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In the last financial year the Department of Health made financial recovery priority and managed to turn the deficits of 2005-06 to a surplus of £505 million in 2006-07. The Comptroller and Auditor General is the statutory auditor of the financial accounts of the NHS and has the duty to certify and report to Parliament on them. This report is published alongside in the NHS Summarised Accounts to provide more detail on the financial performance of the NHS, how it moved into balance and the challenges that face it in the future.
The Department of Health (the 'Department') and the NHS achieved a surplus of £515 million in 2006-07, representing 0.6 per cent of total available resources. This followed two years of rising deficits, and the Department, working with the NHS, has done well in restoring overall financial balance. While the national picture is one of financial surplus there remain variations in financial performance. The surplus is concentrated in Strategic Health Authorities, whilst overall Primary Care Trusts and NHS Trusts remain in deficit Of the 372 NHS organisations, 82 recorded a deficit of £917 million, with 80 per cent of this being reported by just 10 per cent of NHS organisations. There are also regional variations, with the East of England Strategic Health Authority area having a deficit of £153 million and the North West achieving a £189 million surplus. Financial recovery is therefore inconsistent and more needs to be done so that all parts of the NHS achieve financial balance. The Committee concludes that the return to financial balance is the result of the Department's tighter performance management of NHS finances in the way funding flowed through the NHS together with a programme of support for local organisations with particular financial difficulties. In the short term, this largely centralist approach was appropriate. For the future if the NHS is to remain in financial balance more health organisations locally need to improve their financial management. Failure to keep a tight grip on financial performance will undermine health care for patients.
In continuation of HC no. 742 of session 2006-07
This National Audit Office report (HCP 63-I, session 2008-09, ISBN 9780102954418), looks at the financial performance of, and financial management in, the NHS during 2007-08. It also explains some of the issues which are likely to provide financial challenges for the NHS in 2008-09 and beyond. Where the report refers to performance of the NHS it covers the performance of Strategic Health Authorities, Primary Care Trusts and NHS Trusts, as reported in the NHS Summarised Accounts (ISBN 9780103288079). The report also contains an analysis of the financial performance of NHS foundation trusts.
Agenda for Change, the pay modernisation programme for 1.1 million NHS staff in England, representing a pay bill of £28 billion in 2007-08, was implemented between December 2004 and December 2006. It covered all NHS staff, except doctors, dentists and senior managers. Agenda for Change introduced a job evaluation scheme and harmonised employment terms and conditions for the multitude of jobs within the NHS. A key part of the programme is a process for encouraging staff development and improving staff performance known as the Knowledge and Skills Framework. Agenda for Change was expected to bring about new ways of working which would contribute to improved patient care and to more efficient delivery of services. Total savings of £1.3 billion over the first five years were predicted. These were to come from improvements in productivity of 1.1 to 1.5 per cent a year, reductions in equal pay claims, reduced use of agency staff and more controllable pay costs. The Department and NHS Trusts did not establish ways of measuring the effects of Agenda for Change and there is no active benefits realisation plan. The NHS pay bill for the staff covered by Agenda for Change has risen by 5.2 per cent a year on average since 2004-05 while productivity fell by 2.5 per cent a year on average between 2001 and 2005. By autumn 2008 (nearly two years after Trusts had completed transferring staff to Agenda for Change terms and conditions and pay rates) only 54 per cent of staff had had a knowledge and skills review.
This report examines the financial performance of the NHS and NHS Foundation Trusts. The Department of Health and the NHS achieved a surplus of £1,674 million in 2007-08. The surplus was significantly higher than the original forecast of £916 million and more than three times that recorded in 2006-07 (£515 million). In 2006-07, the surplus was concentrated in the Strategic Health Authorities, which are administrative bodies, with the Primary Care Trust and NHS Trust sectors remaining in deficit. All sectors are now in surplus and the quality of financial management at individual NHS organisations improved during 2007-08. The surplus represents funding that was made available but which was not used and there is a real risk that patients lose out because the NHS is not spending its allocated funding on treating them. The Department has committed itself to making the surplus available to the NHS for spending in future years. Some long-standing financial problems affect a minority of trusts which remain in deficit, and some regional variations in financial performance persist. During a period of economic uncertainty when resources are severely stretched it is more important than ever that the NHS can demonstrate value for money and continuous improvements in productivity. The Department intends that the NHS should generate £15 billion in efficiency savings over the next three years. Going forward the Department and NHS face a number of challenges, including changes to the financial reporting framework and timetable, and further system reforms under which a quality element will be introduced into how NHS organisations are funded. The surplus generated and better financial management should, if maintained, help deal with the financial implications of meeting these challenges.
This report examines the value for money risks and implications of the Health and Social Care Bill. The Bill proposes a new model for the NHS focusing on patient outcomes. The proposals are intended to transform the NHS in England into a highly devolved, market-based model in which local commissioners and providers of health services are freed from central control, with an increased say for local authorities, patients and the public. Whilst the reforms could complement the imperative of achieving £20 billion efficiency gains by 2014/15, the reorganisation presents an additional challenge for the NHS. The health reforms are still at an early stage and key questions have yet to be addressed. It is vital that the Department creates robust accountability structures so that Parliament and the public can properly follow the taxpayers' pound and hold those responsible to account. The Committee is concerned that the Department has not yet developed a high quality risk management protocol for either the commissioning or providing bodies. The Department acknowledges that some health trusts and some GP practices have some way to go to achieve foundation trust status or become commissioning consortia. The Department must have effective systems in place to deal with failure so that whatever happens, the interests of both patients and taxpayers are protected. This report provides an overview of aspects of the reforms where Parliament requires clarification and draws out a number of risks associated with the transition to the new model that need to be managed.
Dr Alison Talbot-Smith, an experienced doctor and researcher, and Professor Allyson M. Pollock, one of the UKs leading authorities on the NHS, give a lucid and incisive account of the new NHS – which has emerged from a far-reaching programme of market-oriented changes. Providing an authoritative and accessible overview of the new NHS, the book describes: the structures and functions of the new organizations in each of the devolved countries the funding of NHS services, education, training and research and resource allocation the regulation of the new NHS systems and workforce the relationships between the NHS, the Department of Health, local authorities and regulatory bodies, and between the NHS and the private sector the future implications of current policies. This is an indispensable resource for those working in healthcare today as clinicians, academics, researchers and managers. It will also be essential reading for academics, students, and researchers in related fields, as well as the general public.
NHS Deficits : Sixth report of session 2005-06, Vol. 2: Written Evidence