House of Commons - Health

Select Committee on Health Memoranda

3. NHS RESOURCES AND ACTIVITY

3.1 General

3.1.1 Could the Department provide tables showing health authority gross expenditure on HCHS by service sector and age group for the latest year for which data are available? [4.1a]

3.1.2 Could the Department provide a table showing gross expenditure on Family Health Services in 2000-01 and 2001-02? [4.2]

3.1.3 Could the Deptartment provide tables which integrate expenditure on HCHS and FHS (Table 2.2.2. and 4.2.1) thus aligning data much more closely to PCTs' span of responsibilities? Could this integrated information also be provided by Strategic Health Authority area?

3.1.4 Could the Department give an account of the funding streams for the General Medical Services budget and provide a trend analysis? [4.3a]

3.2 Inflation

3.2.1 Could the Department give an explanation as to the level of funding set aside for inflation in 2002-03? In particular, can it give the average pay awards to each (subjective) staff group and the inflation assumptions for non pay including capital charges? [4.4a]

3.2.2 Could the Department provide a breakdown of the components of the health specific inflation indices for revenue spending on HCHS and Family Health Services respectively, together with capital spending on HCHS, for 1999-2000 and 2000-01, together with estimates for 2001-02? The tables for the HCHS should show separate inflation indices for Review Body staff and non-Review Body staff pay, and whatever other breakdowns of staff are available.[4.4b]

3.2.3 Would the Department state what the increase in expenditure on the NHS has been since 1992 in cash terms, real terms (GDP deflator) and real terms (NHS deflator)? [4.4c]

3.2.4 Would the Department provide a table showing the construction of the NHS inflation index from main sub-indices of pay and other factor costs since 1992, and comment on the assumptions underlying this construct? Would the Department provide the weights used for each sub-index, for each year? [4.4d]

3.3 Hospital and Community Health Services Allocations and Distance from Targets

3.3.1 Could the Department provide a table showing for each health authority or primary care trust:

(i) allocations for resident populations for 2001-02 (cash) and 2002-03 (cash and at 2001-02 prices);

(ii) 2002-03 Distance From Targets (DFT) in cash and percentage terms;

(iii) growth in percentage terms;

(iv) net adjustment (cash) for Primary Care Groups and Primary Care Trusts;

(v) net adjustment for out of area treatments; and

(vi) inherited deficits [4.5a]

3.3.2 Could the Department include a commentary explaining the key factors that determined those percentage growth increases shown in the table? [4.5b]

3.3.3 Could the Department update the Committee on recent developments in allocations of HCHS resources and provide the timetable for any planned changes? [4.5c]

3.3.4 Could the Department provide data on allocations covering HCHS and FHS for each SHA area together with estimates of distances from target needs based expenditure?

3.4 Public Health

3.4.1 Saving lives: our healthier nation set targets in four areas: cancer, CHD and stroke, accidents and mental health. How is the Department monitoring individual primary care trusts' progress towards the targets set in Saving lives? What assessment is being made of the effectiveness of any additional spending committed in response to these targets? What progress has been made to date? [3.1a]

3.4.2 How many public health posts were there in English HAs in each year between 1998-2002? How many public health posts are there now in a) PCTs and b) Strategic Health Authorities?

3.5 Care of Mental Health and Learning Disability Patients

3.5.1 Could the Department update the information given in Tables 2.4, on patients under the care of a learning disability or mental illness consultant, discharges by length of stay, ages and destination, and residential and other places available? Could the Department identify the number of individuals concerned, and hence the number of repeat discharges? [2.4a]

3.5.2 Could the Department provide a table showing:

(i) number of people sectioned, by trust and by type of section?

(ii) number of people sectioned in proportion to HA population? If the data are not available, will the Department consider obtaining it from the HES?

(iii) number of people sectioned in proportion to number of admissions?

