Clause 7 - Funding of strategic health authorities
NHS Reform and Health Care
10:30 am
Mr John Hutton (Minister of State, Department of Health; Barrow and Furness, Labour)
I will come to it, if the hon. Gentleman can bear with me for a second.
In the past financial year, only one health authority—Bexley and Greenwich—failed to achieve a balanced financial position. That health authority is a new one—it merged in April this year—and has taken on difficulties that it is trying to address. However, all health authorities plan to achieve a balanced financial position, which is a massive improvement on the deficits of £459 million that existed in NHS trusts in 1996–97. That is due in part to the financial stability that we have given the NHS, and it means that strategic health authorities have the best foundation on which to face the full challenges of their devolved responsibilities.
Amendment No. 144, which relates to provision in Wales, raises wider issues affecting the government of Wales and the devolution settlement. As part of its devolved functions, it is for the National Assembly for Wales to consider how debts arising from historical overspend are to be addressed. It is not a matter for primary legislation, and the Government do not intend to alter the terms of the devolution agreement. It is properly for the National Assembly to decide, and the amendment, inadvertently or not, would cut directly across that.
The debate has been primarily about deficits. It might be helpful to say a few words about those deficits that exist. The NHS has run up accumulated deficits during the years. An accumulated deficit is not necessarily indicative of either a poor financial position or a cash shortfall. It is a consequence of normal operations in any normal organisation. In any public or private sector body, amounts are due to be paid at the end of the year. In the case of health authorities, most sums will be moneys owed to and from other NHS bodies. It is not, as I said earlier, all a debt repayable on demand. As accounting rules require building values to be recorded on a balance sheet, the majority of sums do not involve repayment. I am not an accountant, but I wish that a set of accounting rules applied to my overdrafts in the same way as to these matters.
The hon. Gentleman explained the amendment well and we understand his point. Strategic authorities will not inherit the deficits of NHS trusts. Assets and liabilities relating to provider functions will be mainly retained by the NHS trusts themselves, not passed on to the new primary care trusts. We are dealing with important issues about deficits in the national health service. Significant extra resources will provide the NHS with the best possible financial platform for the future.