House of Commons - Health

Select Committee on Health Memoranda

Memorandum by the Department of Health (PE 1) (continued)

2. GENERAL EXPENDITURE ISSUES

2.1 NHS financial balance

2.1.1 Based on current forecasts, what will be the likely financial performance of the NHS in 2004-05 in terms of financial balance, "deficit" organisations and performance. [2.1.1]

2.2 Overall expenditure

2.2.1 Could the Department provide an updated version of Table 2.2.1, and of the Department's commentary which accompanied it? Could it also show this data in graphical form? Could the Department provide a brief commentary, explaining what expenditure is included under each section of the table? Can the footnote to table 2.2.1 explain the measures and their applications for lines D to G? [2.2.1]

2.2.2 What is the Department's assessment of each programme's performance in 2002-03 against plans for that year, and anticipated performance in 2003-04 against plans for that year and outturn in 2002-03? [2.2.2]

2.2.3 Could the Department provide a breakdown of what the additional NHS expenditure in 2003-04 as compared with 2002-03 has been spent on? The impacts on expenditure of additional staff, increased pay levels, medicines, capital and other expenditures should be distinguished where possible. [2.2.3]

2.2.4 Could the Department provide information on NHS income from charges over the last 10 years by type of charge? [2.2.5]

2.2.5 Could the Department provide comparative information about total NHS spending in England in relation to total NHS spending in Wales and total NHS spending in Scotland? [2.2.6]

2.3 Programme budgets

2.3.1 Could the Department update the information on expenditure on Programme Budgets provided in Tables 2.3.1-2.3.7 [2.3.1]

2.4 Expenditure on community care

2.4.1 Could the Department provide a table showing, by service, net expenditure in real terms by central and local government on community care, broken down by residential and non-residential care (taking into account relevant service pay and price increases), over the most recent five year period for which such data are available? Could this data include Social Security and Housing expenditures contributing to Community Care objectives? Could it also show this data in graphical form? [2.4.1]

2.1 NHS financial balance

2.1.1 Based on current forecasts, what will be the likely financial performance of the NHS in 2004-05 in terms of financial balance, "deficit" organisations and performance. [2.1.1]

FINANCIAL POSITION 2004-05 AND DEFICIT ORGANISATIONS

1. All NHS Trusts, Primary Care Trusts and Strategic Health Authorities should plan to achieve financial balance or better in 2004-05.

(Note: The FT regulator sent a separate letter direct to the Committee about reporting).

2. To help achieve this position the NHS Bank has provided £60 million of financial support to two SHA health economies considered by the NHS bank to be the most financially challenged.

3. The department recognises that a small number of NHS bodies may have the requirement to develop longer-term financial recovery plans. In these cases the PCT or NHS Trust concerned will be working closely with their Strategic Health Authority to develop and implement appropriate strategies to manage the financial consequences within available resources.

4. Whilst recovery plans are expected to achieve underlying financial balance over the shortest possible period—this should not be at the expense of providing acceptable levels of patient care/services.

PAYMENT PERFORMANCE

5. All PCTs and NHS Trusts should meet the Better Payment Practice Code (BPPC) target of paying 95% of non-NHS trade creditor bills within contract terms or 30 days where no terms have been agreed.

6. The latest projection for financial year 2003-04 indicates that NHS organisations are paying 84% of bills within 30 days/within the BPPC target. This is a significant improvement on 1996-97 when NHS organisations paid 77% of bills within the target.

7. The DH will continue to work with SHAs to ensure all NHS bodies achieve and maintain a level of payment performance consistent with Government Accounting Regulations and Better Payment Practice Code.

2.2 Overall expenditure

1. Expenditure in Table 2.2.1(a) and Figure 2.2.1(a) is shown on a Stage One Resource Budgeting basis. Table 2.2.1(a) is consistent with the presentation of the data in Figure 3.4(a) of the 2004 Departmental Report (CM6204) and with the expenditure reported in Table 2.1.1(a) of last year's evidence.

