Select Committee on Health Written Evidence

2.  GENERAL EXPENDITURE ISSUES (continued)

Table 2.2.1(a)

TRENDS IN ACTUAL AND PLANNED EXPENDITURE ON THE HEALTH AND PERSONAL SOCIAL SERVICES 2003-04 TO 2007-08 BY AREA OF EXPENDITURE (1) (2) (3) (4) (STAGE TWO RESOURCE BUDGETING)

						£million
		2003-04	2004-05	2005-06	2006-07	2007-08
		outturn	estimated outturn	Plan	Plan	Plan
	Central Government Expenditure
	National Health Service Hospitals, community health, family health (discretionary) and related services
	Current
A.	Net spending(13)	57,083	62,768	69,117	76,716	83,937
B.	Charges and receipts(5)	2,146	2,572	2,616	2,616	2,616
C.	Total spending	59,230	65,340	71,733	79,332	86,553
D.	Change over previous year in cash (%)		10.3	9.8	10.6	9.1
E.	Change over previous years in real
	terms (%) (total)		8.1	7.1	7.7	6.2
F.	Change over previous years in real
	terms (%) (net)		7.7	7.4	8.1	6.5
	Capital
A.	Net spending	2,415	3,367	4,206	5,131	6,101
B.	Charges and receipts(5)	270	582	200	200	200
C.	Total spending	2,686	3,949	4,406	5,331	6,301
D.	Change over previous year in cash (%)		47.0	11.6	21.0	18.2
E.	Change over previous years in real terms (%)(total)		44.0	8.8	17.8	15.1
	National Health Service family health services (non-discretionary)(7)
	Current
A.	Net spending	2,141	2,095	1,660	1,108	1,162
B.	Charges and receipts	912	858	682	682	682
C.	Total spending	3,052	2,953	2,342	1,790	1,844
D.	Change over previous year in cash
	(%)		-3.3	-20.7	-23.6	3.0
E.	Change over previous years in real terms (%) (total)		-5.2	-22.6	-25.6	0.3
	Departmental administration (8) (14)
	Current
A.	Net spending	317	328	283	265	262
B.	Charges and receipts	23	62	56	56	56
C.	Total spending	340	390	339	321	318
D.	Change over previous year in cash (%)		14.8	-13.1	-5.5	-0.7
E.	Change over previous years in real
	terms (%) (total)		12.5	-15.2	-7.9	-3.3
	Cost of Collecting NHS element of NI contributions	19	17	15	15	15
	Central health and miscellaneous services (15)
	Current
A.	Net spending	1,008	1,123	1,091	1,073	1,149
B.	Charges and receipts	94	150	113	113	113
C.	Total spending	1,103	1,273	1,205	1,186	1,263
D.	Change over previous year in cash (%)		15.4	-5.3	-1.6	6.4
E.	Change over previous years in real terms (%) (total)		13.1	-7.7	-4.1	3.7
	Other NHS Capital
A.	Net spending	36	29	31	32	32
B.	Charges and receipts	0	0	0	0	0
C.	Total spending	36	29	31	32	32
D.	Change over previous year in cash (%)		-20.4	8.3	2.4	0.0
E.	Change over previous years in real terms (%) (total)		-22.0	5.7	-0.3	-2.6
	NHS Total
A.	Net spending	63,001	69,710	76,388	84,324	92,643
B.	Charges and receipts(5)	3,445	4,224	3,668	3,668	3,668
C.	Total spending	66,446	73,934	80,056	87,992	96,311
D.	Change over previous year in cash (%)		11.3	8.3	9.9	9.5
E.	Change over previous years in real terms (%) (total)		9.0	5.6	7.0	6.6
F.	Change over previous years in real terms (%) (net)		8.4	6.9	7.5	7.0
	Central Government Personal
	Social Services(16)
A.	Net spending	200	222	246	262	284
B.	Charges	52	38	46	46	46
C.	Total spending	252	260	292	308	330
D.	Change over previous year in cash (%)		3.0	12.4	5.3	7.3
E.	Change over previous year in real terms (%)		0.9	9.6	2.5	4.4
	Central Government (specific and special) grants to local authorities
A.	Net spending	1,450	1,925	1,917	1,620	1,658
B.	Charges	0	0	0	0	0
C.	Total spending	1,450	1,925	1,917	1,620	1,658
D.	Change over previous year in cash (%)		32.8	-0.4	-15.5	2.3
E.	Change over previous year in real terms (%)		30.1	-2.9	-17.7	-0.4
	Credit Approvals (LA capital)
A.	Net spending	49	56	53	53	53
B.	Charges	0	0	0	0	0
C.	Total spending	49	56	53	53	53
D.	Change over previous year in cash (%)		13.5	-4.6	0.0	0.0
E.	Change over previous year in real terms (%)		11.2	-7.0	-2.6	-2.6
	Health and Personal Social Services Total
A.	Net spending	64,700	71,913	78,604	86,259	94,639
B.	Charges and receipts(5)	3,497	4,262	3,714	3,714	3,714
C.	Total spending	68,197	76,175	82,318	89,973	98,353
D.	Change over previous year in cash (%)		11.7	8.1	9.3	9.3
G.	Change over previous years in real terms (%) (total)		9.4	5.4	6.4	6.4
H.	Change over previous years in real terms (%) (net)		8.9	6.6	6.9	6.8
	Local Authority Personal Social Services
	Current(9) (10) (11)
A.	Net spending	14,763	15,586	n/a	n/a	n/a
B.	Charges and receipts	2,077	2,800	n/a	n/a	n/a
C.	Total spending	16,839	18,386	n/a	n/a	n/a
	Local Authority Personal Social Services
	Capital(9) (10) (11)
A.	Net spending	186	222	n/a	n/a	n/a
B.	Charges and receipts	75	77	n/a	n/a	n/a
C.	Total spending	261	299	n/a	n/a	n/a
	Local Authority Personal Social Services
	Total
A.	Net spending	14,949	15,808	n/a	n/a	n/a
B.	Charges and receipts	2,152	2,877	n/a	n/a	n/a
C.	Total spending	17,100	18,685	n/a	n/a	n/a
	Local Authority, Health and Personal Social Services Total(12)
A.	Net spending	79,649	87,721	n/a	n/a	n/a
B.	Charges and receipts(5)	5,649	7,139	n/a	n/a	n/a
C.	Total spending	85,298	94,860	n/a	n/a	n/a
	GDP deflator @ 30 June 2005	98.0	100.0	102.5	105.3	108.1

