§ Mr. Gwilym JonesTo ask the Secretary of State for Wales whether he has now reached decisions about the allocation of resources for hospital and community health and related services in Wales for 1992–93; and if he will make a statement.
§ Mr. David HuntI announced on 28 November at columns 1081-1082 my decision on the allocation of resources for health and personal social services in Wales for 1992–93. Within the £1,877 million resources available, I propose to allocate on a provisional basis £1,420 million for the hospital and community health service and for the cash-limited element of the family health service in Wales. This sum, which is subject to parliamentary approval of the supply estimates, includes the full costs arising from the introduction of charging in respect of many of the services provided in England and Welsh patients. This represents a cash increase of £116.6 million, or 9 per cent. over 1991–92 estimated outturn provision. Of this sum, £54.5 million is to be made available for family health service authorities for their administration expenditure in 1992–93 and for the cash-limited element of the practice expenses of general medical practitioners and GP fundholders. The allocations to family health service authorities will be announced in the course of the next few weeks.
Excluding the cost of the artificial limb and appliance service, which is administered through a service level agreement between my Department and the Welsh Health Common Services Authority, and other centrally financed services, £1,357.1 million will be provided for hospital and community health services—£1,228.7 million for current purposes and £128.4 million for capital spending.
For current spending, this represents a cash increase of £102.3 million or 9.1 per cent. over estimated outturn for the current year. This sum, together with the additional £13 million which it is anticipated authorities should, as a minimum, realise from further cash-releasing cost improvement savings and income generation schemes provide an effective increase in resources over 1991–92 of 10.2 per cent. £13.5 million of this sum will be allocated to fund the continuing and full-year cost of developments which are being funded centrally in 1991–92. £10£1 million will be allocated to other centrally funded developments which will be announced in due course.
The £78.7 million balance of the provision available will be made available for the discretionary use of district health authorities. This provides for a 7.0 per cent. increase in DHA's discretionary revenue provision in cash terms or 2.5 per cent. in real terms, taking account of the latest forecast of general inflation in 1992–93. In addition 126W authorities will be expected to generate a further £13 million—that is, 1.1 per cent.—from new cash-releasing cost improvements and income generation schemes through their contracts with service providers.
Thus, in total, DHAs should benefit from a 3.6 per cent. real terms improvement in their purchasing power, exclusive of any reductions in unit costs that arise from productivity gains as throughput increases. As a consequence, authorities should be able to make substantial improvements in the services offered to patients in accordance with the objectives of the patients charter.
This increase in DHA revenue provision in 1992–93 is considerably in excess of the 0.5 per cent. per annum growth assumption which was used to calculate the figures given in my answer to my hon. Friend the Member for Cardiff, North (Mr. Jones) on 21 March 1991 at columns 1081-82 regarding progress toward capitation shares. As a consequence, I am able to ensure that all DHAs in Wales will receive a minimum revenue cash increase of 6.5 per cent. in 1992–93, and that those which would otherwise be more than below their capitation formula targets will also receive the balance of growth funding in proportion to their respective distances from target.
The resulting discretionary revenue allocations for 1992–93 and the increases over their 1991–92 discretionary revenue provision in cash and percentage terms are shown in the table:
Allocation Cash increase £ million £ million per cent. Clwyd 160.4 11.4 7.9 East Dyfed 97.9 6.9 7.6 Gwent 170.1 10.3 6.5 Gwynedd 96.6 7.2 8.2 Mid Glamorgan 217.4 13.1 6.5 Pembrokeshire 43.4 3.2 8.0 Powys 55.5 3.3 6.5 South Glamorgan 191.6 9.4 6.5 West Glamorgan 142.5 8.6 6.5 When authorities' estimated shares of the proceeds of capital charges are added to these calculations, each DHA's percentage share of gross discretionary revenue provision in 1992–93 by comparison with its capitation formula target, updated for estimated population changes is as follows:
Gross Discretionary Revenue Provision Percentage Capitation Formula Target Shares Percentage Clwyd 13.8 14.3 East Dyfed 8.5 8.8 Gwent 15.7 15.2 Gwynedd 8.3 8.7 Mid Glamorgan 19.1 19.2 Pembrokeshire 3.8 3.9 Powys 4.7 4.1 South Glamorgan 13.5 13.0 West Glamorgan 12.6 12.8 Accordingly, the revenue planning assumptions for individual authorities in subsequent years which I gave in my answer of 21 March 1991 have been revised as in table 3:
