4 Funding education and training |
The proposed tariff
162. As we have already observed, the current
arrangements for funding education and training in the NHS are
widely seen as lacking in transparency and accountabilitywith
unfairness in how funds are allocated and too little focus on
quality and value for money. The proposed response to this is
the development of a tariff system, whereby "the money follows
the student", instead of providers receiving a block grant;
and a requirement on providers to account for the service they
163. In Developing the Healthcare Workforce
(December 2010) the Government stated its commitment "to
the principle of tariffs for education and training as the foundation
to a transparent funding regime that provides genuine incentives
within the health sector and minimises transaction costs".
Accordingly, HEE would be made responsible for benchmark pricing
in respect of HEE-funded education;
and a tariff-based approach would be adopted to funding for all
clinical placements (medical and non-medical), as well as postgraduate
medical education and training.
164. Given the substantial financial impact that
this would have for the funding of some providers, implementation
of tariffs would take place over time to avoid destabilising any
provider and allow adjustment to the new arrangements. Options
for managing the transition from 2012-13 would be discussed with
providers and SHAs.
The proposed tariffs would be based on "a detailed costing
] undertaken with a sample of providers".
In the longer term, the DH aspired to tariffs based on "the
cost of education and training, net of any service contribution",
which would avoid cross-subsidisation of service provision from
education and training funds, ensuring that the money followed
the student more effectively.
165. In evidence that we received in autumn 2011
we heard that there was widespread support for the principle of
funding reform. Professor Sowden, of COPMeD, told us that the
current arrangements were:
opaque and through a glass darkly for almost everyone
in the system. You cannot properly explain to anybody exactly
how money flows right to the end point, which is the delivery
of education and training for the student or trainee. That is
not an acceptable position. The aspiration to have a tariff based
system is absolutely right and proper [
] it will take some
time to achieve, but it will be worth the effort.
166. Other witnesses agreed that, while the challenges
involved in constructing more transparent arrangements should
not be underestimated, they were not insurmountable. Professor
Edwards, of MEE, told us that there was a potential model in the
work of the NIHR in unravelling a hitherto "totally opaque"
system for funding research:
No one really knew where it was going or how it was
being used. What they did on day one was to take the money away.
They took it away, gave it back for a three year period and then
produced a very clear plan. It is going to take quite a long time
to work it out.
There was also the example of the work done by NHS
Education for Scotland on the Additional Cost of Teaching fund
(through which clinical placements for medical students are fundedequivalent
to the Service Increment for Teaching in England):
They took four years to have a dialogue with people
locally as to how the money was being used and how it could better
be used, and so on. They have now come up with a really sensible
way in which that money is being properly allocated. You cannot
change things overnight. You will destabilise not only teaching
and training but also the delivery of healthcare. We have to be
very careful, but it is possible to do it if you have that sort
167. We were told in some submissions that non-medical
clinical placements were "currently reliant on good will,
professional responsibility and subsidised funding from other
areas within service provider organisations".
However, the introduction of a dedicated tariff for this purpose
could have the perverse effect of causing providers to opt out
of providing non-medical placements in favour of providing medical
placements. This would be due to the tariff for the latter being
so much greater than that in respect of the former.
168. Other evidence we received raised concerns
that the tariff would be based too narrowly on the cost of training
and would not "take account of the wider potential costs
to services of providing training". This could leave some
providers at a significant disadvantage, "especially in an
environment where healthcare providers are competing with one
another" (as the Government intends in the NHS).
Birmingham Children's Hospital FT was concerned about the potential
impact of tariffs on specialist providers, given "the higher
level of pay for medics that specialist Trusts have to fund to
top up basic tariff funding".
169. There was strong independent-sector support
for the principle of tariff funding, on the basis that it would
allow such providers to make a full contribution to training and
be appropriately remunerated. We heard from independent-sector
healthcare providers that they were particularly keen to be more
involved in postgraduate medical training but found this difficult
as they were largely excluded from the current system (financially
170. The Priory Group, "the largest independent
sector provider of mental health, specialist care and specialist
education services by number of beds" (which provides a significant
number of NHS-funded services), welcomed the commitment to "transparent
funding flows for education and training". It told us that,
under the current system, "funding arrangements are not consistently
applied between regions in England, and funding is often not made
available to independent sector providers".
