MEMORANDUM
Memorandum by the Department of Health
PUBLIC EXPENDITURE QUESTIONNAIRE 1998
[N.B. New material and questions are indicated
in bold type. Other question numbers are as last years
questionnaire.]
1. KEY ISSUES
AND INITIATIVES
1.1 Expenditure
Would the Department list the special monies
set aside since May 1997, together with the purposes for which
they are intended and details of how their use for these specific
purposes is being audited? Would the Department provide a commentary
detailing the impact these allocations have had? Would the Department
indicate how such allocations and in particular those earmarked
to reduce waiting lists, are justified in the light of efforts
to allocate resources in an equitable manner across England.
1. This response covers the two areas where
additional funds have been made available to the NHS ("winter
pressures" and waiting lists), and use of additional funds
for breast cancer services and paediatric intensive care found
from redeploying existing resources.
Breast Cancer Services
Amount and Purpose
2. £10 million has been made available
recurrently to be used specifically for breast cancer services.
Resources were made available through Regional Offices on an indicative
weighted capitation basis to reflect the 35—80 female population.
Health authorities and trusts were asked to work up proposals
focusing on initiatives which supported rapid access to high quality
diagnostic services and the provision of high quality care by
multi-disciplinary site-specialised teams.
Monitoring and Audit
3. Health authorities are monitoring achievement
of the projects. Interim reports were submitted in January 1998
which showed that spending plans were in line with projected expenditure.
Health Authorities will be submitting comprehensive reports 12
months after the funding was received (Autumn 1998) which will
report on the improvements made in the services provided and allow
a tangible measure of progress to be made.
Impact
4. £10 million was available in the
first year to fund a mixture of non-recurrent and recurrent projects
with £10 million available recurrently for subsequent years.
This is being used to support over 300 initiatives around the
country to improve the speed of access to diagnosis and high quality
treatment of breast cancer. Specific projects include increasing
the number of breast specialists—surgeons, oncologist, pathologists,
radiologists; breast care nurses or clinic managers; establishing
or developing "one stop" triple assessment clinics;
providing local chemotherapy services; developing audit procedures;
investing in additional equipment such as mammography sets or
ultra sound machines; reducing waiting times by investing in increased
surgical, oncological, radiotherapy sessions; or improving links
with primary, palliative and hospice care to improve referral
and discharge arrangements. In particular, funding has been used
in many cases to establish or improve "one stop" services
for breast abnormalities. This allows women to receive a number
of tests on the same day from which a diagnosis can be made. Establishment
of this "one stop" service will reduce waiting times
and will help achievement of the White Paper cancer target for
breast cancer (April 1999).
Paediatric Intensive Care
Amount and Purpose
5. £5 million was made available in
1997-98 and £10 million in 1998-99 to support implementation
of the report of the National Co-ordinating Group for PIC "Paediatric
Intensive Care: A Framework for the Future" and the associated
report on nursing standards and qualifications "A Bridge
to the Future". This funding was allocated to Regional
Offices in line with health authority (HA) initial general allocations.
6. The priorities for funding are to:
build up the capacity and capability of "lead"
PIC centres;
provide for safe 24 hour retrieval services;
increase the number of medical and nursing staff
within lead centres trained in specialist PIC skills (eg ENB 415
for nurses); and staff in general hospitals skilled in stabilising
critically ill children prior to transfer.
Monitoring and Audit
7. Funds were allocated to Health Authorities
through the regional co-ordinators of paediatric intensive care.
Applications were scrutinised by the regional coordinator and
officials responsible for paediatric intensive care policy, with
Ministers giving their approval of the spending plans. Monitoring
the use of the funding is the job of the regional co-ordinators
of PIC who report back on a regular basis on the progress made.
Reports on expenditure in 1997-98 have been received and the bidding
process for 1998-99 is under way.
