§ Mr. WatersonTo ask the Secretary of State for Health if she will announce the outcome of her Department's analysis of hospital costs associated with teaching and research; and how she intends to bring about the separation of the research element of service increment for teaching and research recommended in the Culyer report.
§ Mrs. Virginia BottomleyA statistical analysis of hospital costs found that national health service spending in association with teaching and research is higher than the service increment for teaching and research. The excess costs which SIFTR does not cover are in general indirectly funded through contracts for health care.
To address this, in 1995–96, as an interim measure, the SIFTR allocation will be increased by £40 million in 1995–96 by transferring funds from the purchasers of hospitals receiving SIFI'R. I have also said that I will look sympathetically at ring-fencing more money in subsequent financial years to help build up the new funding system for research.
For 1995–96, the whole SIFTR amount will be allocated on the same principles as in 1994–95. The increased allocation will enable hospitals receiving SIFTR to reduce their contract prices for health care, while overall levels of activity remain the same. That will help put teaching and research hospitals on a level playing field with other hospitals and help purchasers make sound decisions about the use of their funds.
The analysis of hospitals costs did not find a convincing basis for separating the NHS costs associated with teaching and research by statistical methods. Previous studies have suggested the research element is about 25 per cent. From 1995–96, the NHS costs associated with teaching and research in England will nationally be attributed 75 per cent. to teaching and 25 per cent. to research.
The separation of the research element of SIFTR helps prepare the way for an improved system for supporting research in the NHS. When the Culyer report was published in September, I welcomed the proposal for a single funding stream for research—one of Culyer's key recommendations. This means that it would be possible to target more precisely the money available for research to support high-quality projects.
We are working in partnership with the universities, the research councils, charities and other organisations which support research in the NHS to take this forward. Work is in hand on the future arrangements for allocating funds and contracting for NHS support and facilities for undergraduate teaching.