(iv) proportion of people who appeal against being sectioned and the outcomes of the appeals? [2.4b]

3.5.3 Could the Department provide a table showing, over the last four years, the numbers of people with mental health problems and with learning disabilities who have been in special hospitals, prisons and regional secure units? [2.4c]

3.6 Expenditure on Prescribing

3.6.1 Could the Department provide information on total NHS expenditure on pharmaceuticals for the past four years, including a breakdown by sector and by generic/branded drugs? Could the Department please state what data are available on pharmaceuticals in the non primary care sector, and how they are monitoring drug spending and cost pressures in the acute hospital and community sectors? [4.10a]

3.6.2 Could the Department provide information on (i) total Family Health Services expenditure on prescribing for each year from 1992-93 to 2001-02, (ii) the average expenditure per capita, (iii) the total number of items prescribed and average number per capita, and (iv) the average cost per prescription? Any commentary which the Department would wish to append would be welcome, including an assessment of progress in meeting its stated target of restraining the growth in the drugs bill to sustainable and affordable limits. In particular, could the Department provide an update on the measures being taken to control NHS expenditure on generic drugs in primary care following the price increases in 1999-2000? [4.10b-c]

3.6.3 Could the Department give an update on progress in getting the pharmaceutical industry to reduce drug costs by 4.5 per cent (as agreed in the PPRS)? Could the Department comment on issues such as volume, price and substitution? Has monitoring information improved since last year, and has this helped cost control? [4.10d]

3.6.4 Could the Department provide estimates of the likely costs of NICE recommendations for the current financial year?

3.6.5 Could the Department provide figures for the amount of money spent on statins per year over each of the last four years, if possible broken down by Trust and Health Authority.

3.7 Allocations to National Specialist Services

3.7.1 What was the total allocation in 2000-01 and 2001-02 to each of the supra regional services and what is the planned allocation for 2002-03; and what significant changes have there been in the overall pattern of expenditure? [4.11]

3.8 Management and Administration Costs

3.8.1 Could the Department provide a commentary on the progress it has made in defining management costs in PCTs, Strategic Health Authorities and NHS trusts? Could the Department update Table 4.11.1? [4.12]

3.8.2 Could the Department provide figures for annual redundancy costs as a result of restructuring broken down by Health Authority and Trust, over the last 10 years?

3.9 Activity and Waiting Times

3.9.1 Could the Department update the information given in Tables 4.13 showing activity data by region for 2000-01 and 2001-02, including: total activity, with trends; activity by Inpatient, Day-Case and Outpatient; maternity and simple access data? Could the Department provide figures for the ratio of Finished Consultant Episodes (FCEs) to hospital spells by Region for the same period? To what extent do a relatively small number of providers depart from the overall pattern? Could the Department report on the progress made by the NHS Information Authority in reviewing clinical information, including the use of the FCE as a measure of activity? [4.13]

3.9.2 Could the Department update the data provided in table 4.14 on 10 year trends in bed availability and patient throughput for each major hospital sector and for each Region? Could information on bed occupancy (collected for the first time in 1996-97) and occupancy rates also be included? [4.14a]

3.9.3 Could the Department provide figures for the number of delayed discharges of patients from acute settings? [4.14b] Could the Department provide an estimate of the number of bed days in 2001-02 for which Social Services Departments would have been expected to reimburse the NHS, had the proposed scheme for incentivising the release of beds been in force in that year?

3.9.4 How many maternities were registered in each NHS region in 2000-01 and how many records in the Maternity Hospital Episode System had (i) maternity tails and, (ii) maternity tails containing data? Could the Department also update the information given in Tables 4.14.3-4.14.7? [4.15a]

3.9.5 Could the Department provide figures on the Caesarean Section rate by Trust over the past five years, plus such figures for other maternity interventions as are available.

3.9.6 Could the Department provide a commentary on, and show evidence of, the progress Trusts and Regions are making in improving data quality and on the steps the Department has taken to ensure improvement? [4.15b]

3.9.7 Could the Department provide information about waiting lists, both distribution by waiting time as well as mean and median average time, on a district of residence basis and on a provider unit basis? Could the Department update Figure 14.16.1 showing changes in mean and median waiting times since March 1988? [4.16]

3.9.8 Could the Department provide an update of Tables 4.16.4 to 4.16.8 on outpatient waiting times? [4.16b]

3.9.9 Can the Department provide information about current levels and past trends of patients' total waiting times from first referral to a specialist to eventual inpatient or day case treatment?

