Supplementary memorandum by the Department
PUBLIC EXPENDITURE SESSIONS22 &
29 NOVEMBER 2007
1.1 Programme budgetingWhat sort of
things would be under "miscellaneous" then? (Q142)
1. Expenditure incurred by the following
bodies is included within the miscellaneous category in programme
Strategic Health Authorities.
NHS Litigation Authority.
Health and Social Care Information
National Patient Safety Agency.
NHS Purchasing and Supplies Agency.
National Institute for Health and
NHS Counter Fraud and Security Management
National Treatment Agency for Substance
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
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
Department of Health research and
Department of Health information
Welfare Food costs; and
European Economic Area Medical costs.
1.2 Programme budgetingBetween 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?
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 costsAccording 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.
MANAGEMENT COSTS 1999-2000 TO 2006-07 (ENGLAND)
|Total NHS Expenditure(1) (2)||40,201
|Management costs as% of NHS Spend
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 expenditureBasically, 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
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
1.5 PFICould 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 parkingI 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?
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