We were subsequently also told by Mr Worskett, of the NHS Partners
Network, that his organisation liked:
the very sound principle that anybody who is appropriate
to do training should be allowed and used to do it, that the money
should follow the trainee [
] I am sure the people who belong
to the Partners Network would want to participate very fully in
that and bear their full burden of the training responsibility.
171. The DH, for its part, was unable in autumn
2011 to give us any more information about its plans for tariff-funding,
beyond explaining the principle
and assuring us it would "move with care" to avoid destabilisation.
172. Dame Julie Moore, of the NHS Future Forum,
told us as follows about the Forum's proposal for a quality premium
to reward excellence in training:
The quality premium you get now for clinical care
[under Commissioning for Quality and Innovation (CQUIN)] is a
bit of the budget that is held back. If you achieve it, you are
given that extra and it is a low percentage, 1% rising to 2%.
It could be done similarly to recognise high quality education.
Of course very low quality education would be recognised by it
Her Forum colleague Dr Nightingale explained that
a quality "metric" would have to be developed.
Professor Tooke, also of the Forum, said this would start with
"process measures and stakeholder feedback" but ultimately
should be based on measurements of improvement in the quality
of patient care.
When we asked Professor Tooke whether the quality premium would
apply to medical schools, he appeared to indicate to the contrary.
173. We later heard approval of the quality premium
in principle from several quarters, including the independent
sector, NHS Employers
and two trade unions (the BMA and the RCN). Dr Dolphin, representing
the BMA, thought that "We should learn from the tariff for
service and make sure that we do not end up with a tariff that
simply rewards activity." Although measuring quality in health
training was difficult, he thought it could be done.
174. In From Design to Delivery (January
2012) the DH reiterated its commitment to tariff-based funding
for all clinical placements (medical and non-medical) and for
postgraduate medical programmes. It noted that this had been supported
in consultation responses and by the Future Forum. The Department
confirmed that HEE would in future negotiate benchmark prices
for non-medical education with higher-education providers.
175. The DH had been working with stakeholders
to develop tariffs for clinical placements and consider how best
to implement them without causing unnecessary destabilisation.
They would be implemented "in the hospital sector from April
2013, phased over a number of years"; and the Department
would work with SHAs and providers on transition plans during
176. At the same time, the DH was working with
stakeholders on developing tariffs for postgraduate medical training
(including GP training). This would continue and would include
consideration of "an appropriate pace of transition, taking
into account the financial impact of the other tariffs".
177. Lastly, in order to have a robust funding
mechanism, "and to reduce the amount of cross subsidisation",
the Department planned "to set the education and training
tariffs alongside the service tariffs in future." This would
take time to develop and embed. The Department would:
work with stakeholders to revise the reference costing
methodology to identify the costs of delivering education and
training alongside service costing. Until the tariffs can be based
on the revised costings, we will seek to minimise the impact of
the changes to education and training income to allow providers
to plan accordingly.
178. When Mr Rentoul, of the DH, appeared before
us in March 2012 he told us that, in respect of the tariff for
clinical placements, there would be "a complex transition"
which was "going to take some time" and the DH "working
with the strategic health authorities over the next few months
to develop transition plans".
Regarding the Future Forum's proposed quality premium, Mr Rentoul
told us that "We are supportive of that",
but it was still "work in progress".
He indicated that this was linked to the proposed Outcomes Framework,
which would provide "a better set of metrics and indicators
that support being able to benchmark performance" and that
the premium would operate along the lines of CQUIN.
Conclusions and recommendations
179. The current arrangements
under which providers are paid by the NHS for education and training
are anachronistic and anomalous. Payment is only partially based
on student or trainees numbers; it is not linked to quality; it
is unjustifiably inconsistent between different professional groups,
parts of the country and types of provider; and there is an almost
total lack of transparency about how it is spent.
180. Accordingly, we welcome
the Government's intention to move payment onto a tariff basis,
including a quality premium, as recommended by the NHS Future
Forum. However, we note that there is so far slender evidence
of progress in converting this desirable policy into a system
that will work in practice. Bearing in mind that implementation
of the new system is supposed to begin in April 2013, we believe
this work needs to attract a greater sense of urgency.