Impact
8. The full implementation of the recommendations
of the paediatric intensive care reports will take a number of
years. However, early indications are encouraging. A questionnaire
issued earlier this year on nurse staffing shows welcome increases
in qualified staff and feed back from the regions indicate that
they are making good progress to fully implementing the recommendations
of the reports.
"Winter Pressures" Funding
Amount and Purpose
9. An additional £300 million was made
available for the NHS in winter 1997-98, of which £269 million
was for the NHS in England. The bulk of this (£159 million)
was allocated to health authorities, with the remainder being
used for Family Health Services and other measures. Resources
were allocated through Regional Offices in line with shares of
1997-98 Health Authority initial general allocations.
10. The purposes of the additional £159
million were:
(i) to ease the pressures on the health and
social care system during the winter period, in particular to
help hospitals cope with medical emergencies
which are already known or likely to occur during the winter months,
for example by improving staffing levels at times of peak pressure
and through services opening extra hours;
reduce delays in discharging patients, for example
by improving rehabilitation and recuperation services, funding
increased care at home, extra nursing and residential home places
and more social services support;
reduce the need for people to be admitted to
hospital in the first place by strengthening primary, community
and social services, providing more specialist nursing and therapy
for people—particularly older people—in their own
homes, nursing and residential homes, and through improved community
and out of hours services.
(ii) as resources allowed, to restrain the
growth in waiting times and waiting lists.
Monitoring and Audit
11. NHS Executive Regional Offices are responsible
for monitoring performance. Health Authorities were asked to report
on performance against plans, giving details of the schemes funded,
by 30 April 1998. Regional Offices have prepared summary reports
for the NHS Executive and information on any particular lessons
learnt will be disseminated.
Impact
12. The £159 million allocated to Health
Authorities in England funded almost 1,500 schemes. Over one fifth
(some £35 million) was transferred to Social Services Departments
under Section 28A of the 1977 NHS Act for those projects where
the identified service need was specifically for social care.
13. Examples of innovative schemes include:
Bury Health Care NHS Trust appointed an Anti-Coagulant
nurse specialist at a cost of £18,000 for the management
of patients with deep vein thrombosis (DVT). Patients attending
A&E with DVT were examined by the nurse and in many cases
were able to be treated as an out-patient and maintained in the
community rather than admitted to hospital. It is estimated that
the scheme saved some 140 in-patient bed days.
In Doncaster ten beds were assigned in order
to speed up the discharge process for patients who were approaching
the end of an acute episode. Seven additional nurses and two Senior
House Officers were assigned to the project. 70 patients were
assessed during the project period and all were discharged to
their own homes.
In Sandwell the additional funds enabled a fifth
intensive care bed to be opened and at times of pressure the unit
was able to open a sixth bed. In previous years Sandwell had transferred
out more patients than it took in from other hospitals. This year
however the trend was reversed.
Waiting Lists
Amount and Purpose
14. The March 1998 Budget made an extra
£417 million available to the NHS in England in 1998-99 for
measures to reduce waiting lists (£500 million for the UK).
£320 million will be spent directly on cutting waiting lists.
£288 million was allocated to health authorities at the end
of April 1998 in line with their 1998-99 initial general allocations.
£32 million will be allocated later in the year to promote
innovation, to reward good performance and to tackle poor performance.
15. £65 million will be used to support
"whole systems" action to achieve sustained reductions
in waiting lists through building on the success of new ways of
working pioneered during the winter and through targeted investment
in primary, community, mental health and social services. The
money has been apportioned between the eight regional offices
in line with their HAs' 1998-99 initial general allocations. Regional
offices will be responsible for allocating amounts between their
health authorities against agreed, costed action plans.
Monitoring and Audit
16. Each health authority is being set a
challenging, individual waiting list and activity target to meet
by 31 March 1999 with its allocation of the £320 million.
Progress against these targets will be monitored vigorously by
regional waiting list task forces and the national Waiting List
Action Team. For the £65 million, health authorities will
be accountable for the implementation of local action plans and
Regional Offices of the NHS Executive, working with Social Care
Regions, will performance manage their delivery. Interim progress
reports are to be submitted by 30 September 1998 with outturn
reports on performance against plans, including an evaluation
of their costs and benefits and their impact on inpatient waiting
lists, due by 30 April 1999.