3.9.10 Could the Department provide figures on how many people were removed from waiting lists for day case treatment and for in-patient treatment (i) because of admission for treatment and (ii) for reasons other than treatment? How many people were self-deferred in each six-month period since September 1988? What rules apply to ensure consistent interpretation of these figures? Has the Department made any assessment of the extent to which people removed for reasons other than treatment in that hospital had either been admitted, died, been treated in another hospital, or no longer required treatment? [4.16c]

3.9.11 Could the Department provide charts and figures showing how trends in emergency and waiting list, booked and planned activity have moved with waiting lists sizes since June 1991? Could the Department provide both indices and actual numbers in each case? [4.16d]

3.9.12 Can the Department provide a comparison of total numbers of people waiting for outpatient appointments for each year for which figures are available, separately identifying trends in the average wait for an outpatient appointment? [4.16e]

3.9.13 Can the Department estimate the number of people at each access point of the elective care system broken down to show:

(a) numbers of GP consultations;

(b) numbers of referrals to specialist outpatient clinics;

(d) numbers of placements on waiting lists (differentiated by (i) "waiting list", (ii) "booked" and (iii) "planned"; and

(e) numbers of elective episodes of care, for each year since 1991-92 [4.16f]

3.9.14 Would the Department provide a commentary on changes over time in numbers waiting at each stage, and the conversion rates between each stage? [4.16f]

3.9.15 What additional mechanisms have been put in place since last year's response to deal with waiting lists? How is the success of each of these measured? What assessment have you made of the effectiveness of each? What has been the cost of each of these? [4.16g]

3.9.16 Would the Department provide figures on the number of people on NHS waiting lists whose treatment has been paid for in the independent sector over the last 10 years? Would the Department explain how these patients are dealt with when calculating average waiting times for NHS patients? Are private patients treated in NHS hospitals included in the figures used by the Department to calculate total NHS elective activity, numbers admitted from NHS waiting lists and average NHS waiting times?

3.9.17 Could the Department supply information on readmission rates to acute hospitals over the past 10 years?

3.10 Commission for Health Improvement

3.10.1 Would the Department provide the latest figures on the total expenditure by the Commission for Health Improvement (CHI) in each year since it was established in April 2000? Would the Department provide figures on the set-up costs of CHI in 1999-2000? Would the Department provide the latest planned expenditure figures for CHI in 2002-03 and 2003-04?

3.10.2 Would the Department provide figures for the number of people employed each year by CHI since it was established in April 2000?

3.10.3 Would the Department give a brief commentary on the work and achievements of CHI including the total number of clinical governance reviews, investigations and national studies that have been completed? Would the Department provide an estimate, by year if available, of:

— Cost per clinical governance review;

— Cost per investigation;

— Cost per national study.

3.10.4 Would the Department explain how it has evaluated CHI to ensure that it is delivering value for money and improvements to the quality of care in the NHS?

3.11 Race Relations (Amendment) Act 2000

3.11.1 Would the Department explain what the additional responsibilities of NHS bodies are under the Race Relations (Amendment) Act 2000, and what steps the Department is taking to ensure that NHS bodies meet these responsibilities?

3.11.2 Would the Department provide figures on the number of NHS bodies, by type of body, which have met the requirement under the Race Relations (Amendment) Act 2000 to publish a Race Equality Scheme by 31 May 2002?

3.11.3 Would the Department like to provide any commentary on its own response to the Race Relations (Amendment) Act 2000?

3.11.4 Would the Department provide figures on ethnic minority representation at board level in NHS bodies over the last five years, by health authority, NHS trust, or PCT, as appropriate? Would the Department also provide figures at Departmental and regional level?

3.11.5 Would the Department provide figures on the numbers and proportions of ethnic minority staff employed by NHS bodies, by staff group, over the last five years, by health authority, NHS trust, or PCT as appropriate? Would the Department also provide figures at Departmental and regional level?

3.11.6 All populations served by NHS bodies should receive equal treatment according to their needs. Would the Department explain what steps it has taken to ensure that people from minority ethnic groups receive equal treatment from NHS bodies? What evidence does the Department have to show that people from minority ethnic groups receive equal treatment from NHS bodies?

3.1 General

3.1.1 Could the Department provide tables showing health authority gross expenditure on HCHS by service sector and age group for the latest year for which data are available? [4.1a]

1. The data requested are shown in Table 3.1.1.

2. The latest year for which disaggregated data are available is 2000-01 since the allocation of programme-age related activity data is reliant on patient level data from the Hospital Episode system (HES).