181. While taking this work
forward the Government needs to recognise that there are significant
difficulties involved in constructing a workable tariff. It is
important that the transition to any new system avoids unnecessary
turbulence, andin particularthreats to the quality
of clinical services.
The proposed levy
182. In Equity and Excellence (July 2010)
the Government stated that:
All providers of healthcare services will pay to
meet the costs of education and training. Transparent funding
flows for education and training will support the level playing
field between providers.
In Developing the Healthcare Workforce (December
2010) it was reiterated that there should be "a level playing
field in the investment and deployment of education and training
funding", enforced by Monitor.
183. The Government further stated as follows:
Relying solely on market levers to secure sufficient
planning and investment in essential healthcare skills is an unacceptable
risk for healthcare provision in this country. It would also be
unfair if only some healthcare providers bore the costs of providing
skills to the local labour market. Over time we intend to move
to a levy on healthcare providers to provide the investment needed
to train the next generation of healthcare professionals. This
will provide a level playing field for healthcare providers and
ensure that everyone invests in the totality of education and
training required to train future healthcare professionals.
184. The basis for the proposed levy was further
elaborated as being to ensure "that those who are chosen
to train the future workforce are rewarded in doing so, and those
that undertake less training than they receive the benefit from,
contribute to the training provided by others."
This would help render transparent "the contribution and
benefits for individual providers".
It would also "more closely align funding and incentives
with the need to secure supply of skills without chronic shortages
or oversupply." It was acknowledged that such a significant
change would take time to implement, in order to develop appropriate
arrangements and avoid unnecessary disruption. Staged implementation
was expected, with a notional levy preceding an actual one.
A number of consultation questions were asked, including whether
the levy should be paid by providers of non-NHS services who "deliver
their services using staff trained by the public purse".
It was also asked whether public health education and training
should be funded by an equivalent levy on public health providers
or through central funding.
185. In From Design to Delivery (January
2012) the DH noted that there were concerns about the practical
implementation of the levy, with fears of "potential side
The Department promised to "undertake further work and consult
widely on how such a levy could be designed, and the possible
impact it would have, before we produce firm proposals for formal
consultation and possible legislation."
186. It has often been argued that, as Dr Dolphin
of the BMA noted in evidence to us, the independent sector has
not been prepared to match the training commitment of the NHS,
treating training as "an externality that they can rely on
others [i.e. NHS organisations] providing for them".
It is clearly right, particularly in view of the expanding role
of the independent sector in care provision in recent years, that
the independent sector (whether providing NHS-funded care or not)
should contribute to the proposed new levy.
187. The Priory Group accepted the principle
of a levybut was apprehensive about ensuring that it would
be remunerated properly for the training it undertook itself.
It told us that "Before [a levy] is implemented it is vital
that clarity and equity of funding flows [i.e. the education
and training tariff system] is established first in order that
the levy can deliver maximum benefits."
The same view was expressed to us by the Foundation Trust Network.
188. The NHS Partners Network, however, was straightforwardly
hostile to the whole idea of a levy. It argued that imposing a
levy on the independent sector could end up being unfair to private
providers, "distorting competition" and actually jeopardising
existing training provision in the sector, which is often provided,
free of charge, to the benefit of the NHS.
189. The organisation's Director, Mr Worskett,
elaborated on this in oral evidence. He told us that, while the
existing system contained "a lot of distortions", it
was "not working that badly".
The danger of introducing a levy was that it could introduce "a
different set of distortions".
There had long existed a "pluralist system", in which
"health professionals of all categories" moved back
and forth between NHS and other providers, each undertaking different
proportions of work in each sector.
For a levy to be fair, the costs and benefits of training to the
various players in this system would need to be apportioned precisely
by "unravel[ing] this complex plural structure".
However, "Trying to unscramble all of that is a huge challenge."
Mr Worskett suggested that "we will get into a terrible morass
of interlinked issues"such as the additional costs
incurred by private providers due to their inability to use medical
trainees in carrying out surgery (in contrast to NHS hospitals).
190. He told us that the independent sector was
already engaged in (largely unrecognised) training of various
kinds at its own expense, from which the NHS benefited.
Instead of paying a levy, he preferred to see the independent
sector make its contribution to training "through doing more
of the training ourselves and putting the training in"although
he also indicated that he expected the independent sector in future
to be paid for this under the proposed tariff.