Table 2.2.1(a)

TRENDS IN ACTUAL AND PLANNED EXPENDITURE ON THE HEALTH AND PERSONAL SOCIAL SERVICES 1999-2000 TO 2002-03 BY AREA OF EXPENDITURE(1)(2)(3)(4) (STAGE ONE RESOURCE BUDGETING)


					£ million
		1999-2000	2000-01	2001-02	2002-03
		outturn	outturn	outturn	outturn

	Central Government ExpenditureNational Health Service Hospitals, community health, family health (discretionary) and related services
	Current
A.	Net spending	36,736	40,009	44,430	48,979
B.	Charges and receipts(5)	1,989	2,252	2,124	2,205
C.	Total spending	38,725	42,261	46,554	51,184
D.	Change over previous year in cash (%)		9.1	10.2	9.9
E.	Change over previous year in input unit costs (%)(6)		3.9	5.1	3.6
F.	D adjusted for E (%)		5.1	4.8	6.1
G.	Change over previous years in real terms (%) (total)		7.9	7.4	6.4
H.	Change over previous years in real terms (%) (net)		7.7	8.3	6.6
	Capital
A.	Net spending	871	1,220	1,693	2,075
B.	Charges and receipts(5)	593	621	374	365
C.	Total spending	1,465	1,841	2,067	2,439
D.	Change over previous year in cash (%)		25.7	12.3	18.0
E.	Change over previous year in input unit costs (%)(6)		5.7	6.5	4.5
F.	D adjusted for E (%)		18.8	5.4	12.9
G.	Change over previous years in real terms (%) (total)		24.2	9.5	14.2

	National Health Service family health services(non-discretionary)(7)
	Current
A.	Net spending	1,796	1,875	1,951	2,023
B.	Charges and receipts	804	845	885	918
C.	Total spending	2,599	2,720	2,836	2,941
D.	Change over previous year in cash (%)		4.6	4.3	3.7
E.	Change over previous year in input unit costs (%)(6)		2.7	2.1	3.1
F.	D adjusted for E (%)		1.9	2.1	0.6
G.	Change over previous years in real terms (%) (total)		3.4	1.7	0.3

	Departmental administration(8)
	Current
A.	Net spending	262	288	309	321
B.	Charges and receipts	26	12	18	21
C.	Total spending	289	300	327	343
D.	Change over previous year in cash (%)		4.1	8.8	4.8
G.	Change over previous years in real terms (%) (total)		2.9	6.1	1.4
F.	Cost of Collecting NHS element of NI contributions	10	15	17	20

	Central health and miscellaneous services
	Current
A.	Net spending	498	514	599	611
B.	Charges and receipts	117	116	132	163
C.	Total spending	615	630	732	775
D.	Change over previous year in cash (%)		2.4	16.1	5.9
G.	Change over previous years in real terms (%) (total)		1.3	13.2	2.5

	Other NHS Capital
A.	Net spending	37	25	39	33
B.	Charges and receipts	3	4	0	6
C.	Total spending	39	29	39	38
D.	Change over previous year in cash (%)		-25.8	31.8	-0.5
G	Change over previous years in real terms (%)(total)		-26.6	28.6	-3.8

	NHS Total
A.	Net spending	40,201	43,932	49,021	54,042
B.	Charges and receipts (5)	3,531	3,849	3,533	3,678
C.	Total spending	43,732	47,781	52,554	57,720
D.	Change over previous year in cash (%)		9.3	10.0	9.8
E.	Change over previous year in input unit costs (%)(6)		4.1	4.8	3.5
F.	D adjusted for E (%)		5.0	5.0	6.1
G.	Change over previous years in real terms (%) (total)		8.0	7.3	6.3
H.	Change over previous years in real terms (%) (net)		8.0	8.8	6.7

	Central Government Personal
	Social Services
A.	Net spending	14	12	89	145
B.	Charges	0	0	0	38
C.	Total spending	14	12	90	183
D.	Change over previous year in cash (%)		-14.0	638.5	104.8
G.	Change over previous year in real terms (%)		-15.0	620.1	98.1

	Central Government (specific and special) grants to local authorities
A.	Net spending	526	471	687	1,456
B.	Charges	0	0	0	0
C.	Total spending	526	471	687	1,456
D.	Change over previous year in cash (%)		-10.4	45.9	111.8
G.	Change over previous year in real terms (%)		-11.5	42.3	104.9

	Credit Approvals (LA capital)
A.	Net spending	49	47	47	47
B.	Charges	0	0	0	0
C.	Total spending	49	47	47	47
D.	Change over previous year in cash (%)		-3.6	-0.5	0.0
G.	Change over previous year in real terms (%)		-4.7	-2.9	-3.3

	Health and Personal Social Services Total
A.	Net spending	40,789	44,461	49,844	55,689
B.	Charges and receipts(5)	3,532	3,850	3,533	3,716
C.	Total spending	44,321	48,311	53,377	59,406
D.	Change over previous year in cash (%)		9.0	10.5	11.3
G.	Change over previous years in real terms (%) (total)		7.8	7.7	7.7
H.	Change over previous years in real terms (%) (net)		7.8	9.3	8.1

