Select Committee on Health Memoranda

Memorandum by the Department of Health




  4.1  Hospital and Community Health Services current and capital resources.

  4.1a  Could the Department provide tables showing health authority gross expenditure on HCHS by service sector and age group for the latest year for which data are available? Could the Department include details of spending by age group?

  4.1b  Could the Department provide a table showing planned capital spending from 2000-01 to 2001-02?

  4.1a  Could the Department provide tables showing health authority gross expenditure on HCHS by service sector and age group for the latest year for which data are available? Could the Department include details of spending by age group?

  1.  The data requested are shown in table 4.1.1.

  2.  The latest year for which disaggregated data are available is 1999-2000 since the allocation of programme-age related activity data is reliant on patient level data from the Hospital Episode System (HES).

  3.  The proportion of HCHS expenditure by programme of care is as follows:

Programme of Care
Proportion of expenditure

Acute services
50 per cent
Mental health
12 per cent
Services intended primarily for the elderly
9 per cent
Other services
18 per cent
Learning disability
6 per cent
5 per cent

  4.  The proportion of HCHS expenditure by age group is as follows:

Age band
Proportion of expenditure

All births
6 per cent
Age 0-4
9 per cent
Age 5-15
4 per cent
Age 16-44
24 per cent
Age 45-64
18 per cent
Age 65-74
14 per cent
Age 75-84
16 per cent
Age 85+
9 per cent

  5.  Services aimed specifically, or mainly, at the elderly account for 9 per cent of total HCHS expenditure. However, those aged 65 and over accounted for 39 per cent of total expenditure despite being only 16 per cent of the population. This is mainly due to high levels of spend in other sectors, with 41 per cent of acute expenditure, and significant proportions of expenditure on services for mentally ill people being used by this age group.

Table 4.1.1


  4.1b  Could the Department provide a table showing planned capital spending from 2000-01 to 2001-02?

  6.  The information requested is given in the attached table

Table 4.1.2

NHS CAPITAL SPENDING 2000-01 to 2001-02 (resources)

4.2  Family Health Services current resources

  Could the Department provide a table showing gross expenditure on Family Health Services in 1999-2000?

  1.  The information requested is contained in Table 4.2.1.

Table 4.2.1


4.3  General Medical Services resources

  4.3a  Could the Department give an account of the funding streams for the General Medical Services budget and provide a trend analysis?

  1.  The two funding streams that make up the GMS budget are the discretionary—(cash-limited) and non-discretionary (non cash-limited) budgets. Table 4.3.1 gives a trend analysis.

Table 4.3.1


  2.  GMS GPs as a whole receive an average level of pay per GP plus reimbursement of all expenses. Some of these expenses are reimbursed directly in whole or part. Of these direct reimbursements, some eg a proportion of staff, premises and IT costs are met from discretionary spending; pay and remaining expenses are delivered through non-discretionary spend. Actual expenditure each year may deliver more or less than the profession's entitlement to pay or expenses. This outcome can only be finalised when a firm estimate of GMS expenses is available some two to three years after year end. Over or underpayments are then corrected in subsequent years.

  3.  From 1998-99 PCG and HA (and from 1999-2000) PCT, discretionary expenditure on reimbursing GMS GPs' practice staff, premises and IM & T expenses has been protected by the introduction of the "GMS expenditure floors". These require each PCT/G or HA to deliver year-on-year increases in GMS discretionary spend which are at least in line with GDP.

  4.  All elements of a PMS Pilot's allocation are funded by transfers of money from the national GMS non-discretionary budget or from a health authority's or PCT's unified budget.

  5.  Please note that GMS discretionary and non-discretionary data lines are taken from the latest 2000-01 Departmental Report—Table 6.12 FHS gross expenditure. It should be noted that due to an oversight the GMS data also reported at table 7.3 on key statistics was not amended to mirror these figures. These corrections will be actioned in the next publication of the Departmental report for consistency purposes.

  4.3b  Could the Department provide an account of capital allocations for primary care investment and the sources of funding (both HCHS capital and revenue and Family Health Services budgets) over the last eight years for England and by health authority? Can they reconcile the General Medical Services budgets against the HCHS and Family Health Services budgets?

  6.  There are no capital allocations specifically for GMS or PMS. The majority of funding for capital in GMS or PMS is made available through revenue funding streams: HA revenue allocations which includes GMS discretionary and PMS funding and GMS non-discretionary spend. Capital related expenditure in the discretionary element includes cost rents, improvement grants and computer purchases and PMS funding, while the non-discretionary element includes GMS notional rents.

  7.  GMS capital is allocated as revenue because HAs do not own the assets acquired. A transfer from HCHS capital to revenue is made each year to fund an element of the total discretionary GMS provision.

  8.  The table below shows the transfers of funds made for year's 1993-94 to 2000-01. Details of transfers for earlier years are not available.



  4.3c  Could the Department provide a trend analysis of the costs of the rental reimbursement schemes (in graphic form) by category (eg notional, actual etc) and an explanation for any changes?

  9.  The information is shown in table 4.3.2 below and in figures 4.3.1 and 4.3.2.

Table 4.3.2


Explanation of Changes

(i)  All data is based on FIS(FHS)4 part B and part C Health Authority financial returns respectively

(ii)  Non Discretionary:

*  From 1997-98 Actual rents was split to additionally show introduction of Health Centre rents incurred.