191. Ms Taber, the Director of Independent Healthcare
Advisory Services, was also clearly hostile to the idea of a levy.
When we asked her whether she wished to see a levy, she told us
"No, not particularly. I do not."
She thought that it was necessary to dispel the "myth"
that the independent sector undertook no training. She agreed
with Mr Worskett that much training was currently undertaken in
the private sector, free of charge, to the benefit of the NHS
but that this was largely unacknowledged.
192. Like Mr Worskett, she thought that, rather
than paying a levy, the independent sector should "work with
the LETBs to make sure there are training opportunitiesso
that we pay our way that waythat will be much better."
She added: "I see us being almost mandated or encouraged
to provide training opportunities so that we contribute financially
that way, in that we provide training in the areas the independent
sector works in."
193. When we heard evidence from healthcare trade
unions on this issue they expressed support for a levy paid by
all providers, including the independent sector. Dr Carter, of
the RCN, pointed out that there were complications around, for
instance, the ability to pay of a small residential homebut
this could be addressed through taking a proportionate approach.
194. When the Minister and officials from the
DH gave evidence to us in March 2012 they were only able to tell
us that the Department was still considering whether to proceed
with a levy and, if so, what form it would take. In this regard
there was much work still to be done with stakeholders.
The Minister told us that there would be some sort of contractual
requirement on the independent sector to make a contribution to
trainingbut it had yet to be decided whether this would
take the form of paying a levy.
195. Dr Hamilton, the Director of Medical Education,
drew attention to an issue that had been raised with the DH in
an unintended consequence might be that [a levy]
would be detrimental to the voluntary or third sector, such as
Macmillan nurses, who also provide services. If the levy were
to apply to them, that would seem to be unfortunate. That is one
of the reasons why it has gone back to be thought about in more
Conclusions and recommendations
196. We support the Government's
intention to introduce a levy on all healthcare providers (whether
or not they supply services to the NHS) to provide a more transparent
and accountable system of funding for education and training in
the health and care sector.
197. We heard from some independent-sector
representatives that they fear a levy would put them at an unfair
disadvantage. However, we are unconvinced by these arguments.
If there is to be a comprehensive tariff system for funding education
and training, as the Government intends, it should be possible
for independent-sector providers to be remunerated for training
that they undertake on a fair and transparent basis, alongside
198. We urge the Government
to ensure that the levy system covers social care services, as
well as healthcare, to ensure that the education and training
system reflects the policy intention to deliver more integrated
health and social care services.
199. We recognise that there
are particular concerns about the potential effect of a levy system
on smaller voluntary-sector organisations. However, we believe
that it is possible to construct workable exemption arrangements
to cover these cases and this issue cannot be used to justify
the current opaque and unaccountable system.
200. Although, however, we support
the Government's policy objective in this area we noteonce
againthat there is slender evidence of progress in converting
this desirable policy into a system that will work in practice.
We believe this work needs to attract a greater sense of urgency.
FUNDING IN THE TRANSITION PERIOD
201. Although the Government has made clear its
intention to fund education and training activity through a system
of tariffs and levies, and we support this intention, there remains
an urgent need to maintain the current commitment to education
and training during the transition.
202. Although it had been reported that the
Multi Professional Education and Training levy (MPET) budget would
be cut by up to 15 per cent over three years, beginning in 2011-12,
Mr Rentoul, of the Department, informed us that, while possible
cuts had been discussed with SHAs, this had been before the overall
NHS funding settlement was clear. MPET funding for 2011-12 was
actually broadly remaining the same in cash terms.
Tim Gilpin, the Director of Workforce and Education for the NHS
North of England SHA cluster, confirmed this and said that a similar
financial settlement was expected in 2012-13.
203. However, another witness drew attention
to the likely effect of inflation on net funding levels;
and it has also been pointed out that the MPET budget is being
required to meet significant new cost pressures including from
health visitors and psychological therapies as well increased
benchmark prices for courses funded from the Non-Medical Education
and Training levy.
In addition to these cost pressures, there is concern that "raiding"
of funds by SHAs might take place in the transitional year. Dame
Julie Moore, of the NHS Future Forum, told us in January 2012
that the Forum had recommended HEE be given control of "the
full sum that was available this year".