17. It is too soon to comment on the impact
of these additional resources.
18. Details concerning the use of the remaining
£32 million for England have still to be finalised although
£10 million for colorectal cancer has been announced. No
firm plans have yet been made on how the additional £10 million
will be used. However, it could be used in a similar way to the
extra £10 million for breast cancer services in 1997-98 and
focused on initiatives which support rapid access to high quality
diagnostic services and the provision of high quality care. In
this way, the money will contribute to reducing cancer waiting
times. The resources could be made available through regional
offices in the same way as the additional £10 million for
breast cancer, with similar robust monitoring systems put in place
to monitor achievement of spending plans. The remaining resources
will be used to support action to tackle waiting lists by modernising
the NHS, for example through extending the piloting of NHS direct,
the 24-hour nurse-led telephone advice line. Further details are
to be announced later in the year.
Assessment of Allocation
19. The Government uses a range of mechanisms
to ensure that NHS funding is distributed fairly. For the bulk
of HCHS recurrent funding the principle is to move towards equity
based on the health care needs of populations as measured by weighted
capitation formulas. These formulas are used to set weighted capitation
targets and the speed at which HAs are moved closer to target
is the subject of annual decisions about the deployment of growth
monies. In distributing growth monies a proportion goes to all
HAs to recognise universal pressures.
20. For tackling specific problems using
non-recurrent funding, fairness is best achieved through using
an effectiveness criterion, that is, by targetting resources to
where they will do most good. In the case of waiting list funding
the universal nature of the pressure was recognised—waiting
lists are by some distance patients' greatest concern and all
parts of the NHS need to play their part in meeting the public's
legitimate expectations by reducing waiting lists and achieving
the reduction in waiting times that will result from shorter lists—so
the general allocations of all HAs were topped up accordingly.
A further tranche of waiting list funding was distributed to ROs
in line with their HAs' initial general allocations, thus achieving
a broad geographical equity. Effectiveness will be pursued by
ROs who will use their local knowledge to target this funding
to meet specific local pressures.
1.2 Redistribution of R & D Resources
What redistribution of R&D resources between
NHS providers, if any, has resulted from the first bidding round
for "R&D support for NHS providers".
1. For the first time in 1998-99, R&D
support funding for NHS providers is distributed through a new
competitive process which seeks to improve the use made of R&D
resources in supporting research of good quality and providing
value for money for the NHS and benefit to patients. The process
was based on ten published assessment criteria in accordance with
the Strategic Framework for the use of the NHS R&D Levy. The
redistributions achieved in the first round provide a balance
between avoiding destabilisation of some trusts, and change especially
to support developing R&D by primary care providers who for
the first time this year have access to R&D support funding.
The overall effect of redistributing R&D resources is to better
target funding on providers who have demonstrated the potential
to make the best use of it. Funding is subject to written agreements
which put obligations on providers to ensure good use of public
funds, and which include arrangements for monitoring and review
of performance by the NHS Executive. The new system for funding
R&D is being evaluated.
2. The first bidding round for funds from
the budget which provides R&D support funding for NHS providers
has resulted in a significant redistribution of resources. The
objective of ensuring that R&D support funding goes to those
providers who are able to make best uses of it means that some
providers are getting more this year, or are receiving funding
for the first time, with those who cannot getting less. In particular,
55 trusts and primary care providers who previously received no
funding have been allocated £2,641k this year, and 38 trusts
who received £667k last year and who bid for funds have received
nothing—although they may be entitled to funding to cover
the service support costs of externally funded non-commercial
R&D which they nevertheless host. Other providers saw changes
in their allocations both as a result of redistributions to secure
best value from R&D resources, and as a consequence of a reduction
in the size of the budget.
