April 2002: Delivering the NHS Plan says payment by results will ensure NHS funding is backed by a new approach to efficiency.

April 2003: A tariff is applied to extra non-elective activity for 15 procedures, including standard hip and knee operations across all acute trusts.

April 2004: The first 10 foundation trusts are authorised and begin to implement full PbR.

January 2005: The DoH announces that it will delay the roll-out of full PbR to include emergency and specialist services - due in April 2005 - by one year after it discovers a£1.5bn PbR imbalance across the service and continuing difficulties in effectively costing non-elective services.

April 2005: The full roll-out of PbR for elective care for both foundation and non-foundation trusts begins.

January 2006: The DoH publishes tariff structure for 2006-07 PbR but withdraws it two weeks later.

March 2006: The DoH reissues tariff structure for 2006-07 PbR.

April 2006: PbR is extended to cover a total of£22bn worth of elective and emergency activity compared with£8bn covered in 2005-06. Acute trusts will receive just 50 per cent of new tariff rates for all emergency activity beyond a threshold, set at 2004-05 activity levels plus 3 per cent, and PCTs will receive just 50 per cent of any reduction below that threshold.

July 2006: Acting NHS chief executive Sir Ian Carruthers announces results of Lawlor review of tariff setting, which emphasises the importance of advance notice. He promises to publish the full tariff for 'road testing' in the autumn and the final tariff before Christmas.

December 2006: DoH publish 2006-07 as promised.

August 2006: DoH publishes proposals to extend PbR to mental health based on 13 clusters of care. Recommendations are expected in October.

March 2007: DoH launches a consultation 'Options for the Future of PbR 2008/09-2010/11'. Publication of findings expected in October 2007.

August 2007: NHS chief executive publishes a letter on PbR setting out the issues that still need to resolved, including delays to PbR mental health trusts pilots. The DoH says further testing and refinement of PbR is needed before it can be applied to mental health organisations.

October 2007: DoH launches 'road-testing' exercise for the 2007-08 tariff.

2009: The DoH envisages 90 per cent of NHS activity will be covered by PbR, including community services and mental health.