3. The proportion of HCHS expenditure by programme of care is as follows:

Programme of Care Proportion of expenditure

Acute services 52%

Mental health 13%

Services intended primarily
for the elderly
9%

Other services 18%

Learning disability 5%

Maternity 4%

4. The proportion of HCHS expenditure by age group is as follows:

Age band Proportion of expenditure

All births 5%

Age 0-4 7%

Age 5-15 4%

Age 16-44 24%

Age 45-64 19%

Age 65-74 14%

Age 75-84 17%

Age 85+ 10%

5. Services aimed specifically, or mainly, at the elderly account for 9 per cent of total HCHS expenditure. However, those aged 65 and over accounted for 41 per cent of total expenditure despite being only 16 per cent of the population. This is mainly due to high levels of spend in other sectors, with 46 per cent of acute expenditure, and significant proportions of expenditure on services for mentally ill people being used by this age group.

Table 3.1.1

HCHS EXPENDITURE BY SECTOR AND AGE GROUP 2000-2001

Service sector	All births	0-4	5-15	16-44	45-64	65-74	75-84	85+	Total
Acute	0	1,130	682	3,115	3,444	2,786	2,836	1,506	15,500
Geriatrics	0	16	29	187	254	438	942	774	2,640
Mental Health	0	4	93	1,584	834	452	586	273	3,826
Other	109	123	83	543	473	370	429	247	2,376
Other Community	65	767	233	555	204	106	149	99	2,177
Learning Disability	0	31	136	900	340	51	23	4	1,486
Maternity	1,205	0	0	0	0	0	0	0	1,205
HQ Admin	38	56	34	188	151	115	135	79	797
TOTAL	1,417	2,127	1,290	7,072	5,701	4,318	5,101	2,982	30,008

1.  Expenditure on those under 65 occurs in the elderly sector due to the allocation of General Community Patient Care (which includes district nursing) and chiropody to this sector. Both of these initially provided services aimed at the elderly although their role has now become more wide spread across different age groups.

2.  In calculating expenditure by age it has been assumed that all expenditure in Maternity is spent on the baby. No allocation, from the total, has been allocated to the costs incurred by the mother (eg hotel costs, complications etc).

3.  HQ Administration has been allocated according to the expenditure already known within the relevant age groups.

4.  Figures may not sum due to rounding.

5.  Expenditure figures exclude Joint Finance.

3.1 General

3.1.2 Could the Department provide a table showing gross expenditure on Family Health Services in 2000-01 and 2001-02? [4.2]

1. The information requested showing gross expenditure on FHS on 2000-01 and 2001-02 is contained in Table 3.1.2.

Table 3.1.2

FAMILY HEALTH SERVICES GROSS EXPENDITURE 2000-01 TO 2001-02

	2000-01	2001-02
	£m	£m
Drugs Total (1)	5,168	5,561
GMS Non-Discretionary	2,510	2,288
GMS Discretionary	940	857
Total GMS	3,449	3,145
PMS (discretionary) (2)	161	597
GDS (4)	1,556	1,629
PDS (discretionary) (2)(3)	21	59
Dispensing Costs	856	877
GOS	292	302
Total Other FHS	2,886	3,465
Total FHS	11,503	12,171

Footnotes:

1 Drugs data source: Prescription Pricing Authority (PPA), England. Figures include amounts paid to pharmacy and applicance contractors by the PPA and amounts authorised for dispensing doctors and personal administration in England, for financial years April to March. The data do not cover costs for drugs dispensed in hospital, drugs prescribed in hospitals but dispensed in the community or private prescriptions.

2 Personal Medical Services (PMS) and Personal Dental Services (PDS) schemes are Primary Care Act pilots designed to test locally-managed approaches to the delivery of primary care. PDS and PMS expenditure figures exclude any related capital investment by NHS trusts.

3 PDS expenditure figures are also gross of patient charge income.

4 The gross GDS costs include the cost of refunds to patients who incorrectly paid income charges.

5 PMS, GMS, GDS, GOS and dispensing costs are Cash figures taken from unaudited FIS data. All 2001-02 figures are provisional as final returns are still to be received.

6 On a much smaller scale, the growth rates of GDS and PDS services will have been affected by some transfers of activity between the two services.

