Commentary on Sections Part 1: National Health Service.Health Service Funding Section 2: Payments relating to past performance
30.Section 2 amends the existing provisions of section 97 of the 1977 Act which enable the Secretary of State and the National Assembly for Wales to increase the initial allocation each of them makes to a Health Authority, where that Authority has satisfied certain conditions. This enables the Secretary of State to make payments to Health Authorities based on their past performance. The existing section 97(3C) provides that the Secretary of State may make such increases where a Health Authority has in any preceding year satisfied objectives which have been notified to Health Authorities in advance.
31.The new subsection (3C) enables the Secretary of State and the National Assembly for Wales to increase an Authority’s allocation not only where it has satisfied objectives, but also where it has performed well against performance criteria. The Secretary of State must notify the Authority of such criteria in advance, although he might not notify them in advance of the exact method by which performance will be measured. This would enable the Secretary of State to make additional payments to Health Authorities on the basis of their performance relative to other Authorities (against criteria notified to them in advance) in addition to them meeting particular objectives. For example, he may need to wait until he knows how well NHS bodies have performed against specific measures in the previous year before he is able to finalise the best method of measuring their performance in the coming year. However, the Secretary of State would need to inform Authorities in advance of the criteria against which their performance would be measured if he intended to make additional payments to Authorities on this basis.
32.Under the existing section 97(3C), the Secretary of State and the National Assembly for Wales can only make increases to Health Authority allocations based on performance in preceding financial years. The new subsection (3C) enables the Secretary of State to make such increases on the basis of performance over a period which has been notified to the Authority in advance, whether it consists of, or any part of, a preceding year or any part of the current financial year.
33.Section 2(3) amends section 97(3D), which provides that a Health Authority is notified of an objective, if the objective is specified or referred to in a notice given to Health Authorities by the Secretary of State. The amendment means that the Secretary of State may specify or refer to objectives, criteria or periods in a notice given to an individual Health Authority, rather than a notice to all Authorities.
34.It is intended that the NHS Performance Fund will be allocated according to a traffic light system to underpin a system of earned autonomy. “Green” organisations will have access to their share of the National Performance Fund as of right. “Yellow” Health Authorities, NHS trusts and Primary Care Groups/Trusts will be required to agree plans, signed off by the regional office, setting out how they will use their share of the fund. “Red” organisations will have their share of the fund held by the new Modernisation Agency. They will get their fair share of extra funds but the Agency will oversee spending.