1.3 Resource Accounting and Budgeting
Could the Department provide a commentary, including
its current timetable, on the implementation of Resource Accounting
and Budgeting within the wider Department? What will be the cost
of implementation? What progress has been made in developing agreed
performance measures and valuing fixed assets? Could the Department
provide a commentary on the conclusions and recommendations of
the report of the House of Commons Procedure Committee (see Second
Report from the Procedure Committee, Session 1997-98, Resource
Accounting and Budgeting, HC 438), and in particular comment on
the accounting issues raised in paras 14-17 and the feasibility
of the timetable as discussed in paras 28-35.
Resource Accounting
1. Implementation of Resource Accounting
in the Department is progressing to plan. In March 1998, after
taking evidence from the Department and the National Audit Office,
the Treasury concluded that progress was generally satisfactory—though
the timetable to deliver the considerable amount of work which
remained was tight. The Department is preparing Resource Accounts
for the current year (1998-99), but on a trial basis only. These
accounts will be subject to a dry run audit by the National Audit
Office and will be made available to the Health Committee for
scrutiny. The Department expects the first year of live running
to be 1999-2000.
2. Bringing together figures from over one
hundred constituent bodies (eg Health Authorities and Executive
Agencies) remains the most substantial challenge in delivering
resource accounting, but the Department is working to develop
the appropriate procedures and policies.
Resource Budgeting
3. On Resource Budgeting, the Department's
implementation timetable is dependent on progress more widely
on developing new procedures and guidance for the planning and
control of Government expenditure. Subject to these procedures
receiving full Parliamentary approval, the Department's first
resource based Estimate will be presented to Parliament for 2001-02
and, from that year, resource accounts will replace cash Appropriation
Accounts.
4. The new procedures are expected to be
developed across Government through a programme of pilots and
trials. The first pilot took place in 1997-98. There will be a
more extensive in-year live test during 1998-99, building on the
information available from departmental resource accounting systems,
and probably further exercises in subsequent years. DH will be
playing its part in these activities to help ensure that, where
necessary, the new budgeting regime takes account of any particular
features of the Department's business. The trials will also provide
an opportunity for the Department to become familiar with the
new arrangements before they go live.
5. The Department expects to be able to
present the Health Committee with dry run Estimates on a resource
basis before the first live year of Resource Accounting and Budgeting
(RAB) in 2001-02.
Project Costs
6. Because of the uncertainty about resource
budgeting at the time, the Department's original project only
dealt with resource accounting. Between 1995 and 1997, as planned,
around £876,000 was spent on the project. The work to be
done is now better defined and the project scope has been revised
to include resource budgeting. The timetable has also been extended
to 2002 (when full RAB is expected to be live). The full project
includes firm costs of around £3 million (including money
already spent) and outline costs (mainly in the NHS) of around
£5 million. The outline costs are incomplete and will be
firmed up as the requirements become clearer.
Performance measures
7. The Department is also required to demonstrate
whether it is using its resources effectively to achieve its objectives.
Progress against a series of performance measures and targets
will be presented in the OPA (Output and Performance Analysis),
a companion volume to the resource accounts. The first published
OPA will be for the year 1999-2000.
Valuation of Assets
9. As a guide, some £2.7 billion of
fixed assets are expected to fall within the Department's resource
accounting boundary. Of these, around 95 per cent have already
been valued. Around £1.5 billion of the assets are held by
Health Authorities and Executive Agencies who already include
the values in their published accounts. On the assets of the Department
itself, all NHS assets held by Regional Offices (around £1
billion) have been valued, as have around 80 per cent of the remaining
administrative assets (mainly the estate). Work is in hand to
value the Department's office information system, which will very
largely complete the picture.
Report on RAB from the House of Commons Procedure
Committee
Accounting Issues
10. In its report on RAB, the Procedure
Committee identified three specific outstanding accounting issues
which, unless satisfactorily resolved, could introduce unnecessary
uncertainty into the figures presented for Parliamentary approval.