	Local Authority Personal Social Services
	Current(9)
A.	Net spending	10,050	10,696	11,369	12,894
B.	Charges and receipts	1,998	2,152	2,229	2,305
C.	Total spending	12,048	12,848	13,598	15,199
D.	Change over previous year in cash (%)		6.6	5.8	11.8
G.	Change over previous years in real terms (%)(total)		5.4	3.2	8.1

	Local Authority Personal Social Services
	Capital
A.	Net spending	83	94	88	124
B.	Charges and receipts	51	62	70	75
C.	Total spending	134	156	158	199
D.	Change over previous year in cash (%)		16.4	1.3	25.9
G.	Change over previous years in real terms (%)(total)		15.1	-1.2	21.8

	Local Authority Personal Social Services
	Total
A.	Net spending	10,133	10,790	11,457	13,018
B.	Charges and receipts	2,049	2,214	2,299	2,380
C.	Total spending	12,182	13,004	13,756	15,398
D.	Change over previous year in cash (%)		6.7	5.8	11.9
G.	Change over previous years in real terms (%)(total)		5.5	3.2	8.3

	Local Authority, Health and Personal Social Services Total(10)
A.	Net spending	50,347	54,733	60,567	67,205
B.	Charges and receipts(5)	5,581	6,064	5,832	6,096
C.	Total spending	55,928	60,797	66,400	73,301
D.	Change over previous year in cash (%)		8.7	9.2	10.4
G.	Change over previous years in real terms (%)(total)		7.5	6.5	6.8
	GDP deflator @ 30 June 2004	90.7	91.8	94.1	97.3

Footnotes:

1. Figures may not sum due to rounding.

2. Percentages are rounded to one decimal place.

3. Real terms growth figures differ from those given last year because of subsequent changes in GDP deflators. Where not otherwise specified, the figures are calculated on total expenditure figures and therefore differ from the Departmental Report, where increases are calculated on net expenditure.

4. The measures in changes in expenditure shown in lines D to H are as follows;

Line D shows the percentage change in total expenditure.

Line E shows the level of inflation specific to each area of expenditure (where applicable).

Line F shows the percentage change in total expenditure after accounting for service specific inflation.

Line G shows the percentage change in total expenditure after accounting for inflation in the overall economy as measured by the GDP deflator.

Line H shows the percentage change in net expenditure after accounting for inflation in the overall economy as measured by the GDP deflator.

5. Includes NHS trust charges and receipts.

6. Input Cost Data is not available for years where outturn data is not available.

7. With the introduction of PMEds allocation in 2004-05, there is no longer any GMS non discretionary funding. All GMS funding is now discretionary. Therefore, figures for HCFHS and FHS non discretionary for 1999-00 to 2002-03 have been restated from those reported in last year's Health Committee evidence (fig 2.2.1a), so as to present a consistent run in expenditure.

8. Include Trading Funds- Medicines Control Agency (MCA) and NHS Estates Agency.

9. Net budget figures are taken from Local Authority Revenue Accounts returns.

10. Local Authority, Health and Personal Social Services total excludes Central Government (Specific and Special) grants to Local Authorities and Credit Approvals (LA Capital) to avoid double counting. The total still does include an element of double counting (unquantifiable) with regard to joint working between hospitals and local authorities.

2. Expenditure in Table 2.2.1(b) and Figure 2.2.1(b) is shown on a Stage Two Resource Budgeting basis. Table 2.2.1(b) is consistent with the presentation of the data in Figure 3.4(b) of the 2004 Departmental Report (CM6204).

Table 2.2.1(b)

TRENDS IN ACTUAL AND PLANNED EXPENDITURE ON THE HEALTH AND PERSONAL SOCIAL SERVICES 2002-03 TO 2005-06 BY AREA OF EXPENDITURE(1)(2)(3)(4) (STAGE TWO RESOURCE BUDGETING)


					£ million
		2002-03	2003-04	2004-05	2005-06
			estimated
		outturn	outturn	plan	plan

	Central Government ExpenditureNational Health Service Hospitals, community health,family health (discretionary) and related services
	Current
A.	Net spending (13)	50,834	57,594	62,641	68,735
B.	Charges and receipts(5)	2,205	2,204	1,867	1,867
C.	Total spending	53,039	59,799	64,509	70,602
D.	Change over previous year in cash (%)		12.7	7.9	9.4
E.	Change over previous years in real terms (%) (total)		9.7	5.4	6.8
F.	Change over previous years in real terms (%) (net)		10.2	6.3	7.0
	Capital
A.	Net spending	1,873	2,579	3,262	4,206
B.	Charges and receipts(5)	333	277	185	140
C.	Total spending	2,206	2,856	3,447	4,346
D.	Change over previous year in cash (%)		29.5	20.7	26.1
E.	Change over previous years in real terms (%) (total)		26.0	18.0	23.0