204. Sir Alan Langlands, of the HEFCE, told us
that "We know, from our relationships with SHAs for nursing,
midwifery and allied health professions, that over the next three
years we are going to see a cut of 14%."
million+ told us that "Universities in England have confirmed
that the number of commissions is likely to decrease by around
205. The Nursing and Midwifery PAB told us it
was concerned that SHAs were reducing numbers of student nurse
commissions, regardless of workforce demand.
Manchester University and AHSC referred to 10 per cent cuts in
nursing commissions (in 2011-12),
while UNISON gave us a figure of 20 per cent.
According to million+, some universities were reportedly facing
cuts of 50 per cent in midwifery courses.
206. Mr Rentoul, of the DH, told us that he did
not recognise these statistics and that midwifery commissions
were actually "still at near record levels". He did,
however, acknowledge that there had been some reduction in the
number of nursing commissions, reflecting the end of a period
of significant growth in NHS funding.
When we subsequently questioned the Minister on midwife numbers
he told us this was certainly an area where more staff were needed,
but he maintained that there were currently record numbers in
training; and there had been significant growth in the workforce
in recent years.
207. The AHP-PAB drew attention to the fact that:
Significant reductions in education commissioning
for pre-registration AHP student numbers are taking place led
by the SHAs/SHA clusters. These reductions are set in the context
of increasing demand on MPET and are being implemented without
taking account of the advice of the AHP-PAB.
This was reinforced by evidence from the Allied Health
Professions Federation, according to which commissions had been
cut by up to 30 per cent in recent years.
Manchester University and AHSC told us of a 6.4 per cent cut in
AHP commissions in 2011-12.
208. The current system is supposed to allocate
specific funds to education and training through a complex series
of block grants. It is widely believed that these funds voted
are regularly "raided" for other purposes. Mr Gilpin
told us that this had not occurred in his region. A small proportion
of funding had been held in reserve, but this had still been spent
on education and training (either on capital projects or to cover
209. Mr Royles, of NHS Employers, acknowledged
in a later evidence session that there were allegations of raiding,
but was sceptical as to whether it did actually occur: "What
some people mean is that money that they think was ring-fenced
to one particular profession is not spent in that profession but
is spent somewhere else." There was also a misapprehension
that arose from the disjunction between the financial year (which
ran from April to April) and the academic year (which ran from
September to September).
Mr Royles did, though, endorse the principle of ring-fencing education
and training funds at the national level.
210. When we asked Mr Rentoul of the DH, in November
2011, whether raiding of education and training budgets was now
going on, he told us "Not to a great extent". He seemed
to indicate that the case for giving HEE control of funding was
predicated on considerations other than the need to prevent raiding
of education and training budgets.
When Mr Rentoul again appeared before us in March 2012, alongside
the Minister, both agreed that significant raiding of education
and training budgets had occurred in the pastbut insisted
that "in recent years there has been less of it."
211. Other witnesses, however, insisted both
that substantial raiding had occurred in the past and that it
was continuing. Professor Sowden, of COPMeD, told us that raiding
of budgets by SHAs:
has reduced the investment in the education and training
infrastructure for all professional groups. In some areas of the
country, that has been much more of a problem than others. It
has continued in the last couple of years, in some areas, to the
detriment of the system. Those systems are likely to have to pay
a price for it in due course.
We also heard from Professor Les Ebdon, the Chair
of million+, that:
One practical proposal to safeguard education and
training is to ring fence the education and training budget. It
has been, in recent years, a soft target for savings and we have
seen damage, particularly at the healthcare assistant, nursing
and midwifery end of the spectrum.
212. Dr Carter, of the RCN, specifically challenged
the account given by Mr Royles:
despite what people say, the sad fact is that when
the health economy is in trouble it is the education and training
budgets that are one of the first to be raided. We know, because
they tell us, that our members cannot get study leave and the
whole continuing professional development is compromised.
He thought it was vital that in the new system LETBs
were "set up as legal entities [
] so that the money
is ring-fenced, they produce budgets and we know that the money
ends up where it is intendedthat is, to develop and educate
213. Dame Julie Moore, of the NHS Future Forum,
told us that the Forum wanted the new system:
to be very transparent so that people knew where
the money was going [
] Once HEE gets the money, it will
go down because it has nothing else to spend it on.
