMA career-support package.

'Finance has done so much for people, particularly under [former NHS finance director] Colin [Reeves], but we can see a gap, particularly at the moment, 'he says.'Many people are going into relatively senior jobs and they are going to need some help.'