	National Health Service family health services(non-discretionary)(7)
	Current
A.	Net spending	2,023	2,097	1,906	1,969
B.	Charges and receipts	918	932	680	898
C.	Total spending	2,941	3,029	2,586	2,867
D.	Change over previous year in cash (%)		3.0	-14.6	10.9
E.	Change over previous years in real terms (%) (total)		0.2	-16.5	8.1

	Departmental administration(8)(14) Current
A.	Net spending	321	326	278	293
B.	Charges and receipts	21	26	16	16
C.	Total spending	342	353	294	309
D.	Change over previous year in cash (%)		3.2	-16.5	5.1
E.	Change over previous years in real terms (%) (total)		0.4	-18.4	2.5

	Cost of Collecting NHS element of NI contributions	17	17	17	15
	Central health and miscellaneous services(15) Current
A.	Net spending	643	1,010	1,112	910
B.	Charges and receipts	164	115	112	113
C.	Total spending	807	1,125	1,225	1,024
D.	Change over previous year in cash (%)		39.4	8.8	-16.4
E.	Change over previous years in real terms (%) (total)		35.6	6.4	-18.5

	Other NHS Capital
A.	Net spending	29	60	31	31
B.	Charges and receipts	6	0	0	0
C.	Total spending	35	60	32	31
D.	Change over previous year in cash (%)		72.2	-47.8	-2.1
E.	Change over previous years in real terms (%)(total)		67.6	-49.0	-4.5

	NHS Total
A.	Net spending	55,724	63,667	69,231	76,144
B.	Charges and receipts(5)	3,646	3,555	2,860	3,035
C.	Total spending	59,370	67,221	72,092	79,179
D.	Change over previous year in cash (%)		13.2	7.2	9.8
E.	Change over previous years in real terms (%) (total)		10.2	4.8	7.1
F.	Change over previous years in real terms (%) (net)		11.2	6.3	7.3

	Central Government Personal
	Social Services(16)
A.	Net spending	146	169	220	344
B.	Charges	38	33	38	46
C.	Total spending	184	202	259	390
D.	Change over previous year in cash (%)		9.6	28.1	50.8
E.	Change over previous year in real terms (%)		6.6	25.2	47.1

	Central Government (specific and special)grants to local authorities
A.	Net spending	1,456	1,463	1,831	1,818
B.	Charges	0	0	0	0
C.	Total spending	1,456	1,463	1,831	1,818
D.	Change over previous year in cash (%)		0.5	25.2	-0.7
E.	Change over previous year in real terms (%)		-2.2	22.4	-3.2

	Credit Approvals (LA capital)
A.	Net spending	47	50	53	53
B.	Charges	0	0	0	0
C.	Total spending	47	50	53	53
D.	Change over previous year in cash (%)		7.5	5.4	0.9
E.	Change over previous year in real terms (%)		4.6	3.0	-1.5

	Health and Personal Social Services Total
A.	Net spending	57,372	65,349	71,336	78,359
B.	Charges and receipts(5)	3,685	3,588	2,898	3,081
C.	Total spending	61,056	68,936	74,235	81,440
D.	Change over previous year in cash (%)		12.9	7.7	9.7
G.	Change over previous years in real terms (%) (total)		9.8	5.3	7.0
H.	Change over previous years in real terms (%) (net)		10.8	6.7	7.1

	Local Authority Personal Social Services Current(9)(10)
A.	Net spending	12,894	14,101	n/a	n/a
B.	Charges and receipts(11)	2,305	2,521	n/a	n/a
C.	Total spending	15,199	16,622	n/a	n/a
D.	Change over previous year in cash (%)
			9.4
G.	Change over previous years in real (%)
			6.4

	Local Authority Personal Social Services Capital
A.	Net spending	124	174	n/a	n/a
B.	Charges and receipts	75	89	n/a	n/a
C.	Total spending	199	263	n/a	n/a
D.	Change over previous year in cash (%)		32.2
G.	Change over previous years in real (%) (total)		28.6