127W
Percentage growth on previous year for 1992–93 to 2001–02 assuming 0.5 per cent. growth 1993–94 1994–95 1995–96 1996–97 1997–98 1998–99 1999–2000 2000–01 2001–02 Clwyd 1.27 1.10 1.10 1.10 1.09 1.09 0.45 0.45 0.45 East Dyfed 1.10 1.03 1.02 1.02 1.02 1.02 0.45 0.45 0.45 Gwent 0.00 -0.10 -0.10 -0.10 -0.10 -0.10 0.45 0.45 0.45 Gwynedd 1.50 1.20 1.20 1.19 1.19 1.18 0.45 0.45 0.45 Mid Glamorgan 0.00 0.62 0.62 0.62 0.62 0.62 0.45 0.45 0.45 Pembroke 1.37 1.15 1.14 1.14 1.14 1.13 0.45 0.45 0.45 Powys 0.00 -2.15 -2.22 -2.29 -2.37 -2.45 0.45 0.45 0.45 South Glamorgan 0.00 -0.27 -0.27 -0.28 -0.28 -0.29 0.45 0.45 0.45 West Glamorgan 0.00 0.76 0.76 0.76 0.76 0.76 0.45 0.45 0.45 These growth planning assumptions assume that capital charges remain the same over the planning period. Although growth of 0.5 per cent. has been assumed on the recurring revenue total, this is exclusive of capital charges, and this becomes 0.45 per cent. when expressed as a percentage of the recurring revenue and the recycled capital charges combined.
I must stress that the figures in table 3 are for planning purposes only. They will be revised and rolled forward each year to take account of actual allocations. The redistribution of resources indicated by these figures will affect the purchasing positions of health authorities, but the provision of services will depend on where purchasers choose to place their contracts. The future of individual hospitals will therefore not always depend on the relative funding position of authorities in which they are located.
Under the new capital allocation arrangements which become effective on 1 April 1992, £97 million will be earmarked for the purposes of the all-Wales major capital programme. Further details of this programme will be announced in due course. £35 million will be made available for the discretionary capital requirements of DHAs and the new Pembrokeshire health trust, as well as the minor capital needs of various other service providers which are not managed by DHAs. This provision includes a sum of £3.4 million which is available as a result of authorities repaying brokerage loans from earlier years.
£1.7 million of this £35 million will be allocated in the form of additional revenue provision to the prospective pruchasers of the Pembrokeshire trust's services. It will thus form part of the trust's income for 1992–93 which can then be recapitalised to meet its capital requirements. The trust's capital expenditure will, however, also be subject to the external financing limit which I shall be issuing to the trust when its financial plan for next year has been updated to take account of the allocations to its prospective purchasers that are covered in this announcement.
A further £2 million will be held in reserve to meet the minor capital requirements of various other service providers such as the dental hospital, Breast Test Wales and the Welsh Health Common Services Authority.
The £31.3 million balance of capital provision will be allocated between the DHAs on behalf of their directly managed units; and in order to ensure the fair distribution of this sum between service providers, it will be allocated between authorities pro rata to the anticipated revenue income which their units will attract next year. In this way, minor capital provision, like revenue will "follow the patient".
128WThe resulting capital allocations are set out in the following table. No allocation is shown for Pembrokeshire health authority because, when the Pembrokeshire trust comes into operation on 1 April, it will no longer be responsible for the capital needs of a directly managed unit. The trust's capital requirements will be met as previously noted.
Capital allocation £ million Clwyd 4.0 East Dyfed 3.3 Gwent 5.l Gwynedd 2.1 Mid Glamorgan 5.9 Powys 1.1 South Glamorgan 5.5 West Glamorgan 4.3 In addition, property sales in 1992–93 are expected to generate a further £5.2 million and it is anticipated that authorities will benefit from £4.2 million of these receipts. 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.
These allocations together represent another major increase in the provision for hospital, community and family health service. They once again underline the Government's commitment to the NHS and they underpin the assurances given about service availability and quality in the patients charter. They accord with the new resource allocation arrangements that flow from the NHS and Community Care Act and, in particular, make real progress toward weighted capitation funding. Indeed, they provide a secure basis on which to take forward the "Agenda for Action" which my Department recently published, and to which the NHS in Wales is fully committed. I am therefore sure they will be widely welcomed.