Hospital and Community Health Services (Hansard, 30 January 1991)

§ Mr. David Hunt

I announced on 11 December, subject to parliamentary aproval, my decision on the allocation of resources for health and personal social services in Wales. Within the resources available I propose to provide £1,188.4 million for the hospital and community health service in Wales. Excluding the cost of the artificial limb and appliance service (which is administered on my behalf by the Welsh Health Common Services Authority) £1,078.4 million will be provided for current purposes and £102.3 million for capital spending.

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For current spending, this represents a cash increase of £103.7 million or 10.6 per cent. over estimated outturn for the current financial year. In addition, a further £2.63 million (0.3 per cent.) is available, representing both savings in central funding requirements and non-recurrent funding which is available as a result of health authorities repaying loans borrowed in earlier years.

In total, therefore, some £106.3 million is available for recurrent and non-recurrent revenue development purposes in 1991£92. This sum, together with the additional £10£4 million which authorities are expected as a minimum to achieve from new cost improvements and income generation schemes, provides an effective increase in resources over 1990–91 of 11.9 per cent.

Authorities will also receive a further £38 million in 1991–92 to meet the net cost of putting cross-border usage of services between Wales and England on a contractual basis. The additional funding available next year is also on top of the extra funding which is being provided to meet the recurrent effect of the supplementary provision made available during 1990–91 for the 1990 review body pay awards.

£92 million of this sum will be made available to health authorities for their discretionary use which represents a cash increase of 9.76 per cent. over this year's estimated outturn provision. £5.1 million will be allocated to fund the continuing and full year cost of developments which are being funded centrally in 1990–91. £9.2 million will be allocated to new centrally funded developments of both a recurrent and non-recurrent nature.

These developments, which are shown in the following table, will considerably assist authorities in meeting future service requirements including those associated with the introduction of the NHS White Paper reforms.

	£ million
Regional services and centrally funded developments	1.20
Expansion in medical staff numbers and day surgery facilities aimed at reducing junior doctors hours, waiting lists and waiting times	2.60
Manpower/Training	1.11
Project 2000	1.13
IT/Clinical audit, quality assurance	1.00
Training of ambulancemen in defibrillation techniques	0.59
Care of the terminally ill	1.00
Other	0.61
	9.24

Of the capital provision, £60.9 million will be made available to health authorities for their discretionary use, but with proviso that at least 7.5 per cent. of each authority's share of these resources should be devoted to works associated with the maintenance of the estate. The provision includes a sum of £2.4 million which is available as a result of authorities repaying brokerage loans from earlier years. This amounts to a cash increase of 10 per cent. over last year's capital allocation. The balance is required for the all-Wales capital programme, including schemes associated with remedial work in four major hospitals and with the rationalisation of authorities' estates. Further details will be announced in due course.

The distribution of discretionary resources between authorities will, as in previous years, be based on capital formula shares but I shall be announcing new arrangements for 1992–93 and subsequent years in the next month or so.

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The current and capital allocations to individual authorities are as shown in the following table. These allocations do not take into account the further sums which will be allocated when decisions have been taken on the distribution of the funds reserved for centrally directed developments and on the introduction of charging for various of the services provided by the Welsh Health Common Services Authority.

	Allocation (£ Million)
	Current Element	Capital Element
Clwyd	146.685	8.582
East Dyfed	89.184	4.382
Pembrokeshire	40.676	2.690
Gwent	156.325	8.454
Gwynedd	86.819	2.337
Mid Glamorgan	201.696	11.010
Powys	52.057	1.522
South Glamorgan	175.045	10.852
West Glamorgan	131.632	11.034

These current and capital allocations provide for a 3.8 per cent. real terms increase in overall discretionary spending by health authorities after taking into account the forecast of general inflation provided by the Chancellor of the Exchequer in his autumn statement; and they substantially exceed the resource planning assumptions which were issued to authorities last year.

In addition, authorities will be able to retain all the proceeds of their cost improvement programmes and income generation schemes. They will also retain the income which they raise from charges for private treatment and the receipts which they obtain from the sale of surplus land and buildings. Property sales are expected to generate a further £7 million in 1991–92. In total, I expect authorities to achieve additional savings and to generate additional income amounting to at least 1.1 per cent. of their recurrent revenue allocations.

The allocations therefore provide health authorities with a secure basis, not simply for maintaining services, but for the expansion of services on behalf of their resident populations next year. Thus, although the basis of funding has changed, there should be no effect on patient services as a consequence of that change. The allocations for next year represent the first step in the process of moving towards funding each health authority in line with its weighted capitation share. I shall be announcing the way in which weighted capitation shares will be calculated in due course when the consultation on this with DHAs in Wales is completed at the end of this month.