It is, as they say, the quiet ones you have to watch.
The quiet ones causing a stir in Richmond House this month are those extreme endurance nerds in the dustier corners of the Treasury and Chartered Institute of Public Finance and Accountancy who have spent years slaving on their so-called alignment project.
The project’s aims – oh the radicalism – are to align departmental budgets, accounts and parliamentary finance reports so that, you know, they roughly square up.
That and allowing the Treasury, in its own words, “to control what is needed to deliver the fiscal rules”. No wonder the Department of Health is unhappy.
Causing particular discomfort is the requirement in the 2011-12 accounts for the DH to consolidate the accounts of foundation trusts and primary care trusts for the first time.
That is a problem because PCTs have long exploited the fact FT accounts are consolidated separately to tuck away those pesky surpluses they don’t want the strategic health authority – or Treasury – to know about.
Last year, £180m of PCT funding was hidden away like that: reported in PCT accounts as if it was spent, but recorded in FT accounts as anonymous “prepayments” – that is, not actually spent; just sat in the FT’s accounts for safekeeping. A similar sum received the same treatment in 2009-10 and doubtless in each of the years before.
Other ruses have also been available, including partially completed spells – patients whose hospital stay starts in March but helpfully does not end until after the start of the new financial year – which give both the PCT and FT flexibility to either hide a surplus or underplay a deficit.
The alignment project will flush these out, requiring the DH to recalculate the PCT surplus to the keen interest of the Treasury and its bid to “control what is needed to deliver the fiscal rules”.
Cue the panicked letter circulated to NHS chief finance officers last week warning that if current ducking and diving continues the impact on the newly aligned accounts for 2011-12 “could be significant… as regards audit assurance of the DH consolidated account”.
It’s suitably quiet and whispered, but that is accountancy speak for: “Oh dear, the DH’s accounts are heading for a qualification”.
Sally Gainsbury is a news reporter for the Financial Times.