5. ACTIVITY AND PERFORMANCE
5.1.23 What have trends in (a) the NHS inflation
index (b) sub-indices of the NHS inflation index and (c) relative
weights given to each sub-index been in each year from 1992-93?
What assumptions underlie the construction of the index and any
changes in weighting? What is the Department doing to replace
the discontinued FHS sub-index? (Q62)
Answer
NHS inflation index
1. The trends in the NHS inflation index
and sub-indices are shown in table 62a.
2. The NHS inflation index is constructed
using five sub-indices. These are:
— HCHS pay cost index: this measures the
change in average pay bill per head of those employed within the
HCHS.
— HCHS price index: this measures the change
in the price of goods and services supplied to the HCHS, it is
measured by the Health Service Cost Index.
— HCHS capital inflation index: this reflects
the changes in prices experienced in HCHS capital projects and
is calculated using a mixture of construction costs, equipment
and land costs.
— FHS index: this is produced using different
assumptions for each of the main groups—general medical
and personal medical services (GMS/PMS); general dental and personal
dental services (GDS/PDS); pharmaceutical services (PhS) and general
ophthalmic services (GOS).
From 2004-05, the FHS index is no longer available
due to the introduction of the new GMS contract leading to a discontinuity
in the GMS/PMS data series. A new contract was also introduced
for PhS in 2005-06 and one for GDS/PDS in 2006-07, which will
also lead to a discontinuity of the GDS/PDS data series.
— The "other" index: this comprises
of the revenue and capital expenditure on central health and miscellaneous
services and Departmental administration. The GDP deflator is
used in the absence of service specific deflators.
3. The NHS index is not available from 2004-05
due to the discontinuity of the FHS index.
4. The Department plans to review the continued
need to construct a FHS-specific index or whether an alternative
proxy, such as the GDP deflator, will be a sufficient measure.
The Department will work in conjunction with the Office for National
Statistics and the University of York Centre for Health Economics
on this.
5. The weights attached to each of the elements
for each of the years are shown in table 62b.
Table 62a
NHS INFLATION INDEX AND SUB-INDICES
|
| Year | HCHS pay
| HCHS prices | HCHS capital
| FHS | Other
| NHS total |
|
| 1992-93 | 100.0
| 100.0 | 100.0
| 100.0 | 100.0
| 100.0 |
| 1993-94 | 104.2
| 101.4 | 104.4
| 100.6 | 102.5
| 102.7 |
| 1994-95 | 107.7
| 102.3 | 112.9
| 102.9 | 103.8
| 105.4 |
| 1995-96 | 112.5
| 105.6 | 118.0
| 105.5 | 106.8
| 109.3 |
| 1996-97 | 116.2
| 107.2 | 119.7
| 109.0 | 110.2
| 112.4 |
| 1997-98 | 119.1
| 107.6 | 124.7
| 112.2 | 113.6
| 114.8 |
| 1998-99 | 124.9
| 110.3 | 128.5
| 115.6 | 116.7
| 119.3 |
| 1999-2000 | 133.5
| 111.6 | 132.1
| 120.3 | 119.5
| 124.8 |
| 2000-01 | 143.1
| 111.2 | 139.7
| 123.6 | 122.2
| 130.1 |
| 2001-02 | 155.0
| 111.3 | 148.8
| 126.2 | 125.3
| 136.2 |
| 2002-03 | 162.8
| 112.5 | 155.4
| 131.1 | 129.5
| 141.1 |
| 2003-04 | 174.7
| 114.1 | 162.9
| 137.2 | 133.2
| 147.9 |
| 2004-05 | 182.6
| 115.3 | 175.3
| n/a | 136.9
| n/a |
| 2005-06 | 191.2
| 117.5 | 182.8
| n/a | 139.6
| n/a |
| 2006-07 | 199.1
| 121.0 | 191.5
| n/a | 143.4
| n/a |
| 2007-08 | 206.1
| 123.2 | 206.4
| n/a | 147.4
| n/a |
|
| Source: |
| Financial Planning and Allocations, DH
|
Table 62b
WEIGHTS USED IN THE NHS INDEX
|
| Year | HCHS pay
| HCHS prices | HCHS capital
| FHS | Other
| NHS total |
|
| 1992-93 | 49%
| 21% | 6%
| 21% | 3%
| 100% |
| 1993-94 | 49%
| 21% | 5%
| 22% | 3%
| 100% |
| 1994-95 | 49%
| 21% | 6%
| 22% | 3%
| 100% |
| 1995-96 | 49%
| 21% | 5%
| 22% | 3%
| 100% |
| 1996-97 | 50%
| 21% | 4%
| 23% | 2%
| 100% |
| 1997-98 | 47%
| 25% | 3%
| 23% | 2%
| 100% |
| 1998-99 | 47%
| 25% | 3%
| 22% | 2%
| 100% |
| 1999-2000 | 46%
| 24% | 3%
| 24% | 2%
| 100% |
| 2000-01 | 46%
| 22% | 4%
| 26% | 2%
| 100% |
| 2001-02 | 47%
| 21% | 4%
| 26% | 2%
| 100% |
| 2002-03 | 48%
| 32% | 4%
| 14% | 2%
| 100% |
| 2003-04 | 45%
| 30% | 4%
| 18% | 2%
| 100% |
| 2004-05 | 47%
| 32% | 4%
| 14% | 2%
| 100% |
| 2005-06 | 47%
| 27% | 3%
| 22% | 2%
| 100% |
| 2006-07 | 45%
| 28% | 4%
| 21% | 2%
| 100% |
| 2007-08 | 42%
| 30% | 4%
| 22% | 2%
| 100% |
|
| Source: |
| Financial Planning and Allocations, DH
|
| 