*  Health centre rates were created in 1997-98 to identify costs incurred.

(iii)  Discretionary

Again with the introduction of monitoring Health centre spend from 1997-98—Improvement Grants have been split to separately identify Health Centre spend.

(iv)  The decrease in cost rent spend in 1999-2000 is due in part to GPs having transferred out of GMS into PMS pilot status. It is also suspected that HAs are misreporting spend correctly between their cost and notional rents which would account for the continued increase in notional rents.

(v)  Data up to 1995-96 is based on the returns of the former 90 FHSAs. Data from 1996 onwards is based on Health Authority returns.

Source:   Financial returns from the former 90 Family Health Service Authorities (up to 1995-96) and then the 100 England Health Authorities.

  4.3d  Could the Department provide an account of the total value of the asset base in primary care by category of owner, eg HA, LA, GP, private provider?

  10.  The total value of premises occupied by GPs is around £2.23 billion. This comprises £1.75 billion owner-occupied premises, £280 million rented from the private sector and £200 million for NHS-owned health centres.

  4.3e  Could the Department provide an account of estimates of backlog in repairs and maintenance for primary care nationally and by health authority?

  11.  Financial data on the value of backlog repair and maintenance for the GP estate is not held centrally. However, from a total of around 11,000 premises, analysis of a sample of 3,912 rented (excluding health centres) and notional rented premises showed the following:

  4.3f  Could the Department provide data on the sources of finance for primary care premises and debts outstanding?

  12.  The vast majority of GP premises are funded through private capital borrowed from the range of specialist and high street financial institutions and banks. Details of outstanding loans are considered commercially sensitive and are not available. In addition, NHS LIFT is a new initiative for which contracts have yet to be signed. Please see attached Annex A on NHS Lift rationale

  4.3g  Could the Department provide baseline data on the changing ownership of primary care premises and provide details of the top ten new provider companies?

  13.  The ratios for GP premises are 63 per cent owner-occupied, 21 per cent private sector owned and 16 per cent occupying NHS-owned health centres. To date, premises built by third party developers have mainly replaced existing premises already rented in the private sector. It is expected therefore that the above ratios currently remain constant.

  14.  The leasing of purpose built premises to GPs is still a relatively new concept involving an increasing number of developers with varying numbers of completed projects. A "top ten" list of companies is not yet feasible in this maturing sector of the GP estate. However, the Department has issued standards of size, design, construction and lease terms that all third party developers should give regard when building premises suitable for modern primary care.

  4.3h  Could the department provide data on practice premise size (single handed, 1-4, 4-8, 8-12, 12 plus and average list size) by ownership category?

  15.  We do not hold this information. The survey/sampling exercise mentioned earlier (4.3e) is not robust enough yet to indicate the proportion/numbers of different sized practices occupying either leasehold or freehold property.

4.4  Inflation

  4.4a  Could the Department give an explanation as to the level of funding set aside for inflation in 2001-02? In particular, can it give the average inflation funding allocated to each health authority, the average pay awards to each (subjective) staff group and the inflation assumptions for non pay including capital charges?

  4.4b  Could the Department provide a breakdown of the components of the health specific inflation indices for revenue spending on HCHS and Family Health Services respectively, together with capital spending on HCHS, for 1998-99 and 1999-2000, together with estimates for 2000-01? The tables for the HCHS should show separate inflation indices for Review Body staff and non-Review Body staff pay, and whatever other breakdowns of staff are available.

  4.4c  Would the Department state what the increase in expenditure on the NHS has been since 1992 in cash terms, real terms (GDP deflator) and real terms (NHS deflator)?

  4.4d  Would the Department provide a table showing the construction of the NHS inflation index from main sub-indices of pay and other factor costs since 1992, and comment on the assumptions underlying this construct? Would the Department provide the weights used for each sub-index, for each year?

  4.4a  Could the Department give an explanation as to the level of funding set aside for inflation in 2001-02? In particular, can it give the average inflation funding allocated to each health authority, the average pay awards to each (subjective) staff group and the inflation assumptions for non pay including capital charges?


  1.  NHS funding will rise by almost £4.2bn in 2001-02—equivalent to 6.9 per cent real terms growth. This funding was agreed following the outcome of both the 2000 Spending Review (SR2000) and the Chancellors Budget statement in March. The Department made assumptions about the pay, price and demand increases likely over the next three years, as well as efficiency and other value for money improvements. These assumptions informed the debate on funding levels for future years.

  2.  In 2001-2002 health authorities received on average an 8.9 per cent increase in resources. Additional funds have also been allocated through other mechanisms, such as centrally held Modernisation monies and via Capital allocations.

  3.  This overall allocation will help the NHS to meet healthcare pressures reflected in local Health Improvement Plans. However, it is for health economies, including health authorities in partnership with NHS Trusts, Primary Care Groups and local authorities, to determine how best to use their funds to meet national and local priorities for improving health and modernising services. The significant additional resources available will aid them in this process.

  4.  It is not, therefore, possible to provide average 'inflation' funding allocated to each health authority. The Health Service Cost Index (HSCI) covers England only and so a retrospective view is also not possible. It should be noted that the Market Forces Factor (MFF) used in allocations will provide a level of adjustment for various factors which affect prices in each health authority.


  5.  The table below shows the settlements awarded to those staff whose pay arrangements are determined by the Review Bodies.

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Prepared 17 January 2002