Press release: NHS Confederation welcomes Audit Commission report on NHS Financial Management and Accounting Regime

26 Jul 2006

The NHS Confederation has today welcomed the Audit Commission's report to the Secretary of State for Health on the NHS financial management and accounting regime as an important step forward in the road to financial recovery in the NHS.

Nigel Edwards, Director of Policy at the NHS Confederation, which represents over 90 per cent of NHS organisations, said:

"Today's Audit Commission report to the Secretary of State represents an important programme of action for creating a financial system appropriate for the new NHS.

"The NHS Confederation has been calling for a long time for many of the changes recommended by the Audit Commission in order to deal with the dysfunctional effects of the Resource Accounting and Budgeting (RAB) regime and to allow organisations to respond to the increased volatility introduced by choice and payment by results.

"We particularly welcome the recommendation to end the Resource Accounting and Budgeting principle in the NHS which meant that trusts in financial difficulty were penalised twice by accounting rules.

"NHS Confederation members will also be pleased that the Audit Commission has recommended that the Department of Health introduce a proper banking function that will lend trusts money against their business plan. The Confederation has been calling for a strategic banking function for some time to enable trusts to borrow to support long-term change.

"The Audit Commission highlight a number of cultural issues that have undermined good governance and planning and these will need to be dealt with. We particularly support their call for the proper costing of policies and timetabling of policy. The Confederation believe that the government must ensure that performance management systems do not undermine the role of NHS boards as the bodies responsible for the strategy and oversight of their trusts.

"Finally, we need to ensure that new policy initiatives from central government are costed in a sustainable way. Often in the past, new policies have been costed on the assumption that all trusts are in financial balance which means that many new initiatives are not sustainable for many organisations."

ENDS

 

Notes for editors

1.      The NHS Confederation represents more than 90% of the organisations that make up the NHS. Its members include the majority of NHS acute trusts, ambulance trusts, foundation trusts, mental health trusts, primary care trusts, special health authorities and strategic health authorities in England; trusts and local health boards in Wales; and health and social service trusts and boards in Northern Ireland.

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