	Local Authority Personal Social Services Total
A.	Net spending	13,018	14,275	n/a	n/a
B.	Charges and receipts	2,380	2,610	n/a	n/a
C.	Total spending	15,398	16,885	n/a	n/a
D.	Change over previous year in cash (%)		9.7
G.	Change over previous years in real (%) (total)		6.7

	Local Authority, Health and Personal Social Services Total(12)
A.	Net spending	70,390	79,624	n/a	n/a
B.	Charges and receipts(5)	6,065	6,198	n/a	n/a
C.	Total spending	76,454	85,822	n/a	n/a
D.	Change over previous year in cash (%)		12.3
G.	Change over previous years in real (%) (total)		9.2
	GDP deflator @ 30 June 2004	97.3	100.0	102.3	104.9

Footnotes:

1. Figures may not sum due to rounding.

2. Percentages are rounded to one decimal place.

4. The measures in changes in expenditure shown in lines D to F are as follows:

Line D shows the percentage change in total expenditure;

Line E shows the percentage change in total expenditure after accounting for inflation in the overall economy as measured by the GDP deflator;

Line F shows the percentage change in net expenditure after accounting for inflation in the overall economy as measured by the GDP deflator.

5. Includes NHS trust charges and receipts .

6. Input Cost Data is not available for years where outturn data is not available.

7. With the introduction of PMEds allocation in 2004-05, there is no longer any GMS non discretionary funding. All GMS funding is now discretionary. Therefore, figures for HCFHS and FHS non discretionary for 2002-03 to 2005-06 have been restated from those reported in last year's Health Committee evidence (fig 2.2.1b), so as to present a consistent run in expenditure.

8. Include Trading Funds—Medicines Control Agency (MCA) and NHS Estates Agency.

9. There are no centrally generated "plan" figures for local authority expenditure, including Personal Social Services.

10. Net budget figures are taken from Local Authority Revenue Accounts returns.

11. Local Authorities do not forecast receipts for future years. It is assumed that receipts for 2003-04 form the same proportion of the net expenditure as for 2002-03.

12. Local Authority, Health and Personal Social Services total excludes Central Government (Specific and Special) grants to Local Authorities and Credit Approvals (LA Capital) to avoid double counting. The total still does include an element of double counting (unquantifiable) with regard to joint working between hospitals and local authorities.

13.	Less HCFHS depreciation of	398	354	511	611
14.	Less Dept Admin depreciation of:	14	16	17	17
15.	Less CHMS depreciation of:	8	14	17	19
16.	Less PSS depreciation of:	9	12	10	10

17. Growth in NHS expenditure in 2003-04 is distorted by the definitional changes in para 3. Once these are adjusted for, growth in NHS expenditure in 2003-04 is 7.3%.

3. The NHS expenditure figures for 2002-03 to 2005-06 (in Table 2.2.1(b)) are different to that referred to by the Chancellor in the 2002 Budget announcement. Since the 2002 budget announcement, NHS expenditure plans have been changed and appropriate adjustments made for the following reasons;

Change to the Discount Rate from 6% to 3.5%. From 1 April 2003.

Pensions Indexation: From 2003-04 onwards the Departmental Expenditure Limit for the Department of Health has been increased by a switch from the Exchequer's AME spending to cover the increased cost of pensions. An addition of over £1.6 billion has been made to the NHS DEL to cover these costs from 2003-04 onwards.

Free Nursing Care: From 2003-04 the NHS is responsible for paying for the cost of providing Free Nursing Care to those in Nursing Homes.

Health Care in Prisons: From 2003-04 the Department of Health is responsible for paying for the cost of providing health care in Prisons. An addition of over £100 million to the DH DEL has been made to cover these costs from 2003-04 onwards.

4. As a result of the above adjustments, growth in NHS expenditure over 2002-03 in 2003-04 is distorted. Once these are adjusted for, real-terms growth in Net NHS expenditure in 2003-04 is 7.3%, compared to 11.2% shown in table 2.2.1(b).