3.1 General

1. The information requested is contained in Table 3.1.3.

2. It is not possible to produce the HCHS programme budget figures at Strategic Health Authority area level.

Table 3.1.3

HCFHS PROGRAMME BUDGET EXPENDITURE 2000-01 PRICES

(Real Terms)

£ million

1997-98 1998-99 1999-2000 2000-01

Total Hospital of which: 18,603 20,096 19,132 21,002

Ordinary admissions 13,375 14,250 13,736 15,011

Day cases 1,211 1,462 1,294 1,461

Outpatients 2,891 3,140 2,940 3,276

Day care 471 537 494 538

Accident & emergency 656 707 668 716

Total Community of which: 4,582 5,115 4,740 5,128

Community nursing 1,926 2,211 2,036 2,125

Health visiting 364 399 402 419

Professional staff groups 655 711 602 654

Immunisation, surveillance & Screening 410 449 453 472

Residential care 1,227 1,345 1,246 1,458

Total GMS of which: 3,263 3,266 3,410 3,449

Non-Discretionary 2,364 2,347 2,505 2,510

Discretionary 898 919 905 940

Total Other FHS of which: 6,953 7,174 7,675 8,054

Drugs 4,418 4,558 4,959 5,168

PMS (discretionary) (1) — 39 81 161

GDS 1,450 1,505 1,510 1,556

PDS (discretionary) (1) — 4 12 21

Dispensing Costs 826 817 826 856

GOS 259 251 287 292

Ambulance journeys 514 534 500 554

Other Patient related 678 853 943 885

Non-Patient related 1,121 80 2,037 2,093

Total HCFHS 35,716 37,118 38,437 41,164

Footnotes

(1) Personal Medical Services (PMS) and Personal Dental Services (PDS) schemes are Primary Care Act pilots designed to test locally-managed approaches to the delivery of primary care. PDS and PMS expenditure figures exclude any related capital investment by NHS trusts; PDS expenditure figures are also gross of patient charge income.

3.1 General

3.1.4 Could the Department give an account of the funding streams for the General Medical Services budget and provide a trend analysis? [4.3a]

1. The two funding streams that make up the GMS budget are the discretionary—(cash-limited) and non-discretionary (non cash-limited) budgets. Table 3.1.4 gives a trend analysis.

Table 3.1.4

TREND ANALYSIS OF FUNDING STREAMS OF THE GMS BUDGET

£ms	1993-94	1994-95	1995-96	1996-97	1997-98	1998-99	1999-00	2000-01
GMS Non- Discretionary	1,840	1,902	1,965	2,073	2,198	2,243	2,451	2,510
PMS	n/a	n/a	n/a	n/a	n/a	38	84	161
GMS Discretionary	715	723	754	800	835	878	897	940

Source: GMS discretionary and non-discretionary financial returns from the former 90 Family Health Service Authorities (up to 1995-96) the England Health Authorities and from 2000-01 PCTs.

(1) PMS Pilots funding covers wave 1,2a and 2b funding.

(2) PMS spend includes both local transfers from the Unified budget discretionary amounts and GMS non-discretionary transfers.

(3) The Discretionary and non-discretionary GMS figures reflect the growth over the period in GP and practice staff numbers, and the rise in pay and expenses.

2. GMS GPs as a whole receive an average level of pay per GP plus reimbursement of all expenses. Some of these expenses are reimbursed directly in whole or part. Of these direct reimbursements, some eg a proportion of staff, premises and IT costs are met from discretionary spending; pay and remaining expenses are delivered through non-discretionary spend. Actual expenditure each year may deliver more or less than the profession's entitlement to pay for expenses. This outcome can only be finalised when a firm estimate of GMS expenses is available some two to three years after year end. Over or underpayments are then corrected in subsequent years.

3. From 1998-99 PCG and HA (and from 1999-00) PCT, discretionary expenditure on reimbursing GMS GPs' practice staff, premises and IM & T expenses has been protected by the introduction of the "GMS expenditure floors". These require each PCT/G or HA to deliver year-on-year increases in GMS discretionary spend which are at least in line with GDP.

4. All elements of a PMS Pilot's allocation are funded by transfers of money from the national GMS non-discretionary budget and a health authority's or PCT's unified budget.

5. Please note that GMS discretionary and non-discretionary data lines are taken from the latest 2002 Departmental Report—Table 6.12 Family Health Service Gross Expenditure.

