Clause 9 - Funding of Local Health Boards

NHS Reform and Health Care Professions Bill – in a Public Bill Committee at 3:00 pm on 29th November 2001.

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Question proposed, That the clause stand part of the Bill.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales

Clause 9 provides for the funding of local health boards, the setting of the financial duties and the establishment of resource limits. The clause closely mirrors the existing clause 97 in the National Health Service Act 1977 for the funding of health authorities. The clause provides for local health boards to be funded by the Assembly to secure health care for their populations. It also provides for the Assembly to fund up to the amount that is allocated, and also allows for the initial allocation to be adjusted during the year. It provides for the Assembly to make payments to local health boards on their performance, based on specific objectives or criteria. The Assembly will be required to notify local health boards in advance of those criteria if additional payments are

intended to be made on that basis. Part or all of the performance funding will be able to be withdrawn if, subsequent to the additional allocation, the local health board partially or wholly fails to satisfy the set criteria.

When determining local health board allocations, the clause allows for the Assembly to take into account the local health board's expenditure on non-cash-limited funding, which is part 2 expenditure. In addition, it provides for local health boards to pay capital charges to the Assembly and allows the Assembly to ring-fence parts of the allocation for specific purposes. As well as establishing the funding mechanism, it establishes a duty on local health boards not to exceed the sum allocated to them by the Assembly plus any other receipts. It also extends the setting of resource limits to local health boards, as provided for in the Government Resources and Accounts Act 2000. I commend the clause to the Committee.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I apologise in advance if I am displaying an excess of ignorance about the Welsh Assembly. Is there a mechanism in the Welsh Assembly so that, if it wanted to, it could provide free residential care for the people of Wales in the same way that the Scottish Parliament can for the people of Scotland?

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

If the Welsh Assembly decided that it wished to provide free residential care in the same way as is anticipated in Scotland, it would be contrary to Government policy for England. Is there any funding mechanism that the Department of Health in London could use to restrict the money paid to the Welsh Assembly for Welsh health care because it disapproved of decisions taken by the Welsh Assembly?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales

What the Welsh Assembly does on that matter is for the Welsh Assembly. The responsibilities are devolved under the Government of Wales Act 1998. The Assembly can make its own decisions and would have to find its own finances for the scheme.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

The Minister says that the Assembly would have to find its own finances for such a project. Presumably, the money that the Department of Health, or the Treasury, in London gives to the Welsh Assembly to provide health care in Wales is categorised. I imagine that there are rules and regulations about what the money can be spent on. Could the Welsh Assembly spend money sent by the Treasury for health care on another non-health related spending priority? Surely the money is ring fenced in one way. Is it not the case that the Treasury provides money for health care, which the Welsh Assembly devolves throughout the Principality of Wales to provide health care?

I will round the figures to make it simple. Let us imagine that the Government give £1 billion for health care in Wales on the criteria of maintaining current provision. The Welsh Assembly decides to provide free

residential care for the elderly next year, which, for sake of argument, costs £500 million and comes out of the health budget sent by the Treasury. The Assembly would be £500 million short to maintain the same level of health care in the Principality, and that would be a problem. If that is the logic, given that the Government in London do not agree that residential care should be provided free at taxpayers' expense out of Department of Health funds, how could we get around it?

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales

The hon. Gentleman will forgive me for going over what happened in 1998 when we passed the Government of Wales Act. Funding decisions for the Welsh Assembly derive from the Barnett formula and the Assembly has complete autonomy in deciding how to spend the money. Decisions to increase public spending on health will have consequential effects on the Barnett formula that carry over into Wales, but the Assembly can determine whether to use the money for health or something else. Under the devolved settlement, it is entirely within the power of the Assembly.

Question put and agreed to.

Clause 9 ordered to stand part of the Bill.