5. Table 2.2.1(c) gives a brief explanation of the main areas of expenditure in table 2.2.1(a) and 2.2.1(b).

Table 2.2.1(c)

EXPLANATION OF MAIN AREAS OF EXPENDITURE IN TABLES 2.2.1(a) AND 2.2.1(b)

Area of Expenditure	Description
NHS Hospital and Community health Services and discretionary family health services (HCHS)	This covers hospital and community health services, prescribing costs for drugs and appliances and General Medical Services (which include reimbursements of GMS GPs' practice staff, premises, out of hours and IM&T expenses). It also includes other centrally funded initiatives, services and special allocations managed centrally by the Department of Health (such as service specific levies which fund activities in the areas of education and training and research and development); HCFHS includes all GMS funding. This is because of the introduction of the new GP contract in April 2004, which means that there is no longer any GMS non discretionary funding. All GMS funding is now discretionary and PCTs were informed of their 2004-05 PMeds Allocation in February 2004. In order to present a consistent run of expenditure in Table 2.2.1(a) and (b) GMS non-discretionary expenditure has been restated as HCFHS.
Capital	Capital expenditure is that used on the acquisition of land and premises, individual works for the provision, adaptation, renewal, replacement or demolition of buildings, items or groups of equipment and vehicles etc.
NHS Family Health Services (FHS) (non-cash limited)	This covers demand-led family health services, such as the cost of general dental and ophthalmic services, dispensing remuneration and income from dental and prescription charges.
Departmental Administration	The administrative costs of running the Department of Health.
Central health and miscellaneous services (CHMS)	These are a wide range of activities funded from the Department of Health's spending programmes whose only common feature is that they receive funding direct from the Department and not via health authorities. Some of the services are managed directly by Departmental staff; some by non-departmental public bodies, or other separate executive organisations.
Other NHS Capital	Includes the capital elements of Departmental administration and CHMS.
NHS Total	The sum of HCHS current and capital expenditure, FHS, Departmental administration, CHMS current expenditure and other NHS capital.
Personal Social Services	Personal care services for vulnerable people, including those with special needs because of old age or physical or mental disability. Examples are residential care homes for the elderly, home help and home care services, and social workers that provide help and support for a wide range of people.
Central Government (specific and special) grants to local authorities	Cash grants targeted at services which require a higher priority, where pump priming is appropriate or where the service is needed in only some authorities.
Credit Approvals (LA capital)	Central government permission for individual local authorities to borrow or raise other forms of credit for capital purposes.
Local Authority Personal Social Services	Personal care services for vulnerable people, including those with special needs because of old age or physical or mental disability. Examples are residential care homes for the elderly, home help and home care services, and social workers that provide help and support for a wide range of people.
Health and Personal Social Services Total	The sum of NHS total, central Government personal social services, central Government (specific and special) grants to local authorities, credit approvals (LA capital), and civil defence.
Local Authority, Health and Personal Social Services Total	The sum of Health and Personal Social Services Total and Local Authority Personal Social Services Total.

1. Table 2.2.2 outlines the significant changes (ie over £10 million) between estimated outturn reported in last years evidence (HC1108) and outturn expenditure in table 2.2.1(b) of this years evidence for 2002-03.

2. Table 2.2.2 also shows the significant changes (ie over £10 million) between Planned expenditure in last years evidence (HC1108) and estimated outturn expenditure in table 2.2.1(b) of this years evidence for 2003-04.

Table 2.2.2

COMPARISON OF NET EXPENDITURE PLANS FOR 2002-03 AND 2003-04 WITH THOSE ON PAGES 50-52 OF LAST YEAR'S HEALTH COMMITTEE WRITTEN EVIDENCE (HC 1108)

The main areas of change (£10 million or over) to the spending plans for various parts of the programme other than LAPSS are as follows. The grant to local authorities for central government is unhypothecated. Local authorities determine their own expenditure.


£ million	Difference		2002-03

HCFHS current	2,179	2,046	Presentational change to reflect transfers of GMS services from FHS non discretionary to HCFHS
		1,112	Presentational change to reflect transfer of PMS and PDS services from FHS non discretionary to HCFHS current
		-319	Underspend due to year end slippage on programme spending
		-156	Outturn for capital changes, provisions depreciation and impairments less than originally estimated
		-405	Differing presentation of figures for provisions following a change in the discount rate from 6% to 3.5%
		20	Transfer from DH Admin current
		-99	Amendment to the depreciation adjustment to reflect actual costs reported by SHAs and PCTs.
HCFHS capital	-55	-60	Additional Capital Underspend
FHS Current	-3,044	-2,046	Presentational change to reflect transfers of GMS services from FHS non discretionary to HCFHS
		-1,112	Presentational change to reflect transfer of PMS and PDS services from FHS non discretionary to HCFHS
Departmental Administration	-29	-20	Transfer to HCFHS Current—NHS Pensions to Special Health Authority
		-13	Transfer to CHMS Current—Commission for Social Care Inspection
CHMS current	-60	-23	Underspends on the demand led Welfare Foods budget.
		13	Transfer from DH Admin current for the Commision for Social Care Inspection
Central Government PSS	-50	-17	Machinery of Government Transfers to DfES for Children's Services
		-32	Underspend due to year end slippage on programme spending
PSS Grants to Local Authorities	-509	-505	Machinery of Government Transfers to DfES for Children's Services
PSS Credit Approvals	-9		No changes over £10 million to report


