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Welfare reform on the Web (September 2006): National Health Service - funding

Local variations in NHS spending priorities

London: Kings Fund, 2006

This analysis is based on Department of Health data for 2003/04 and 2004/05 when primary care trusts (PCTs) were first required to report their level of spending in 21 different disease areas under the national programme budget project. It reveals wild variations in spending by PCTs in different disease areas. These differences cannot be fully explained by differing levels of need, the age profile of the local population or varying costs. The report shows a seven-fold difference in spending on mental health services between Islington PCT in North London and Berkshire’s Bracknell Forest PCT in 2004/05. Such differences are evident across England in all disease areas. Spending on cancer varies fourfold, on circulatory diseases twofold, and on musculo-skeletal problems 13-fold.

(For comment see Health Service Journal, vol.116, Aug.17th 2006, p.12-13)

NHS ‘is doing poorly with its extra billions’

T. Helm

The Daily Telegraph, August 14th 2006, p.9

A study by the think tank Civitas says that Britain is lagging behind many other countries in standards of healthcare provision despite a massive increase in NHS spending. Progress has been particularly slow in stroke care and mental health services. Although many trusts have met their targets, “they have done so at the expense of the most effective methods of health care.”. The article quotes the report: “Improvements in the NHS have in no way increased in proportion to the vast sums of money ploughed into it.”

NHS post-code lottery is flourishing, finds study

C. Hall

The Daily Telegraph, Aug. 9th 2006, p.10

A report published by the King’s Fund has found that patients’ addresses still determine how much is spent on their care. For example, the report claims that spending on mental health could be four times greater in one Primary Care Trust (PCT) than another. Prof John Appleby, the Fund’s chief economist said: “These new data raise serious questions about the consistency of decisions PCTs make about how much they spend on different diseases.”

(See also The Daily Telegraph, 31st Aug., 2006, p.18)

The Review of the NHS financial management and accounting regime: a report to the Secretary of State for Health

Audit Commission


This report recommends that:

  1. Resource accounting and budgeting (RAB) is incompatible with trusts’ financial regime and should not be applied to them. Instead the Department of Health should establish a national buffer so that it can meets its obligations to the Treasury while trusts operate as intended.
  2. Individual trusts which have suffered RAB adjustments without any compensating financial support should have the funds returned to them
  3. Trusts should move onto a financial regime which gives greater emphasis to cash and liquidity and has transparent arrangements for borrowing for both investment and working capital.
  4. Finance for capital development and working capital needs to be provided by a separately identifiable, professionally staffed banking arrangement within the NHS. It would be the only source of such funds.
  5. A more effective and swifter mechanism for identifying and dealing with financial distress should be created, with clear trigger points and matched intervention strategies.
  6. The NHS manuals for accounts should be reviewed, made less prescriptive and more principle based, and brought more closely into line with generally accepted UK accounting procedures.
  7. The Department of Health and strategic health authority oversight and management could be improved by addressing the way in which policy initiatives are costed.

Training and public health hit for £350m to recover deficits

G. Clews

Health Service Journal, vol.116, Aug. 17th 2006, p.5

Quarterly figures published for the first time by the Department of Health reveal that the NHS will only balance its books this financial year thanks to £350m raided from budgets for public health, training and education. Overall, predictions are for an £18m surplus, which is to be achieved in part by use of a new contingency fund siphoned from these key areas.

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