Health Minister Lawrie Hooper will seek Tynwald approval this week for his over-spending department to get an extra £10m.

The Department of Health and Social Care is currently forecasting to be about £7m over budget by the end of the financial year.

‘Unusual costs and activity within Manx Care’ including a pay award still under negotiation are cited as the reason for the shortfall.

An explanatory memorandum to Tynwald states: ‘It is perhaps disappointing that Manx Care has been unable to manage within its allocated budget for the year, give the political commitment to the Sir Jonathan Michael report and its recommendations. ‘However the reasons for the over-spend in the current year are largely due to unusual costs/activity including a pay award which is currently in negotiation.’

pay award

The final position is contingent on the agreement of a pay award for two of Manx Care’s largest pay groups.

An amount of £2.4m is built into the overspend to cover the current pay offers but this has not been agreed by the unions.

The £7m overspend also includes the impact of increased drugs costs and costly treatments for some patients.

An amount of £10m is being requested to provide an element of contingency.

The DHSC has also already received approval from Treasury to be reimbursed more than £20m from internal funds, mainly in relation to Covid-19 expenditure.

If Tynwald approval is given, the department’s net budget will increase from £232m to £242m for the year 2021-22.

Manx Care was created in April 2021 and at that point the budget for the DHSC was split between DHSC and the new care provider.

The department now mandates what services it requires Manx Care to provide and allocates the budget accordingly.

Within Manx Care, the actual cost is met by a Mandate transfer from DHSC so is always a net zero.

In Sir Jonathan Michael’s report a proposed funding formula was put forward, being CPI plus 3.03% but this was not put in place in time for the 2021-22 budget.

For the current financial year the amount allocated to Manx Care to provide health and care services was £269m.

This amount included a 1% (£2.7m) savings target.

The explanatory memorandum to Tynwald notes: ‘The first year of operation of an organisation often proves to be difficult and the new structures, governance and personnel within both DHSC and Manx Care require time to be established and achieve their aims, whilst working against a back-drop of a worldwide pandemic.’

Pay negotiations are still under way with the Health, Medical and Dental and the Manx Pay Terms & Conditions staff.

A pay award of 3% has been offered to match that offered in the UK. This £2.4m over the budgeted 1%.

Also included is part of the Public Services Commission pay award which was not budgeted for. In addition to a 1% consolidated amount, the PSC awarded £500 per-person as a one-off lump sum. The total cost for that was £470,000, bringing the total pay claim element of the supplementary vote to £2.8m.

Drug costs have increased significantly during the year to £25.6m, which was £2.6m over budget and is expected to exceed budget by £4.5m by year-end.

Total overspend on the cost treating patients in the UK is expected to be £1.3m.

These costs over which the island has little control, have been volatile in recent years.

High cost treatments have also put pressure on budgets. For example, one three month treatment is estimated to cost £960,000 in the current year and may extend into next year.

Manx Care had made £1.5m of savings towards its £2.7m target by the end of November.