5. ACTIVITY AND PERFORMANCE
5.1.21 Could the Department give an explanation
as to the level of funding set aside for inflation in 2009-10?
In particular, can it give the average pay awards to each (subjective)
staff group and the inflation assumptions for non-pay including
capital charges? (Q60)
Answer
NHS tariff
1. In 2009-10, payment by results covers elective
and non-elective admitted patient care, outpatient attendances
and A&E activity. The national tariff underpinning the system
is adjusted annually to take account of cost pressures. The uplift
includes an estimate of:
— the expected impact on pay including
pay drift, the Staff and Associate Specialists contract reform
and changes to statutory annual leave entitlement;
— increases in the cost of drugs and other
technology, including recommendations from the National Institute
for Health and Clinical Excellence;
— meeting Working Time Directive compliance;
— price inflation for goods and services;
and is adjusted for:
— the beneficial impact of VAT reduction
on costs; and
— an overall 3.0% efficiency assumption.
2. For 2009-10, the total uplift for the
national tariff is 1.7%. The components of this are shown in table
60a.
3. The 2009-10 uplift does not include a
quality element as per previous years. However, PCTs are expected
to make 0.5% of their contract values available and to agree with
their providers how this potential additional income is linked
to quality in 2009-10 contracts. High Quality Care for All
introduced the concept of reflecting quality in providers' income.
The Commissioning for Quality and Innovation (CQUIN) payment framework
aims to ensure that quality improvement and innovation form part
of commissioning discussions. In 2009-10, organisations may choose
to link 0.5% of contract value to measurement of quality. Acute
contracts should include a CQUIN scheme linking payment to specific
locally determined goals on quality and innovation. For community,
mental health and ambulance service providers, payment may be
linked to a quality improvement plan.
Pay
4. Table 60b shows the pay settlements
awarded to NHS staff in 2009-10.
5. These settlements are in line with the recommendations
of the independent pay review bodies covering NHS staff—the
Review Body on Doctors' and Dentists' Remuneration, the NHS Pay
Review Body and the Review Body on Senior Salaries.
Prices
6. The GDP deflator is used as a proxy for
underlying non-pay inflation in the NHS.
Capital charges
7. 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 providers forms part
of the total cash resources available through PCT allocations.
8. The aggregate index used to uplift capital
charges from 2006-07 to 2007-08 levels was 7.5%.
9. Since the 2006 inquiry, the incorrect
index series has been provided for the above. The HCHS capital
inflation index was used instead of the aggregate capital charges
index. Table 60c gives the correct figures.
Table 60a
NHS TARIFF UPLIFT, 2009-10
|
| | 2009-10 (over 2008-09 baseline)
|
| | £ million
| % |
| Baseline | 64,640
| |
|
| Increase in pay and prices |
| |
| Pay | 1,750
| 2.7 |
| Non-pay inflation | 240
| 0.4 |
| Clinical negligence (1) | 100
| 0.2 |
| Secondary care drugs | 620
| 1.0 |
| Revenue cost of capital | 260
| 0.4 |
| Working Time Directive (WTD) | 150
| 0.2 |
| Beneficial impact of VAT reduction on costs
| -80 | -0.1
|
| Efficiency | -1,940
| -3.0 |
| | 1,100
| 1.7 |
|
| Source: |
| Financial Planning and Allocations, DH
|
Footnotes:
|
| 1. Targeted adjustments have been made to certain tarfff prices to reflect forecast increase in contributions to Clinical Negligence Scheme for Trusts. These adjustments sum to 0.3% of the 2008-09 baseline.
|
| 2. Figures many not sum due to rounding.
|
Table 60b
NHS PAY SETTLEMENT, 2009-10
|
| Group | Settlement
|
|
| All staff on Agenda for Change | 2.4%
|
| All salaried doctors and dentists (1) | 1.5%
|
| Staff covered by NHS Very Senior Managers' Pay Framework
| 1.5% |
|
| Source: |
| NHS Pay Branch, DH |
Footnotes:
|
| 1. Includes salaried doctors and dentists employed in the family health services and hospital and community health services.
|
Table 60c
AGGREGATE CAPITAL CHARGES INDEX
|
| Year | Growth
|
|
| 2003-04 to 2004-05 | 4.8%
|
| 2004-05 to 2005-06 | 2.3%
|
| 2005-06 to 2006-07 | 7.6%
|
|
| Source: |
| Financial Planning and Allocations, DH
|
| 
