News / Operating framework targets repeat of surplus in 2008/09

The operating framework for 2008/09 said each SHA area must plan to deliver the same level of surplus as it carries forward from 2007/08. The delivery of such an underspend would ‘enable the full deployment of baseline and additional resources made available to the service in 2008/09’, it added.

But before carrying forward a surplus, SHAs must resolve any outstanding legacy debt in PCTs by the end of the current financial year. In exceptional circumstances this deadline will be extended by 12 months.

The aggregate surplus for 2008/09 will also need to reflect those surpluses generated by NHS trusts as they recover from debt or to meet payments on working capital loans.

The Department has not asked for a specific level of contingency – a policy trailed by David Flory, director general of NHS finance at the HFMA conference. Instead, SHAs will determine the need within their health economies, and where best to hold the contingency fund.

The NHS has been given a challenging cash-releasing savings target of 3%. This target has been built into the tariff uplift, meaning the tariff has increased by 2.3%. The payment by results package confirms the tariffs released as part of the road-testing exercise. Independent organisations providing services under free choice will be paid tariff plus market forces factor.

The Department said the tariff uplift included a recognition of the importance of tackling healthcare-acquired infections and improving cleanliness. This had been achieved by building some flexibility into the tariff to allow organisations to accelerate their strategies for reducing infection.

Specialist top-ups will only be paid to NHS bodies on a list of eligible bodies. Difficulties in identifying ‘specialist’ providers for orthopaedic and colorectal services means that these top-ups will remain more widely available. This is a change from earlier proposals.

The operating framework also provided details of one-year allocations to PCTs (see box). David Nicholson, NHS chief executive, described the 5.5% headline growth as ‘a substantial amount of money available to invest in new services’.


PCT allocations

PCT revenue allocations will increase by 5.5% – almost £4bn more than 2007/08. In addition the Department is allocating £1.7bn of central budgets to PCTs taking the proportion of NHS revenue allocated directly to PCTs to 82%.

The announcement of PCT revenue allocations is for one year only, pending the report of the Advisory Committee on Resource Allocation (ACRA). With this in mind, there is no differential growth in the 2008/09 allocations. All PCTs will receive the same percentage uplift.

An announcement of the revenue allocations for the following years of the comprehensive spending review period will be made by the summer, once ACRA has reported and new Office for National Statistics population projections have been published. The Department insisted this should not stop PCTs entering into three-year agreements with local partners.

PCTs will receive a capital allocation of £400m, with an extra £250m for national programmes such as community hospitals.