Seb Evans (SE): Why have you decided to keep the annual retention fee (ARF) at the same level?
Ian Brack (IB): I need to look at the risks and opportunities the organisation faces every year.
We’ve always got to bear in mind what our statutory purpose is. We’re all about protecting the public and ensuring confidence in dental professionals, but we have to do it in a sustainable manner.
We’re constantly looking to cut our costs, and we’ve continued to do that. We want to get to a point where we are able to sustainably and meaningfully reduce the ARF. But, with all that in mind, what I’m looking at is the landscape around the GDC.
Within the GDC there are internal risks. Those risks relate to the change processes we’re going through. We’re an organisation that is carrying out an end to end review of fitness to practise (FtP). We’re already doing things that are changing the way we’re working. This has financial risk involved in it because it has costs.
We’re relocating, we’re moving staff to Birmingham and establishing a significant operational hub there. This building (in London) will stay our national headquarters, and one reason for that is that we get it for a peppercorn rent, but many of our operational staff will eventually be based in Birmingham. That’s a big change that will bring long-term savings but there are up-front costs involved and of course we’ve got risk involved in that too.
And we’ve got Shifting the Balance, which we’ve got to deliver. Shifting the Balance involves investment. It involves investing in new upstream ways of working. You’ve got three major areas of alteration and change in the organisation with the associated risks.
Externally, the UK is leaving the EU. Everyone is going to be affected by Brexit one way or another. You’ll have impacts on the overall UK economy, potentially good or bad, we don’t know. That’ll affect dental professionals and the whole economy, it’ll change the labour markets along with all types of things. So there’s a degree of uncertainty just generically about leaving the EU.
But there is also something very specific about leaving the EU for the GDC. If we leave with a hard Brexit, an unnegotiated settlement, then we’ll lose Mutual Recognition of Professional Qualifications (MRPQ), and that matters a lot to us. MRPQ creates the right to automatic registration for dentists qualifying in EU countries. If we don’t have MRPQ anymore, and there is a real possibility of that, we have to find another way of registering EU qualified dentists, which last year made up 23% of our new applicants.
The obvious way to do that is the Overseas Registration Exam (ORE). The problem with that is it’s already an expensive system to run. If we end up needing to significantly expand that capacity, to accommodate the 400 plus applicants who would have otherwise have been automatically registered through MRPQ, there will be cost implications for the GDC.
Of course, those 400 plus dentists each year from the EU could stop coming to the UK. Setting aside the problem that would cause from a workforce point of view, which is an issue for the Department of Health (DH), that would mean a reduction in income, something in the region of half a million per year. But it starts to get much more serious if existing dentists from the EU decide to leave and were not replaced. As a very rough example, if a third of existing European registrants were to leave the UK register and the supply of new EU dentists were to fall away, that would represent a drop of around £2.5m each year for the GDC.
A big factor in all of this is whether MRPQ ceases to apply or not and whilst I know that the intention is that a negotiated deal will retain it, I don’t know whether this will come to pass. But what I do know is it’s a real possibility, so I’ve got to plan for it.
I went to the council and advised them that this is not the time for us to reduce the ARF. It’s disappointing, because we’ve done a lot of good work and things are going in the right direction.
SE: We’re seeing savings in FtP hearings, where have these come from and are the changes you’ve made having the desired affect?
IB: It’s a good story and bad story. The good story is we’ve made efficiencies and savings. We’ve cut costs out of the organisation that didn’t need to be there, we’ve streamlined processes, some of which you’ll see more of in the 2018 accounts. Already we’re cutting delay out of the system, which creates savings.
The problem is, last year, FtP also didn’t do all the work it needed to do, work slipped behind. Some of the things that look like savings in the annual report and accounts are better described as deferred spend. Spend we budgeted for in 2017, money that we should have spent, that we wanted to spend, and it didn’t happen because the work slipped. When you get that, you’ve not actually got a saving, the money is going to have to be spent, probably this year or next.
One of the things for me is that the organisation I’m looking at now understands the drivers of complexity, performance and costs in FtP in a much more sophisticated way than we did when I arrived. As we get better at picking out those characteristics that lead to high costs and potentially delays, we get much better at predicting our performance and forecasting our costs. Each year, we’ll get better at it.
SE: Your annual report and accounts puts your reserves at just above your four- to six-month target.
IB: Correct. The reserves have recovered after several years of being dangerously low and I recognise we are now marginally above the target. But remember, I’m expecting chunks of that to be spent, later this year and next, on the things we’ve spoken about.
