ANNEX A: OUTLINE OF THE EXISTING LAW Existing legislation about the NHS National Health Service Act 1977 Part I system – hospital and community health services
344.The system provided for under Part 1 of the 1977 Act (and Part 1 of the 1990 Act – discussed below) is the system under which all of the NHS, apart from family health services, is provided, including its hospitals. The core duty to ensure the provision of a health service is laid upon the Secretary of State (1977 Act, section 1) in extremely broad terms, and is supplemented by the provisions of the sections 2 to 5.
345.Section 3 sets out those general services which it is the Secretary of State’s duty to provide to such extent as he considers necessary to meet all reasonable requirements. Most of the services that may be described as hospital and community health services are included under this section.
346.Section 5(1) and (1A) impose duties on the Secretary of State to provide medical and dental services to state school pupils. This is the basis for what is described as the school nursing service.
347.Section 2 confers wide ranging powers for the Secretary of State to provide such services as are appropriate to discharge any duty imposed on him by the Act (including his general duty under section 1), and to do any other thing whatsoever which is calculated to facilitate, or is conducive to or incidental to, the discharge of any duty imposed on him by the Act . Further miscellaneous powers relating to specific matters are conferred by section 5(2) (for example, the conduct and assistance of research and development (section 5(2)(d)).
348.Sections 8 to 18 of the 1977 Act go on to provide for the administration of the NHS. These sections have been substantially amended since 1977, most recently by the Health Act. As amended, they provide for the setting up of Health Authorities (section 8), Special Health Authorities (section 11) and Primary Care Trusts (section 16A, as inserted by section 2 of the Health Act). Health Authorities, Special Health Authorities and Primary Care Trusts are independent statutory bodies, although their membership is determined in accordance with regulations (and in the case of Special Health Authorities, the establishment order) and some of the appointments to their membership are made by the Secretary of State. Health Authorities and Primary Care Trusts are established for territorial purposes. Each Health Authority is established for such area of England and Wales as set out in the establishment order made under section 8. The entire area of England and Wales is covered by Health Authorities . Each Primary Care Trust is established for the area specified in its establishment order under section 16A(3). Each Primary Care Trust area is wholly contained within the area of a Health Authority, but there is no requirement for total coverage. Some areas of England are covered by Primary Care Trusts , others are not. There are no Primary Care Trusts in Wales, as the relevant provisions of the Health Act have yet to be brought into force in Wales. Special Health Authorities are established for specific functional purposes – they are established for the purpose of performing any functions of the Secretary of State which he may then direct them to perform under section 16C.
349.The Secretary of State may direct a Health Authority or Special Health Authority to exercise his functions (section 16C, formerly 13, of the 1977 Act). A Health Authority may direct a Primary Care Trust established in their area to exercise those of its functions which it is permitted to delegate (section 17A, inserted by section 12 to the Health Act). The Secretary of State may direct Health Authorities that delegable Health Authority functions are or are not to be exercisable by Primary Care Trusts, or are to be exercisable by Primary Care Trusts to any specified extent (section 17A(4)). The Secretary of State may also give directions to a Health Authority, Special Health Authority or Primary Care Trust about the exercise of any of their functions (section 17). A Health Authority may also give directions to a Primary Care Trust about the exercise of any functions which the Health Authority has directed the Primary Care Trust to exercise (section 17B). These Direc­tions may be given by regula­tions or by instru­ment in writing (section 18). There is very little further prescrip­tion in pri­mary legislation as to what the Secretary of State must do or how he must do it in rela­tion to the provision of that part of the NHS which is not concerned with family health services. It will be seen that this way of providing services is a great deal more flexible than the regula­tory system envisaged under Part II. There are probably historical reasons for this, but those reasons are no longer relevant.
350.Health Authorities­ may, in accordance with regulations and any relevant directions, delegate their functions (whether Part I or Part II) to each other, or to committees or others (section 16 of the 1977 Act (as substituted by paragraph 9 of Schedule 5 to the Health Act)). Similar provision is made for Primary Care Trusts (section 16B of the 1977 Act (as inserted by section 2(1) of the Health Act)). Regulations have been made under both provisions.
351.Health Authorities and Special Health Authorities are funded under the provisions of section 97, as substituted by paragraph 47 of Schedule 1 to the 1995 Act and amended by section 36 of the Primary Care Act and by sections 4 and 8 of the Health Act. Health Authorities are paid money in each year under section 97(1) and section 97(3). Section 97(1) concerns the remuneration of persons providing Part II services and is not cash-limited (in other words the Secretary of State must pay whatever it has cost the Health Authority, and he cannot impose a ceiling on the expendi­ture). Under section 97(3) a Health Authority is paid money not exceeding the amount allotted to them by the Secretary of State. This amount is allotted towards meeting their "main expendi­ture" which includes all expenditure attributable to the performance of their Part I functions, and all their administrative costs. The money paid in respect of Part I services is therefore ultimately cash-limited. To enforce the cash-limits set by the Secretary of State, Health Authorities have various financial duties imposed upon them by section 97A of the 1977 Act (as substituted by paragraph 48 of the 1995 Act and amended by paragraph 23 of Schedule 2 to the Primary Care Act).
352.Primary Care Trusts are funded by Health Authorities under section 97C of the 1977 Act, as inserted by section 3 of the Health Act. There is a similar distinction between cash-limited and non-cash-limited funding. PCTs are also subject to a set of financial duties similar to those for HAs.