Clause 7 - Funding of strategic health authorities
NHS Reform and Health Care
10:15 am
Mr John Hutton (Minister of State, Department of Health; Barrow and Furness, Labour)
The hon. Member for Oxford, West and Abingdon tabled several amendments that relate to deficits and underspends. I am not an accountant but, as I understand the position, the majority of the deficits that he referred to—I shall come to the point about underspends—are not deficits that involve repayment. That is the sort of deficit that I would like to have myself and I would need to speak to my bank manager about it. A large amount relates to the way in which accounting rules require building values to be recorded on the balance sheet. They do not necessarily all give rise to an immediate call for repayment; they are not debts in that sense of the word.
The hon. Member for North-East Hertfordshire referred to underspends, and it might be helpful to try to explain one or two related matters. The total budget for the Department of Health last year—2000–01—was more than £45 billion, which was managed, as the hon. Gentleman knows, by more than 450 NHS bodies. The underspend to which he referred represents approximately 1.5 per cent. of total NHS expenditure. More than a third of that underspend was actually a planned contingency fund to meet costs that might arise or become due in the following year. There is always an element of that in any large organisation and provision needs to be made for it. On one level it looks like an underspend, but it has actually been put aside specifically to deal with expenditure that will arise in the following year. I make it clear to the hon. Gentleman that none of the money has been or will be wasted; it will all be spent on the provision of health care for the benefit of patients.
Substantial amounts were included in the underspend. For example, £250 million was deliberately held back and carried over to meet identified expenditure commitments arising in the current year, 2001–02. That would not have been counted in previous years, but a change in Treasury rules means that it is now counted as part of that underspend. There was some capital slippage of about £140 million, spread across approximately 450 trusts. NHS bodies manage a large capital programme, a significant proportion of which is devoted to building projects. Some delays are caused by planning problems; even for such basic reasons as bad weather. That money must be carried forward to the next year, and will not be lost. The hon. Gentleman rightly referred to the problems of underspend. I have tried to explain as best as I can—as a lawyer, and not as an accountant—how I understand those sums to be calculated.
The legislation is a continuation of the existing legal powers that apply to the funding of the new bodies, which will be called strategic health authorities, not health authorities. They will have a different role, but the funding arrangements will be the same as those applied by previous Governments. The hon. Member for North-East Hertfordshire was Member when his party was in government, and the hon. Member for West Chelmsford was a Health Minister. We do not plan to change the rules that satisfied both hon. Gentlemen and the Government then; the rules are a sensible way of funding the NHS and ensuring that the Exchequer does not lose out.