214. When officials from the Department gave
evidence in March 2012, Dr Hamilton, the Director of Medical Education,
assured us that HEE, by holding LETBs to account for their expenditure
of education and training funds, would be able to make sure those
funds were being used for their intended purpose. Regarding arrangements
for the transition year of 2012-13, Mr Rentoul told us that:
we have a service level agreement with each of the
SHAs for their MPET money with some key performance indicators
and what they have to deliver for it. We monitor and track progress.
For the 2012-13 financial year, we will continue to do that to
protect the money.
Conclusions and recommendations
215. We heard from the Department
that its policy is currently to keep NHS funding for education
and training broadly the same in cash terms from year to year.
Against a background of inflation and major cost pressures, this
is an extremely challenging financial settlement
216. We have heard evidence
that education commissions are being significantly cut. Given
the wider financial situation in the NHS, there is also the risk
that SHAs will raid education and training budgets in 2012-13,
as they have done before.
217. "Raiding" of
education and training funds for other purposes has a long history.
While we welcome the Government's willingness to apply a "ring-fence"
to the Multi Professional Education and Training levy, we are
sceptical about its effectiveness. We believe the Government's
plans for more fundamental reform discussed earlier in this chapter
represent a more realistic way of safeguarding education and training
activity within the health and care system. In the meantime the
Government must act to safeguard funding for education and training
240 Department of Health, Developing the Healthcare
Workforce - A consultation on proposals, December 2010, para
Ibid., para 8.12 Back
Ibid., para 8.13 Back
Ibid., para 8.14 Back
Ibid., para 8.15 Back
Q 146 Back
Q 145; cf. Qq 117, 146 Back
Ev w196 Back
Loc. cit.; Ev w161 Back
Ev w98; cf. Ev w33 Back
Ev w87 Back
Ev w18, w205 Back
Ev w18 Back
Q 350 Back
Qq 73-4 Back
Q 75 Back
Q 258 Back
Loc. cit. Back
Q 264 Back
Q 358 Back
Q 392 Back
Department of Health, From Design to Delivery, January
2012, paras 131-4 Back
Ibid., para 136 Back
Ibid., para 137 Back
Ibid., para 138 Back
Q 516 Back
Q 518 Back
Q 519 Back
Loc. cit. Back
Department of Health, Cm 7881, July 2010, para 4.33 Back
Department of Health, Developing the Healthcare Workforce -
A consultation on proposals, December 2010, para 6.21 Back
Ibid., para 8.2; cf. para 1.4 Back
Ibid., para 8.16 Back
Ibid., para 8.17 Back
Ibid., para 8.18 Back
Ibid., Question 36 (p 58) Back
Ibid., para 7.10; Question 27 (p 53) Back
Department of Health, From Design to Delivery, January
2012, para 140 Back
Ibid., para 141 Back
Q 377 Back
Ev w18 Back
Ev w74 Back
Ev 150; Charlotte Santry, "Private sector warns of training
levy danger", Health Service Journal, 10 November
2011, pp 10-11 Back
Q 350; cf. Q 356 Back
Q 350 Back
Q 351 Back
Q 355 Back
Q 351 Back
Q 356 Back
Qq 305, 350, 355, 362-3, 366 Back
Q 353 Back
Q 350 Back
Loc. cit. Back
Qq 335, 340-1, 354-5, 359-60, 363-6; cf. Ev 166 Back
Q 347 Back
Q 349 Back
Qq 390-1 Back
Qq 523-5 Back
Q 526 Back
Q 527 Back
Ev 141; cf. South Central Strategic Health Authority, "Workforce
demand and supply modelling to 2010-15", August 2010, p 5 Back
Q 69 Back
Q 110 Back
Loc. cit. [Mr Sharp] Back
Ev w195; Qq 71, 87, 110; Seamus Ward, "Training on target?",
Healthcare Finance, March 2011, p 19 Back
Q 252 Back
Q 145 Back
Ev 141 Back
Ev 106 Back
Ev w199 Back
Q 387 Back
Ev 141 Back
Q 72 Back
Q 495 Back
Ev 109 Back
Ev w240 Back
Ev w199 Back
Qq 100-3 Back
Q 357 Back
Q 345; cf. Ev 161 Back
Q 18 Back
Q 515 [Mr Rentoul] Back
Q 164 Back
Q 176 Back
Q 387 Back
Q 252 Back
Q 513 Back