These issues were: whether to adopt commercial accounting practice
in respect of prior period adjustments; the treatment of contingent
liabilities; and a proposal from the Government on accounting
for the effect of general price inflation.
11. In general, the process of piloting
and live testing of resource budgeting referred to in Paragraph
4 above is expected to inform the design of budgeting and control
procedures so that uncertainty in each of these areas is minimised.
More specifically, departments' treatment of contingent liabilities
will have to be in line with generally accepted accounting practice
(as reflected in the Resource Accounting Manual, which details
how departments should prepare their resource accounts) and draft
resource accounts will provide an indication of the likely scale
of the issue. The Government will be keeping the operation of
contingent liabilities under review in its programme of live testing,
and if a particular budgeting problem emerges in this area, it
will be addressed. The Government is also examining how prior
period adjustments might impact on expenditure control under RAB,
and how they might be accommodated within the Supply process.
12. On accounting for the effects of general
price inflation, the Government believes that its proposal is
correct in principle, since it would reflect more accurately the
cost of holding assets and so provide an improved framework for
resource allocation. As part of the piloting work on resource
budgeting, the Treasury will be examining how the change should
be introduced. Through the NHS, the Department has considerable
experience of accounting for changing prices and will seek to
contribute this to the work being done by the Treasury.
Timetable
13. The timetable for implementing RAB,
though tight, is achievable for the Department. The project costs
referred to above are based on an assumption that the new procedures
for resource budgeting are finalised well before the first live
year of RAB.
14. The Procedure Committee accepted the
Government's proposals for monitoring the implementation of resource
accounting and budgeting on the condition that Parliament is fully
involved in assessing progress towards implementation. Three trigger
points have been defined to provide Parliament with reassurance
during the transitional period leading to full implementation
of RAB that satisfactory progress is being made. These points
are:
(i) Stage 1 approval (April-December 1998).
This approval has already been granted for the Department of Health;
(ii) assessment of departments' opening balance
sheets for 1999-2000 (April-June 1999); and
(iii) NAO's audit of departments' dry run
1998-99 resource accounts (autumn 1999).
15. As each trigger point is reached, it
will be possible to assess the Department's progress towards implementation.
2. NHS AND PSS
EXPENDITURE ISSUES
2.1 Overall Expenditure (formerly A1)
Will the Department provide an updated version
of table A1.1 of HC 297 [Trends in Actual and Planned Expenditure
on the Health and Personal Social Services 1993-94 to 1998-99
by Area of Expenditure], and of the Department's commentary
which accompanied it? Can the Department provide a brief commentary,
explaining what expenditure is included under each section of
the Table?
Significant changes between forecast and actual
outturn for 1996-97 and between the planned level of spending
and forecast outturn for 1997-98 should be identified, by comparing
figures in HC 297 with current figures. For each programme the
planned level of spending in 1996-97 and actual outturn expenditure
should be shown in tabular form.
Please identify differences between the 1998
Departmental Report and the figures in the new table 2.1.1, and
explain these differences.
Any commentary which the Department wishes to
append would be welcome, including information about efficiency
gains and a table showing changes in the HCHS cost-weighted index
of activity for the latest 10 years for which figures are available.
What is the Department's assessment of each
programme's performance in 1996-97 against plans for that year
and anticipated performance in 1997-98 against plans for that
year and outturn in 1996-97?
Can the Department provide a table showing for
each health authority: the planned Purchaser Efficiency Indicator
(PEI) for 1997-98, and the latest estimated PEI Outturn for 1997-98.
Could the Department provide a commentary on any progress towards
a replacement measure?
OVERALL EXPENDITURE
1. The information requested on expenditure
trends from 1993-94 to 1998-99 is given in Table 2.1.1. Figures
have been adjusted for classification changes, so that they provide
a consistent series.
2. The NHS elements of Table 2.1.1 are on
the same basis as Figure 2.1 of the DepartmentalReport (Cm 3912),
in that they reflect the areas in which funds are actually spent,
rather than those to which they are initially allocated.
the health committee 13
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