ANNEX A:: OUTLINE OF THE EXISTING LAW RELATING TO THE NHS Part 1 System: hospital and community health services
479.The system provided for under Part I of the 1977 Act (and Part I 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 is laid upon the Secretary of State (1977 Act, section 1) in extremely broad terms, supple­mented by the provisions of sections 2 to 5. It is these provisions which define the Secretary of State’s overarching responsibilities to provide health services under a comprehensive health service. They are broad powers and thus frequently the legislative source for functions which have in practice, been delegated to health service bodies such as Strategic Health Authorities and PCTs.
480.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 which may be described as hospital and community health services are included under this section.
481.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.
482.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 or incidental to, the discharge of such a duty.
483.Sections 8 to 18 of the 1977 Act pro­vide for the administration of the NHS. These sections have been substantially amended since 1977, most recently by the NHS Reform Act. As amended, they provide for the setting up of Strategic Health Authorities (section 8), Special Health Authorities (section 11) and PCTs (section 16A). HAs (Health Authorities)/Strategic Health Authorities, Special Health Authorities and PCTs 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. HAs/Strategic Health Authorities and PCTs are established for territorial purposes. Each HA/Strategic 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 Strategic Health Authorities and PCTs in England and HAs in Wales. There are no PCTs in Wales. The NHS Reform Act provides for the establishment of LHBs 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 direct them to perform under section 16C.
484.Legislation allows health service functions to be exercised by health service bodies in one of two ways. Functions are either directly conferred by the primary legislation or the person on whom they are directly conferred (either Secretary of State or a health service body) is permitted to delegate them to another health service body.
485.Strategic Health Authorities­ may, in accordance with regulations and any relevant direc­tions, delegate their functions (whether Part I or Part 2) to each other, or to committees or others: see section 16 of the 1977 Act. Similar provision is made for PCTs: see section 16B of the 1977 Act. Regulations have been made under both provisions.
486.Strategic Health Authorities, HAs and Special Health Authorities are currently funded under the provisions of section 97 of the 1977 Act Section 97(1) concerns the remuneration of persons providing Part 2 services and is not cash-limited (in other words the Secretary of State must pay whatever it has cost the HA, and he cannot impose a ceiling on the expendi­ture). Under section 97 an 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, HAs have various financial duties imposed upon them by section 97A of the 1977 Act.
487.PCTs are funded under section 97C of the 1977 Act and LHBs under section 97F, inserted by the NHS Reform Act. There is a similar distinction between cash-limited and non-cash-limited funding. Section 97C was amended by section 3(3) of the Health and Social Care Act 2001 so that in addition to HA allotments, the Secretary of State may make supplementary payments direct to PCTs. PCTs are subject to a set of financial duties similar to those for HAs (see section 97D, as inserted by section 3 of the Health Act and amended by section 3 of the Health and Social Care Act 2001)