Primary care trusts have failed to control demand for hospital services by transferring care into the community, research from the Audit Commission has found.

In its report More for Less the commission said all of the 6.5 per cent increase in PCT funding in 2008-09 was swallowed up by acute trusts, despite the increase in the tariff being much less at just 2.3 per cent.

6.5% - Increase in PCT funding

2.3% - Increase in NHS tariff

6.8% - Increase in acute trust income

This was because the number of inpatients increased by 4 per cent and the number of outpatients by nearly 8 per cent - eating up all of the 4.1 per cent real terms gap between NHS commissioners and acute providers.

The report says these figures “suggest that PCTs made little or no inroad in 2008-09 to transferring care from hospital or in dampening demand”.

The commission said the “most telling figure” was the 7.8 per cent increase in outpatient numbers, as these represented the “future order book” for inpatient care.

PCTs often suspect acute trusts deliberately refer outpatients for follow-up appointments to inflate their income under the tariff. But Audit Commission managing director of health Andy McKeon said he suspected the growth in outpatients was instead “something we have now just noticed” due to new transparencies in the system.

Despite the increase in income for acute trusts, the commission noted average unit costs fell by 1.8 per cent in 2007-08 and 2.2 per cent in the first quarter of 2009-10. This was because the biggest growth in patient volumes was in lower cost procedures, particularly diagnostics, which rose by 12 per cent in 2007-08.

The commission’s report comes as PCTs are starting to report serious financial difficulties. NHS Peterborough said it was 2.5 per cent over its budget - or £3.4m - by the end of September, having requisitioned half of its £2.9m surplus from the last two years.

The PCT plans to break even by the end of the year, but only by using the other half of its surplus. Director of finance David Bacon told HSJ this was being done with the agreement of the strategic health authority.

However, the Department of Health has previously said only half the total £1.8bn NHS surplus held at the end of 2008-09 should be spent by the end of 2010-11.

Almost £1m of the Peterborough PCT’s overspend is with a local private hospital. Mr Bacon said that represented patient referrals made under the extended choice network, which were paid for at NHS tariff rates.