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Welfare Reform on the Web (April 2007): National Health Service - funding

Balancing the NHS books proves a juggling act

S. Gainsbury

Public Finance, Mar. 2nd-8th 2007, p. 14-15

The NHS's third quarter financial report in 2007/08 showed no less than three radically divergent bottom-line positions. This analysis attempts to explain the contradictions of different sets of figures which variously predict:

  • A 13m surplus at year end
  • A possible 37m net deficit at year end
  • An in-year surplus of 269m

Chiefs reveal frustrations over doctors' contracts in HSJ survey

C. Santry

Health Service Journal, vol. 117, Mar. 1st 2007, p. 5

A survey of just under 100 NHS trust chief executives has shown that:

  • 69% would like to cap GPs' pay
  • 70% would like to abolish the clinical excellence awards that replaced merit awards for consultants in 2004
  • 59% would like to write off their trusts' historic debts
  • Over 66% believed that patient care would suffer as a result of short term financial decisions
  • 79% want to see the NHS run by an independent board and freed from political interference.

(See also Health Service Journal, vol.117, 1st Mar. 2007, p. 6-7)

Explaining NHS deficits 2003/4 - 2005/6

B. McCormick

Department of Health, 2007

The report concludes that the most important explanation for the emergence of deficits from 2004/05 onwards is probably slow adjustment to the accounting change which disallowed virement from capital to revenue accounts. This accounting change brought to light deficits which the NHS had previously been deliberately hiding. Bad workforce planning and the introduction of performance targets also contributed to the problem.

Options for the future of payment by results: 2008-09 to 2010-11

Department of Health


This consultation paper outlines plans to further roll out payment by results (PbR) in the NHS over the next four years to cover services beyond elective and emergency care. Improved data collection and clinical engagement are crucial if payment by results is to be extended beyond the acute sector. The government also intends to set up PbR development sites to test out proposals to extend the scope of the system. These sites will test out "local currencies for services outside the national tariff" and "alternative currencies or funding models for services already covered by the tariff". However, the plans to roll out a new version of the national health care resource group tariff which puts prices on different services has been delayed for a year. Other proposals include the introduction of "bonus payments" for providers offering patients excellent service.

PCT network attacks "unfair" reporting of the top-slice effect

V. Vaughan

Health Service Journal, vol.117, Mar. 8th 2007, p. 5

Primary care leaders called for changes in the way finances are reported after it emerged that the vast majority of primary care trust debts in 2006/07 were the result of top-slicing of funds. A proportion of primary care funds were being held in reserve by strategic health authorities to ensure overall financial balance in the NHS.

Trusts hail 178m windfall as 'unfair' finance system is axed

H. Mooney

Health Service Journal, vol. 117, Mar. 29th 2007, p. 5

The Department of Health is to scrap the "double deficit" accounting system for acute trusts and will pay back fines taken from them in 2006-07. The move will see the resource accounting and budgeting system (RAB) abolished from April 1st 2007, as well as several trusts receiving rebates that will significantly reduce their end-of-year deficits. Under the RAB system introduced in 2001, trusts that run up an in-year deficit are penalised by the same amount the following year.

(See also Health Service Journal, vol.117, Mar. 29th 2007, p. 12-13)

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