3.2 Inflation

HEALTH AUTHORITY INFLATION

1. NHS funding will rise by £4.3 billion in 2002-03—equivalent to 6.1 per cent real terms growth. This overall allocation will help the NHS to meet healthcare pressures reflected in local Health Improvement Plans. However, it is for health economies, including strategic health authorities in partnership with NHS Trusts, Primary Care Trusts and Groups and local authorities to determine how best to use their funds to meet national and local priorities for improving health and modernising services. The significant additional resources available will aid them in this process.

PAY

2. Table 3.2.1 shows the settlements awarded to those staff whose pay arrangements are determined by the Review Bodies.

Table 3.2.1

REVIEW BODY PAY SETTLEMENTS 2002

Group	Basic Settlement	Additional Payments	Total
Nursing & Midwifery	3.7 per cent	0.4 per cent	4.1 per cent
Professional Allied To Medicine	3.7 per cent	0.4 per cent	4.1 per cent
Doctors & Dentists Review Body—HCHS	3.6 per cent	0.5 per cent	4.1 per cent
Doctors & Dentists Review Body—FHS	4.6 per cent	—	4.6 per cent

PRICES

3. The GDP deflator is used as a proxy for underlying non-pay inflation in the NHS. This needs to be adjusted for assumptions about the level of procurement and other efficiency savings that the NHS is expected to make.

CAPITAL CHARGES

4. At national level, the cost of capital charges paid by the NHS is a circular flow of funds. The total of the capital charges estimates made by NHS Trusts forms part of the total cash resources available through Health Authority allocations.

5. Indices for land, buildings and equipment are produced for the Department each year by the Valuation Office, in order that the NHS may calculate capital charges in advance of the financial year.

6. The aggregate index used to uplift capital charges from 2001-02 to 2002-03 levels was 12 per cent.

3.2 Inflation

HCHS PAY AND PRICES INFLATION

Prices

1. Increases in the cost of goods and services, ie the non-pay components of inflation are measured by the Health Service Cost Index (HSCI). The HSCI weights together price increases for a broad range of items used by the health service—for example, drugs, medical equipment, fuel, telephone charges—using weights derived from expenditure on these various goods and services reported in financial returns.

Pay

2. Table 3.2.2(a) gives details of pay and non-pay components used in calculating HCHS pay and price inflation.

Table 3.2.2(a)

INFLATION FOR SPECIFIC ITEMS OF HCHS REVENUE EXPENDITURE

	1999-2000 Per cent	2000-01 Per cent	2001-02 Per cent
Total Staff Pay	6.9	7.2	N/A
Review Body Staff	7.6	7.5	N/A
Non-Review Body Staff	4.5	5.8	N/A
Prices	1.2	-0.3	-0.5
HCHS Total	4.5	4.2	N/A

FHS INFLATION

3. The components of the Family Health Service (FHS) inflation index are set in Table 3.2.2(b). For General Medical Service (GMS) and General Dental Service (GDS), service specific inflation is calculated as the increase year on year in the average cost per practitioner. For both services the changes in unit costs include volume and quality effects (eg increase practice staff numbers or the provision of a changing range of services) as well as pure price effects. For the Pharmaceutical Service (PhS) and General Ophthalmic Service (GOS), service inflation is assumed equal to movements in the GDP deflator. GMS cash limited expenditure has not been included in the calculations. The FHS inflation index may be affected by a number of changes in primary care services, including the provision of drug costs in unified budget, and will need to be reviewed in the future.

Table 3.2.2(b)

COMPONENTS OF THE FHS INFLATION INDEX

	1998-99	1999-2000	2000-01
	Per cent	Per cent	Per cent
GMS	2.3	10.4	3.7
GDS	4.6	1.0	4.0
PhS	2.9	2.3	1.9
GOS	2.9	2.3	1.9
FHS Total	3.0	4.1	2.7

Footnotes:

1. The difference in service inflation figures for the years 1998-99 and 1999-2000 from those provided previously is due to changes in the GDP deflator for these years.

