§ Mr. Willetts
To ask the Secretary of State for Health if she has(a) instructed the NHS management executive and (b) notified NHS directors of finance that the provision for capital charge neutrality should no longer be applied when operating lease arrangements are submitted to the management executive for approval as part of the private finance initiative.
§ Mr. Sackville
Yes. Guidance on this matter was included in a letter sent by the director of finance of the National Health Service Management Executive to regional general managers and directors of finance on 7 December 1993, copies of the letter are available in the Library. The relevant passages are856WRegional allocations for capital charges reflect an initial move towards weighted capitation. The capital charges allocation is recurrent, and will be the starting point for further redistribution in 1995/96. The intention is that no distinction should be made between the allocation for capital charges and the allocation for other revenue, and they are used as a single revenue resource.Where they have not already done so, RHAs are expected to start the process of redistribution of capital charges subregionally. The changes detailed above should remove a reported impediment to pursuing private finance options. The allocation a health authority receives will not be affected by changes in the asset base of its providers. Decisions on whether to pursue private finance (eg leasing) or direct purchase options should be based on value for money and transfer of risk criteria. RHAs and Outposts should ensure that this point is clearly understood by DHAs and Trusts".