One of the more dramatic parts of the 2011-12 operating framework is the withholding, by strategic health authorities, of 2 per cent of primary care trust funding.
PCTs will only be able to draw on this money if their business cases are supported by the SHA’s directors of finance.
Even in stable times, slippage would have seen an embarrassing wedge of that £1.8bn still resting in SHAs’ bank accounts as next winter approaches
Two whole per cent. That’s about £1.8bn. Some say withdrawing such a huge sum, with the NHS struggling to meet the “Nicholson challenge”, pretty well ensures central intervention. Others smile at the contradiction of “liberating” the NHS through greater central control. And pragmatists equate £1.8bn with the cost of dismantling the NHS superstructure assembled during the last decade, letting the PCTs’ money fund the PCTs’ redundancy bill.
But what exactly is “non-recurrent” spending? Accountants conventionally classify costs into fixed, variable, and so-called “step costs” that reflect the lumpy nature of cost behaviour. The greater the proportion of variable costs, the better an organisation can respond to market changes.
NHS providers sometimes engage permanent staff using non-recurrent funding, often to aid recruitment. There is a risk involved, but not a huge one. For, as NHS staff are rapidly learning, in the long run all costs are flexible.
In commissioning, however, definitions are more slippery. Few contracts commit PCT resources for more than one year, yet PCTs still rely on local hospitals. Buying in temporary staff to maintain continuity during a transition would presumably be viewed as non-recurrent, but what about that additional £2 per head of population being given to commissioning consortia to support their development? What about next winter’s flu crisis? What about a financial dig-out for a struggling local hospital?
Even in stable times, slippage would have seen an embarrassing wedge of that £1.8bn still resting in SHAs’ bank accounts as next winter approaches. And these are not stable times. SHAs need to decide their priorities, and soon, for the business cases will be many and varied.