2. The GMS figures do not include PMS GPs.

3.2 Inflation

3.2.3 Would the Department state what the increase in expenditure on the NHS has been since 1992 in cash terms, real terms (GDP deflator) and real terms (NHS deflator)? [4.4c]

1. In 2001-02 HM Treasury introduced resource budgeting as a method for monitoring and controlling public expenditure. Resource Budgeting is being introduced in two Stages:

(i) Stage 1: Introduced in April 2001 for years 2001-02 and 2002-03. This introduced accruals accounting ie accounting for resources consumed against cash paid out. This increased the Departmental Expenditure Limit (DEL) and therefore NHS expenditure figures by around £200 million a year compared to the previous cash system.

(ii) Stage 2: To be introduced from April 2003. Under Stage 2 Resource Budgeting those non-cash items that currently score in Annually Managed Expenditure (AME) will become part of Departmental Expenditure Limit (DEL). These items are:

(a) capital charges ie depreciation and cost of capital and

(b) the cost of new provisions as opposed to the cash payments associated with settling the provisions.

2. This will increase NHS Expenditure by a further £2 billion.

3. This means that a consistent run of NHS Expenditure data is no longer available as Stage 1 resource budgeting information was only collected from 1999-2000.

4. Table 3.2.3 shows NHS expenditure up to 1999-2000 on a cash basis and from 1999-2000 to 2003-04 on a Stage 1 Resource Budgeting basis.

Table 3.2.3

CHANGE IN NET NHS EXPENDITURE 1992-93 TO 2003-04

		Net NHS expenditure	Percentage Change	Real terms change (1)	Change after adjusting for NHS specific inflation (2)
		£m	Per cent	Per cent	Per cent
Cash
1992-93	Outturn	27,968
1993-94	Outturn	28,942	3.5	1.0	0.8
1994-95	Outturn	30,590	5.7	4.3	3.0
1995-96	Outturn	31,985	4.6	1.7	0.8
1996-97	Outturn	32,997	3.2	0.0	0.3
1997-98	Outturn	34,664	5.1	1.9	2.9
1998-99	Outturn	36,608	5.6	2.8	1.6
1999-2000	Outturn	39,881	8.9	6.4	4.1
Stage 1 Resource Basis
1999-2000	Outturn	40,216	—	—	—
2000-01	Outturn	44,170	9.8	7.5	5.6
2001-02	Estimated outturn	49,406	11.9	9.4
2002-03	Plan	53,743	8.8	6.1
2003-04	Plan	59,061	9.9	7.2

Footnotes:

1. Change after adjusting for the GDP deflator (28 June 2002).

2. NHS specific inflation index is available of the period up to 2000-01.

5. Between 1992-93 and 1999-2000, the latest year for which NHS specific indices are available, net NHS expenditure has increased by:

42.6 per cent in cash terms

19.3 per cent in real terms adjusted by the GDP deflator and

14.2 per cent after accounting for NHS specific inflation.

6. Between 1999-2000 and 2003-04, net NHS resources increase by:

46.9 per cent in cash terms and

33.7 per cent in real terms adjusted by the GDP deflator.

3.2 Inflation

1. The NHS inflation is constructed using five sub-indices. These are:

HCHS Pay Index: This measures the change in average paybill per head of those employed within the HCHS;

HCHS Price Inflation: This measures the change in the price of goods and services supplied to the HCHS, it is measured by the Health Service Cost Index;

HCHS Capital Inflation Index: This reflects the changes in prices experienced in HCHS capital projects and is calculated using a mixture of the construction price index and the GDP deflator;

FHS Index: This is produced using different assumptions for each of the main groups. For general medical services and general dental services, inflation is calculated as the increase in the average cost per practitioner. For both services, the change in unit costs includes volume and quality effects as well as pure price effects. For pharmaceutical services and general ophthalmic services, service inflation is assumed equal to movements in the GDP deflator; and,

The "Other" Index: This comprises of the revenue and capital expenditure on Central Health Miscellaneous Services (CHMS) and Departmental Administration (including the Medicines Control Agency and NHS Estates). The GDP deflator is used in the absence of service specific deflators.

