§ Mr. RedmondTo ask the Secretary of State for Health what are his Department's procedures for producing budgets and forecasts; what guidance is issued on the use of those procedures; what criteria are applied when judging cost effectiveness; and if he will make a statement.
§ Mr. Freeman[holding answer 19 January 1990]: It is for district health authorities to draw up their own budgets in the light of the resource allocations they receive from the regional health authority.
The setting of budgets is part of the planning cycle. Regional health authorities submit annually to the NHS management executive their programmes for the next financial year. These programmes provide the basis from which budgets are drawn up. The management executive issues guidance on what programmes should cover including quantified information on planned levels of activity, finance and manpower.
Health authorities' cost improvement programmes deliver a fundamental and continuing challenge to their cost base. Health authorities decide the level of cost improvements they can achieve. The management executive, where necessary, challenges the adequacy of the level proposed and monitors its delivery, as it does other key aspects of programmes.