Monitor believes NHS England would be overstepping its legal powers if it sought to take control of trusts’ investment spending, HSJ understands.

Earlier this month, HSJ revealed NHS England was setting up a “project appraisal unit” to oversee both capital and revenue investment spending by itself, clinical commissioning groups, NHS Property Services Community Health Partnerships and NHS providers.

An NHS England spokeswoman confirmed the last category included both NHS trusts and foundation trusts.

The unit is being established to evaluate and approve business cases for any investments that could commit NHS England to future spending.

HSJ has now learned that Monitor’s legal advice on the subject states NHS England has powers to control investment spending decisions by CCGs, but not providers.

The advice says NHS trust spending is subject to the oversight of the Department of Health and NHS Trust Development Authority but foundation trusts are subject to the Monitor finance regime.

Monitor’s line is that NHS England has powers neither to require providers to submit business cases for approval nor to directly control trust or foundation trusts’ spending decisions.

An NHS provider source said: “NHS England appears to be in danger of imperial over-reach beyond its remit - on a not infrequent basis.”

A spokeswoman for NHS England said that, while “it is for the provider trust to determine whether or not formal commissioner support is required to sustain its business case”, trusts should submit their investment plans where they would tie commissioners to spending commitments.

She said this policy is based on best practice set out by the Department of Health and the Treasury.

The spokeswoman added: “DH and Treasury business case guidance establishes that it is best practice for provider trust business cases to demonstrate relevant commissioner recognition of, and support for, income and activity assumptions that are material to the sustainability of the proposition.”

If a provider’s business case required NHS England to commission relevant services to support it, NHS England “would need to assure relevant aspects of that business case” and recommend that its board formally approved the assumptions underpinning the trust’s investment plan.