The government has said it accepts the case against the 'double deficit' accounting system for acute trusts - but has delayed a decision on whether to scrap it until the end of this financial year.

The government has said it accepts the case against the 'double deficit' accounting system for acute trusts - but has delayed a decision on whether to scrap it until the end of this financial year.

NHS chief executive David Nicholson said the decision would also hinge on the service balancing the books in April.

The NHS Confederation said it was 'very disappointed' by the failure to announce a decision, describing this week's statements, which came alongside the NHS operating framework for next year, as 'a missed opportunity'.

Mr Nicholson's comments were part of the government's response to a report by the Audit Commission, which called for an end to the system by which acute trusts in deficit are forced to pay it back twice over, in the form of a surplus to match the debt the following year.

The phrasing of Mr Nicholson's statement, and accompanying paragraphs in the operating framework, suggests that the government could be attempting to exert 'one last push' from the most financially troubled trusts before getting rid of the widely disliked accounting penalty.

Mr Nicholson said: 'We have been looking at resource accounting and budgeting (RAB), and we have not yet finally decided what we will do, but if the NHS achieves financial balance that will give us the opportunity to make a decision.

'What we have said about RAB is pretty clear: if the NHS delivers targets this year and gets to financial balance and more organisations are in run-rate balance, it gives us the opportunity and resource to do it.'

HSJunderstands that the total NHS net deficit is currently at about£490m - compared with a£500m contingency fund created by the DoH from central budgets.

The framework says it recognises the rationale behind the Audit Commission's recommendation to get rid of RAB for acute trusts.

It sets out two reasons for the delay in reaching a decision: the need to create a 'resource buffer' funded by the NHS to absorb the costs of eliminating RAB, and the need to demonstrate that trusts have the financial discipline to operate outside the system. It also stresses that trusts would be expected to recover their cash positions.

Mr Nicholson added: 'There will be no free lunch: the NHS needs to generate enough unallocated resource to enable us to reverse RAB if we have financial balance.'

The framework - launched alongside Mr Nicholson's first podcast, revealing his messages to the NHS - sets out what he describes as an 'increasingly rules-based system'.

Under an attached model contract, primary care trusts will be able to fine acute trusts by up to 2 per cent for carrying out unagreed activity or moving too slowly on the 18-week target.

DoH director of commissioning Duncan Selbie said the penalties 'should only be implemented once everything else has failed'.

Mr Nicholson told HSJthat the contract would help to 'rebalance the power' between commissioners and providers. He also said trusts will be expected to avoid public disputes over payment for activity.

'We would expect few if any public disputes between NHS organisations - they will have all the information they need about activity and what is expected, and I would expect people to resolve their disputes locally.' He said the contracts should make gaming much more transparent, 'for instance if provider trusts are moving care from secondary to primary care but then trying to fill that hole with a set of things that haven't been planned for.'

Commissioning: less tennis, more dancing

Interviewed by HSJ, Mr Nicholson set out his vision of the ideal relationships between providers and commissioners.

'We need stress in the system because that's how you get change. But the analogy I always use is that the relationship shouldn't be about tennis - constantly batting back and forth and winning the odd point - and more like ballroom dancing where partners have different steps but together produce something greater than the parts.

'We are at the tennis stage at the moment and the model contract attempts to put some rules around how that would develop - but we don't want to take all the stress out of the system.'

Read the operating framework here

Watch the podcast