£ million	Difference		2003-04

HCFHS current	3,915	3,312	Transfers from FHS non discretionary
		67	Transfer from FHS non discretionary for PDS
		388	Transfers from HCFHS capital
		359	Take up of 2002-03 End Year Flexibility (EYF)
		-152	Transfers to PSS
		-95	Transfers to CHMS current
		11	Transfers from CHMS current
		17	Transfers from Departmental admin current
HCFHS capital	-276	250	Take up of 2002-03 EYF
		-12	Transfers to Other Government Departments
		-388	Transfer to HCFHS current
		-100	Forecast underspend
		-27	Transfers to CHMS Capital
FHS current	-3,379	-3,312	Transfers to HCFHS Current
		-67	Transfers to HCFHS for PDS
Departmental Administration Current	-45	-17	Transfer to HCFHS Current—NHS Pensions to Special Health Authority
		-13	Transfer to CHMS Current—Commission for Social Care Inspection
CHMS current	134	95	Transfers from HCFHS current
		13	Transfers from Departmental admin current
		-28	Transfer to HCFHS current
Central Govenrment PSS	47	152	Transfers from HCFHS capital
PSS Grants to Local Authorities	-555	-613	Machinery of Government Transfers to DfES for Children's Services
PSS Credit Approvals	-9		No changes over £10 million to report

Note: Changes less than £10 million are not listed and may slightly affect totals.

2.2.3 Could the Department provide a breakdown of what the additional NHS expenditure in 2003-04 was compared with 2002-03 has been spent on? The impacts on expenditure of additional staff, increased pay levels, medicines, capital and other expenditures should be distinguished where possible. [2.2.3]

1. Total NHS expenditure in 2003-04 rose by £5.9 billion, of which £5.2 billion was increased revenue expenditure and £0.7 billion increased capital expenditure.

2. In Summary, of the additional £5.9 billion in 2003-04 was accounted for in the following proportions:

Extra staff, Drugs and goods and services	45%
Pay accounted for	31%
Capital and Training	18%
Cost Pressures	6%

3. This extra cash has been used to:

improve access and quality of services.

invest for the future.

ensure that pay levels are sufficient to attract and retain staff

to meet unavoidable cost increases

IMPROVING ACCESS AND QUALITY OF SERVICE

4. Extra staff, drugs and goods and services account for 45% of the increase in NHS expenditure. These are key to improving access and quality of NHS services.

MORE STAFF

5. Delivery of the NHS Plan depends critically upon increasing staff numbers. In 2003 staff numbers rose significantly over 2002 with increases of:

— 18,840 more qualified nurses, midwives and health visitors;

— 5,640 more doctors; and

— 5,500 more therapists and scientists.

6. These staff have been deployed to help deliver, amongst other things:

— an extra 364,000 planned procedures which represents a 4.7% increase of which 181,000 of the extra procedures were in outpatients (a 10.0 % increase), 167,000 extra elective hospital admissions (3.2% increase) and 16,000 extra procedures in primary care (2.2% increase);

— deal with an additional 469,000 new out-patient attendances with a consultant; and

— deal with an additional 245,000 or 6.1% increase in emergency admissions.

PRESCRIBING

The increased spend on drugs reflects a 9.5% growth in GP and nurse prescribing and around 12% growth in hospital drugs.

7. The growth in GP and nurse prescribing spend on drugs this year includes:

— £179 million on drugs for Coronary Heart Disease (ie lipid regulating and anti-hypertensives) equivalent to over nine million more prescriptions;

— £55 million on drugs for diabetes or over two million prescriptions;

— £12 million on drugs for depression equivalent to writing 1.4 million more prescriptions.

INVESTING IN THE FUTURE

8. Delivery of further improvement in the NHS beyond 2003-04 will depend upon investment for the future in staff, buildings, equipment and information technology. In 2003-04 the additional investment allowed, amongst other things:

INVESTMENT IN TRAINING

— an increase in Nurse and midwife training places 1,850 (8%);

— an increase in therapist and scientist training places of 1,600 or 17%;

— an increase of intake of medical students of 753 (14.3%).