Year HCHS
Pay HCHS
Prices HCHS
Capital FHS Other NHS
Total

1991-92 100.0 100.0 100.0 100.0 100.0 100.0

1992-93 107.9 104.7 97.5 104.3 103.2 105.8

1993-94 112.4 106.2 99.2 104.9 105.8 108.7

1994-95 116.3 107.1 104.1 107.3 107.2 111.5

1995-96 121.4 110.5 108.8 110.0 110.2 115.6

1996-97 125.4 112.2 112.3 113.7 113.7 119.0

1997-98 128.5 112.7 117.0 117.1 117.4 121.5

1998-99 134.8 115.5 121.3 120.6 120.5 126.2

1999-2000 144.0 116.8 126.2 125.5 123.4 132.1

2000-01 154.0 116.5 130.9 128.9 126.1 137.4

2. The weights attached to each of the elements for each of the years are shown in the table below.

Year HCHS
Pay HCHS
Prices HCHS
Capital FHS Other NHS
Total

1991-92 49 per cent 21 per cent 6 per cent 21 per cent 3 per cent 100 per cent

1992-93 49 per cent 21 per cent 6 per cent 21 per cent 3 per cent 100 per cent

1993-94 49 per cent 21 per cent 5 per cent 22 per cent 3 per cent 100 per cent

1994-95 49 per cent 21 per cent 6 per cent 22 per cent 3 per cent 100 per cent

1995-96 49 per cent 21 per cent 5 per cent 22 per cent 3 per cent 100 per cent

1996-97 50 per cent 21 per cent 4 per cent 23 per cent 2 per cent 100 per cent

1997-98 47 per cent 25 per cent 3 per cent 23 per cent 2 per cent 100 per cent

1998-99 48 per cent 26 per cent 2 per cent 23 per cent 2 per cent 100 per cent

1999-2000 47 per cent 24 per cent 2 per cent 24 per cent 2 per cent 100 per cent

2000-01 46 per cent 22 per cent 3 per cent 27 per cent 2 per cent 100 per cent

3.3 Hospital and Community Health Services Allocations and Distance from Targets

3.3.1 Could the Department provide a table showing for each health authority or primary care trust:

(i) allocations for resident populations for 2001-02 (cash) and 2002-03 (cash and at 2001-02 prices);

(ii) 2002-03 Distance From Targets (DFT) in cash and percentage terms;

(iii) growth in percentage terms;

(iv) net adjustment (cash) for Primary Care Groups and Primary Care Trusts;

(v) net adjustment for out of area treatments.

(vi) inherited deficits [4.5a]

1. The information requested in parts (i) to (v) is contained Table 3.3.1.

(vi) Inherited Deficits

2. In financial year 2002-03 the Department allocated funding to Health Authorities (HAs), and they allocated funding to Primary Care Trusts (PCTs), on the basis of the relative needs of their populations. A weighted capitation formula is used to determine each HA's and PCT's fair share of available resources, to enable them to commission similar levels of services for populations in equal need. The weighted capitation formula takes no account of a health body's financial position in previous years.

3. Current [4]forecasts indicate that the NHS will report overall financial balance in the financial year just ended, ie 2001-02. This repeats the achievement of overall financial balance in 2000-01. However, a small number of health bodies would have received temporary help (brokerage[5]) last year to tide them over the year-end.

4. While brokerage can assist an organisation to manage its end-of-year position it does not of itself cure the cause of the financial problem; it essentially rolls the issue over into the next financial year.

5. This means that HAs/PCTs which have borrowed monies or NHS Trusts which incur deficits must have plans in place to fund the repayment of brokerage or recovery of deficits in the following year. They also have to ensure that the problem does not repeat itself, ie the underlying cause of the financial overspend needs to be addressed.

6. In general, brokerage provided or deficits incurred in 2001-02 need to be made good in 2002-03 otherwise there will be a shortfall in the amounts owed to other parts of the NHS or central budget holders. Lenders will have factored repayment into their plans for 2002-03. If repayment is not made the lending body will have to manage on less money. This in turn reduces the amount they can spend on patient care.

7. However, local circumstances may allow the staged repayment of brokerage or recovery of deficits over more than one year. Such circumstances could take into account the cause of the financial problem, the potential impact of repayment and the capacity within individual health economies to absorb repayment across the piece. Clearly, any such arrangements would have to be subject to the agreement of local providers, commissioners and the managing Strategic Health Authority.

8. The audited accounts of individual health bodies for 2001-02 will not be available centrally until October or November.

Table 3.3.1

4 Final confirmation of the 2001-02 position will be in the autumn when the audited accounts are available. Back

5 An end of year mechanism operated by the Department for matching NHS overspends and under-spends. Back



© Parliamentary copyright 2003	Prepared 17 February 2003