Notes:
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 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.
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.  Net budget figures are taken from Local Authority Revenue Account returns. Current figures are for Adult services only. Capital figures show spend on Adult and Children services (as this cannot be broken down further).
11.  Local Authorities do not forecast expenditure for future years. Figures for 2003-04 are available, but expenditure on Adults' services cannot be seperately identified.
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:	354	511	611	675	750
14.  Less Dept Admin depreciation of:	12	13	17	17	17
15.  Less CHMS depreciation of:	15	17	18	19	19
16.  Less PSS depreciation of:	11	10	16	10	10

Table 2.2.1(b)

EXPLANATION OF MAIN AREAS OF EXPENDITURE IN TABLE 2.2.1(a)

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 GP contract in April 2004, which means that there is no longer any GMS non discretionary funding.
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.

Table 2.2.1(b)

EXPLANATION OF MAIN AREAS OF EXPENDITURE IN TABLE 2.2.1(a)

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.

  2.2.2  What is the Department's assessment of each programme's performance in 2003-04 against plans for that year, and anticipated performance in 2004-05 against plans for that year and outturn in 2003-04? [2.2.2]

  ANSWER

  1.  Table 2.2.2 outlines the significant changes (ie over £10 million) between estimated outturn report in last years evidence and outturn expenditure in Table 2.2.1(a) of this years evidence for 2003-04.

  2.  Table 2.2.2 also shows the significant changes (ie over £10 million) planned expenditure in last years evidence and estimated outturn expenditure in Table 2.2.1(a) of this years evidence for 2004-05.

