Select Committee on Health Minutes of Evidence

Supplementary memorandum by the Department of Health



1.1  Programme budgeting—What sort of things would be under "miscellaneous" then? (Q142)

  1.  Expenditure incurred by the following bodies is included within the miscellaneous category in programme budgeting:

    —  Department of Health.

    —  Primary Care Trusts.

    —  Strategic Health Authorities.

    —  NHS Pensions Agency.

    —  NHS Litigation Authority.

    —  Health and Social Care Information Centre.

    —  National Patient Safety Agency.

    —  NHS Purchasing and Supplies Agency.

    —  National Institute for Health and Clinical Excellence.

    —  NHS Counter Fraud and Security Management Service.

    —  National Treatment Agency for Substance Misuse.

    —  NHS Appointments Commission.

    —  Prescription Pricing Authority.

  2.  A specific and detailed breakdown of miscellaneous costs by individual body is not available.

  3.  The Department of Health's own costs accounted for 70% of the expenditure included within the miscellaneous category for 2005-06. Some of the Department of Health costs included within this category are:

    —  Grants and other support to local authorities;

    —  Grant in aid funding for non-departmental public bodies and non-consolidated special health authorities;

    —  Hospital financing for Credit Guarantee Finance (CGF) pilot projects;

    —  Department of Health spend on medical, scientific and technical services;

    —  Department of Health grants to voluntary bodies;

    —  Department of Health research and development expenditure;

    —  Department of Health information services;

    —  Welfare Food costs; and

    —  European Economic Area Medical costs.

1.2  Programme budgeting—Between 2003 and 2005, the NHS spent proportionately less on coronary heart disease and mental health services, yet we know these are key elements in the Department's national plan and policy framework for the NHS. How is this consistent with the national policy framework? (Q144)

  1.  Recorded expenditure in each of the programme budgeting categories is ultimately driven by the diseases patients present with each year, coupled with the decisions made by doctors and nurses on how to treat such patients.

  2.  Given this, it is inevitable that programme level expenditure, such as mental health will vary from one year to the next. In the case of circulation system problems, the relatively low growth in expenditure between 2004-05 and 2005-06 was partly attributable to lower expenditure on family health service prescriptions as a result of the lower price of drugs following the Prescription Price Regulation Scheme agreement and statins coming out of patent.

1.3  NHS management costs—According to PEQ98, it appears that management costs in primary care trusts are estimated to be higher in 2006-07 than in the previous year. Is this not a little bit surprising given that the number of PCTs has actually been reduced by half? (Q194)

  1.  Management costs continue to show growth in PCTs due to:

    —  the guaranteed employment status given to staff affected by the Commissioning a Patient-led NHS mergers and restructuring programme up until June 2007; and

    —  PCTs unaffected by the CPLNHS programme adding a normal year-on-year increase from pay awards.

  2.  The management costs also contained some redundancy costs. There were £196.7 million of redundancy costs in PCTs and SHAs during 2006-07 of which £33.0 million were declared as management costs. Management costs adjusted to remove the redundancy amounts are given in Table 1.

Table 1

£ millions
1999-20002000-01 2001-022002-03 2003-042004-05 2005-062006-07
ActualActual ActualActualActual ActualActualActual(1)
HA/SHA497536 46397115 13314681
PCT-24 224723847 9861,0861,116
NHS trust1,0001,015 1,0089881,070 1,2221,3151,396
Total1,497 1,5751,6951,808 2,0322,341 2,5472,593
Total NHS Expenditure(1) (2)40,201 43,93249,02154,042 64,18469,07875,829 81,672
Management costs as% of NHS Spend 3.7%3.6%3.5% 3.3%3.2% 3.4%3.4%3.2%

1.  2006-07 management costs figures have been adjusted to remove £33 million of redundancy costs. SHAs have fallen from £111 million to £81 million and PCTs have reduced from £1,119 million to £1,116 million.

2.  See notes given in written evidence Ev 183, table 98.

1.4  Non-NHS staff expenditure—Basically, it is the variation and proportion of pay spent on non-NHS staff in table 34c, indicating that South Yorkshire SHA spent 33.5% on agency staff compared to just 0.1% at North and East Yorkshire and North Lincolnshire SHA. This seems a huge variation between two strategic health authorities. Can you give us a note on it? (Q199)

  1.  South Yorkshire SHA has shown salaries and wages for non-NHS staff of £6,777,000 in 2005-06. This is because they hosted the NHS Electronic Staff Records (ESR) Central Team, which uses specialist agency staff. The ESR is nationally funded by the Department.

  2.  Of the total, spend on the NHS ESR Central Team accounts for £6,616,780 with the remaining £160,220 being for the SHA itself, which brings South Yorkshire SHA into line with other SHAs.

1.5  PFI—Could you send a note on Queen Elizabeth, Greenwich. It is not in my constituency but it is a very important local provider, and certainly the word is that they are stuck with a very expensive PFI that cannot be renegotiated (Q213)

  1.  The Department is familiar with the allegation that the PFI scheme at the Queen Elizabeth Hospitals NHS Trust (QEH) is putting them at a disadvantage when compared to other hospitals. We understand that this perceived discrepancy stems from a report done by external consultants for the trust at the end of last year in which it was stated that the trust had incurred additional costs of around £10 million under its PFI scheme. The Department have looked at this carefully and are certain that not all these costs are attributable directly to the PFI scheme, or that they would not have arisen had the scheme been built using public capital.

  2.  There are two main ways in which a trust with a PFI scheme can renegotiate its contract. Firstly, the trust could elect to break the contract early, paying the private sector partner an amount commensurate with the amount payable over the outstanding contract term. Although this would be expensive, the cost of breaking a contract to the taxpayer would be no more under PFI than at a new public capital funded scheme.

  3.  Secondly, although tied to a contract, typically of 30 years, PFI is flexible and able to cater for changes to service requirements. If a trust wishes to obtain additional services or buildings from their private sector partner, they are able to do so via a variation to the contract. In doing so the trust concerned will obtain advice from an independent technical advisor to ensure that the amount quoted by the private sector, both in capital and ongoing revenue expenditure terms, is fair.

1.6  Car parking—I am going to digress for one moment because the Chairman has just mentioned parking fees. In our questionnaire we were very keen to try to find out what sort of profit the private contractors who are running the parking are taking. We just got figures for the income the NHS is getting from parking fees but we did not get an answer to the sort of profit that the parking providers are making. Is that something that is available or not? (Q310)

  1.  Data is collected centrally on the amount of income received annually by NHS trusts from car parking. However, no data is collected such that the level of profit can be calculated.

  2.  NHS trusts decide on the arrangements for car parking in the light of their particular circumstances. This can include direct management of the car parks by the trusts themselves or contracting with another organisation to provide the service. No data is collected centrally on how car-parking services are provided.

January 2008

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