ANNEX A: OUTLINE OF THE EXISTING LAW Existing legislation about the NHS National Health Service Act 1977 Funding the NHS
368.Health Authorities are funded under the provisions of section 97 of the 1977 Act, as substituted by paragraph 47 of Schedule 1 to the 1995 Act and amended by section 36 of the Primary Care Act and sections 4 and 8 of, and paragraph 31 of Schedule 5 to, 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 covered in the next section. Section 97(3) concerns Part I expenditure and administrative costs. Under section 97(3) a Health Authority is paid money not exceeding the amount allotted to it by the Secretary of State. This amount is allotted toward meeting its “main expenditure”, which includes all expenditure attributable to the performance of its Part I functions, all its administrative costs, and certain other expenditure. The money paid in respect of Part I services is therefore cash limited. To enforce the cash-limits set by the Secretary of State, Health Authorities have various 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 the Schedule 2 to the Primary Care Act and paragraph 32 of Schedule 5 to the Health Act) . It is possible for the Secretary of State to make one off direct payments to NHS trusts by way of public dividend capital, loans or payments under NHS contracts. Direct payments to Primary Care Trusts can only be made by NHS contracts.