Table 2.2.2

COMPARISON OF NET EXPENDITURE PLANS FOR 2003-04 AND 2004-05 WITH THOSE ON PAGES 43-45 OF LAST YEAR'S HEALTH COMMITTEE WRITTEN EVIDENCE (HC 1113)

  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		2003-04
HCFHS current	-511		-£706 million slippage on unified NHS/central budget programme spending £153 million overspend on demand led non discretionary GMS (now classed as HCFHS) £47 million shortfall in NHS Trusts achievement of profit and loss targets compared to estimate -£3 million underspend on NDPBs outside the boundary
HCFHS capital	-164		-£155 million slippage on HCHS SHA/central budget capital programme -£44 million grants to LAs less than estimated £34 million NHS Trusts spending more than provision
FHS Current	44		£22 million pharmaceutical services overspend £12 million pharmaceutical charges shortfall in income £5 million general dental services shortfall in income £5 million general ophthalmic services overspend
Departmental Administration	-9		No changes less than £10 million to report
CHMS current	-2		No changes less than £10 million to report
Central Government PSS	32		-£10 million underspends on a number of central budgets that include the national training strategy and social work development and welfare regulation grants £42 million overspend on budgeting for NDPBs outside the resource accounting boundary
PSS Grants to Local Authorities	-13		£13 million underspend on preserved rights grant and deferred payments grant following adjustments in respect of local authority expenditure in previous years
PSS Credit Approvals	-1		No changes less than £10 million to report

	Difference		2004-05
HCFHS current	127	449	Take up of 2003-04 End Year Flexibility (EYF)
		250	Transfer from HCFHS capital
		-189	Transfer to FHS non discretionary
		-58	Net transfers to and from Other Government Departments
		-97	Transfer to CHMS Revenue
		-24	Transfer to DH Admin Revenue
		-200	Forecast underspend
HCFHS capital	105	355	Take up of 2003-04 EYF
		-250	Transfer to HCFHS current
FHS current	189	189	Transfer to HCFHS current
Departmental Admin Current	49	23	Brought forward from 2005-06
		11	Brought forward from 2006-07
		14	Take up of EYF from 2003-04
CHMS current	10	-100	Transfer to PSS
		97	Transfer from HCFHS
		12	Transfers from Other Government Departments
Central Government PSS	2		No changes less than £10 million to report
PSS Grants to Local Authorities	94
PSS Credit Approvals	3		No changes less than £10 million to report

  Notes

  1  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 2004-05 as compared with 2003-04 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]

  ANSWER

  1.  Total NHS expenditure in 2004-05 rose by £6.7 billion, of which £5.8 billion was increased revenue expenditure and £0.9 billion increased capital expenditure (taking account of underspend on capital in 2003-04).

  2.  In summary, of the additional £5.8 billion in 2004-05, was accounted for in the following proportions:

—  Extra Staff, Drugs and good and services 48%.

—  Pay accounted for 30%.

—  Capital and training 17%.

—  Cost pressures 5%.

  3.  This extra funding has been used to:

—  Improve access to, and quality of services—£3.2 billion of the increase has been used to employ additional staff, increase prescribing and purchase more goods and services. Approximately £1.4 billion was spent on additional staff and £0.8 billion on increased prescribing. The balance was used to purchase more goods and services.

—  To achieve world class service standards, the NHS needs to invest in people and infrastructure. Investment in training, capital and research increased during the year by £1.15 billion. Capital investment in 2004-05 was £4.5 billion compared to £3.2 billion in 2003-04, a real terms increase of over 40%. 16 new hospital schemes signed contracts and proceeded to construction in 2004-05 compared to 11 in 2003-04. 70% of CT scanners and well over half of all MRI scanners and Linacs now in use in the NHS are new since January 2000 and since publication of the NHS plan in July 2000, over £430 million has been invested in equipment for the diagnosis and treatment of cancer.

—  There are now more students in training at medical school than ever before and NHS commissioning plans are for a further significant increase in the number of students entering nurse training in 2004-05.

—  Ensure that pay levels are sufficient to attract and retain staff—around £2 billion has been invested in pay and this is having a direct impact on staff numbers with increases of 8,040 doctors, and 11,160 nurses compared to the previous year.

—  Meet unavoidable cost pressures—such as inflation on goods and services.

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

  ANSWER

  1.  The information requested is given in Table 2.2.4.

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Prepared 5 May 2006