SE: You’ve been making a surplus with the ARF to fill your reserves. Now you’re making savings in the FtP process, so surely you will now have even more money going into the reserves?
IB: Yes, but this year we’re spending more money to allow us to safely make the changes we’ve talked about. We’re going to be spending more money, for example on double-running parts of the organisation. So, cost will be higher and we’ve got calls on the reserves, so we need to replenish those. Going on we’ll have the same level of reserves when we come out of the stress period in 2019, and then the fees can hopefully come down.
The reserves are a bucket with a hole in the bottom in that the funds you see going in are also going out and I need to keep putting stuff in until I plug the hole in 2019.
SE: This is how it all looks to dentists:
In 2015 the ARF went up and registrants were told it’s to compensate for a rise in FtP cases
In 2016 plans to make FtP numbers drop were announced, but FtP cases were still very high and so to compensate for that the ARF stayed high
In 2017 FtP cases started to drop, we were told there are more cost savings from the GDC on the way but fees stayed high and this was to replenish the reserves
And then this year, FtP cases continue to drop, reserves have shot up and are replenished, but the fees are still staying high and registrants are told you’re doing more work and Brexit might bring expensive changes for the GDC.
From a registrant’s perspective it seems like every year there’s a different reason for the fees to stay high. What stops you coming up with another excuse next year?
IB: I understand that viewpoint. It’s probably not a bad characterisation of what the last four/five years looked like for registrants.
I’ve made the point firstly that there’s a lot of costs still in the system from the spike in the caseload. Yes, caseload is dropping but cases that go to full hearing typically last between one and two years and the main cost for us is incurred in the final third of case lifetimes so there’s still cost in the system from that caseload.
To be fair we had no way of knowing we were going to be leaving the EU. If I didn’t have these levels of uncertainty, yes, I’d be a lot happier about saying to the council that now is the time to reduce the fee. But we do have these levels of uncertainty, I’m personally accountable to the council and to Parliament. I want to be able to say that the GDC is in a position to sustainability and robustly carry out its statutory purpose. The price the GDC has to pay for that is that we can’t do what undoubtedly would make us more popular with the profession at this moment, and bring down the ARF. It’s not the right thing for us to do.
I have to say, we want to bring the costs down, we’re doing what we can, we understand how it feels for registrants. The direction of travel is going the right way. I will be delighted when I’m sitting here and we’ve managed to reduce the ARF. But I also would say that the risks are real, they are there, and I do have to plan for them. It’s frustrating because we’ve made real progress, but it’s the right thing to do.
SE: The General Medical Council (GMC) recently announced a provisional registration fees drop, a full registration fees drop, doctors holding full registration for the first five years, their fees will drop, no transaction charges for retention fees being paid quarterly or monthly, it has vowed for any future increases to be in line with inflation. The GMC appears to be doing its best to be affordable for the profession it regulates and it’s doing its best to make payments easy and more predictable. Why can’t the GDC be more like the GMC?
IB: It sounds like a really simplistic answer, but we’re not the GMC. The reason that matters is that the whole business model is different. And so is the law. The legal structures for each different health regulator aren’t the same. Even the Department of Health sometimes overlooks this: other health regulators can do some things we cannot because our legislation just isn’t the same. For example, the Dentists Act requires us to collect ARF fees from dentists in advance of the year of registration. To be able to begin charging dentists in instalments, the legislation and our regulations would need to be changed. But, if we see something being done by a different regulator that we’re legally able to do and that would be beneficial for our registrants, we certainly look at it.
SE: Anything else you’d like to add?
IB: The GDC is going through a lot of change, we’ve got an awful lot going on and a lot to do. I think it’s an exciting time for the GDC, to work here and to do what we’re doing. I think the potential for the profession is exciting.
We’re going to be a changed organisation again next year. We’re bringing the costs down, we’re improving the performance, not just in ways measured by the Professional Standards Authority, but things we believe matter to the public and registrants to do the job better. When we come to you in the first half of next year to consult on the corporate strategy, it’s going to be a real consultation talking about the direction of the organisation for the next three years. It’s going to have real impact, what we do for three years will go into a model where we cost it out and it will produce an ARF. We can argue about the edges of that, but it’s fundamentally what we do that will affect the ARF and how we interact with the profession we regulate. It’s a real opportunity and I really hope the profession is going to take that up and engage with us.
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