INVESTMENT IN BUILDINGS, EQUIPMENT AND INFRASTRUCTURE

— a 11% increase in the level of general capital allocations (to around £1.6 billion) to maintain and improve the NHS estate;

— 12 hospital schemes opened in 2003-04 (four of which were major) with a capital value of nearly £400 million;

— Expanding and modernisation of services for Coronary Heart Disease £103 million, including work to progress 13 major tertiary schemes and enabling works for over 40 cardiac catheterisation laboratories;

— Central purchase of major Cancer equipment, including 17 new MRI scanners, 19 Linear Accelerators, 33 CT Scanners and over 130 items of breast screening equipment; and

— There are 42 NHS Local Improvement Finance Trust (LIFT) schemes—the initiative designed to invest over £1 billion into primary and social care facilities—of which six reached financial close in 2003-04.

PAY INCREASES TO RECRUIT AND RETAIN STAFF

9. The NHS is a labour intensive organisation and pay accounts for roughly 59% of total spend. Consequently pay increases absorb a significant part of the additional spend. The main elements of the total increase in pay bill are:

— pay awards (including pay modernisation) for NHS staff totalling £1.4 billion;

— other costs including change in occupational and grade mix and national insurance contributions of around £400 million.

10. Investment in pay is, of course, vital to both recruit and retain staff.

PRICE INCREASES

11. As well as investment in staff and additional activity the NHS, faces day-to-day price rises in goods, services and drugs. We estimate that these cost the NHS around an extra £350 million in 2003-04.

2.2.4 Could the Department provide information on NHS income from charges over the last 10 years by type of charge? [2.2.5]

1. Table 2.2.4 shows the breakdown of NHS income from charges over the last 10 years (1993-94 to 2002-03) by type of charge.

2.2.5 Could the Department provide comparative information about total NHS spending in England in relation to total NHS spending in Wales and total NHS spending in Scotland? [2.2.6]

1. Table 2.2.5 shows Net NHS Expenditure in England, Wales and Scotland for 2003-04. It also shows Net NHS expenditure per head of population for each of these countries.

Table 2.2.5

TOTAL NET NHS EXPENDITURE FOR ENGLAND, WALES AND SCOTLAND 2003-04


	Net NHS Expenditure(1)(2)	Net NHS Expenditure per head of population (3)(4)
	£ million	£

England	63,314	1,270
Scotland(5)	7,281	1,440
Wales(5)	3,767	1,290

1.  Estimated outturn on a stage 2 Resource Budgeting basis
2.  Figures exclude expenditure on departmental administration
3.  Calculated using population figures: 2002 Based resident population projections (2001 Census)
4.  Figures are rounded to the nearest £10
5.  Expenditure figures for Wales and Scotland have been provided by NHS Finance, The Welsh Assembly Government and The Scottish Executive Health Department, respectively.

2.3 Programme Budgets

2.3.1 Could the Department update the information on expenditure on Programme Budgets provided in Tables 2.3.1-2.3.7 [2.3.1]

1. Historically the response to this question is in two parts, and two types of program budgeting have been reported. However, we no longer collect the data required to produce one of these types of program, this question therefore deals with one methodology produced before and one new methodology. This new methodology will be based on information drawn mainly from programme budgeting returns produced by primary care trusts (PCTs) as part of their annual accounts process.

2. Unfortunately, due to major discontinuities in the data, figures for 1996-97 are not comparable with those in earlier years and trends are reported on the period 1991-92 to 1995-96 and 1997-98 to 2002-03.

OLD PROGRAMME BUDGET METHODOLOGY

3. This section of the reply discusses trends in Hospital and Community Health Services (HCHS) gross current expenditure over the period 1991-92 to 1995-96, and 1997-98 to 2002-03.

4. In order to gain the maximum value and usefulness from the programme budget it is necessary to compare expenditure trends over a comparative period. Major discontinuities in 1996-97 make long term comparisons difficult.

5. Expenditure on HCHS is shown in Table 2.3.1(a). The corresponding annual growth rates are also given. These rates are for the period 1991-92 to 1995-96 and 1997-98 to 2003-04. Figures 2.3.1(a) to 2.3.1(d) illustrate the breakdown of expenditure between the main programmes and how this has changed for 1992-93, 1996-97, 1998-99 and 2002-03.

Abbreviations used in Table 2.3.1

CHS	= community health services;
DC	= day care;
DP	= day patient;
HCHS	= Hospital and Community Health Services;
IP	= inpatient;
JF	= joint finance;
LD	= learning disabilities;
MH	= mental health;
OP	= outpatient;
YD	= younger people with physical and/or sensory disabilities;



© Parliamentary copyright 2005	Prepared 21 February 2005