304.Section 85 of the 1978 Act currently provides for two streams of funding from the Secretary of State to Health Boards to allow them to perform their functions as required by that Act. The section draws a clear distinction between resources for functions covered by Part I of the 1978 Act (hospital and community health services) and functions under Part II of the 1978 Act. Funding for the Part II functions includes provision for the pay and expenses of GPs, dentists, pharmacists and optometrists. In particular, this includes the reimbursement of costs incurred by pharmacists (and other dispensing contractors) in dispensing prescriptions issued by GPs, known as “prescribing costs”.
305.The allocations to Health Boards for Part I functions are cash limited whereas the majority of the Part II functions are funded from non-cash limited resources. With the exception of certain general medical services expenditure, it is not possible under the present section 85 of the 1978 Act to include any of the Part II functions in the cash limited stream of funding where so desired. Section 52 inserts a new section 85AA in the 1978 Act to provide for certain Part II expenditure to be funded from within cash limited resources. This underpins the introduction of a single stream of cash limited funding to Health Boards to collectively cover expenditure on hospital and community health services and GPs’ prescribing costs. This will give Boards and, in turn, primary care NHS trusts increased financial flexibility in the use of their resources.
306.The new section 85AA retains the Secretary of State’s power, currently at section 85(1), to issue cash limited allocations (for “main expenditure”) and to provide, as per the current section 85(2)(b), non-cash limited resources (for “general Part II expenditure”) to Health Boards. Subsections (4)(a) and (b) provide for certain defined elements of Part II expenditure to be brought within cash limited allocations. Subsection (4)(d) makes the same provision for certain elements of GMS remuneration designated by the Secretary of State.
307.The new section 85AA also retains the Secretary of State’s power of direction, currently at section 85(2A), on the application of sums paid to Health Boards for Part I functions, and extends that power to Part II sums.
308.Section 52 also inserts a new section 85 into the 1978 Act, consequential on the changes described above, which retains the current funding regimes of the other health agencies listed in section 85(1).
Commentary on Sections Part II - the National Health Service: Scotland Section 52: Expenditure of Health Boards and other bodies