The “PSF” incentive deal was this: cut your costs and report a surplus in your accounts, and the government will give you a big fat cash reward in return that you can spend on new kit and building repairs [2/8]
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BBC reports extra £1bn for NHS capital spending this yr. There’s a catch: The £1bn is cash hospitals and other NHS trusts already have but have been forbidden to spend. They earned it last yr in incentive payments for cutting their costs [thread, 1/8ish]
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The incentive scheme has been running for 3 yrs and has typically seen between 70 and 90 NHS trusts in England cut their spending each yr by 50% more than they need to breakeven, in return for a total £2.3bn in cash rewards. More about it here https://www.nuffieldtrust.org.uk/news-item/having-your-fudge-and-eating-it … [3/8]
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It was important to the government that PSF cash was not spent on everyday costs like staff and medicines, because spending it like that would increase the reported overspend in the NHS’s operating costs [4/8]
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So the deal was it could be spent on capital - reported separately in the accounts. But NHS trust capital spending has to sit within the Dept of Health & Social Care’s capital spending limit, even when trusts are spending their own cash. [5/8]
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Cuts to that spending limit have meant trusts have been told they can’t spend the £2.3bn cash surplus they earned under the PSF scheme over the last 3 yrs after all, making the cuts they made to everyday spending even sorer [6/8]
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Earlier this yr the government even considered changing the law to effectively make it illegal for a hospital to SPEND ITS OWN CASH on new equipment and building without the dept signing it off [7/8]
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News that £1bn will now be available this year is a welcome reprieve, but it’s the equivalent of giving someone cash then banning them from spending it, only to expect cheers of jubilation when you later decide they can spend it after all [8/8]
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Catch 22 in action
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Really interesting, thanks for this. So does this mean that devolved governments will not be receiving additional funding via Barnett consequentials?
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Thanks Sally. It’s been briefed out as new money from the Treasury - presumably in addition to the money already in their accounts?
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The treasury will raise the DHSC’s CDEL this yr, which will merely allow trusts (at best) to spend the £1bn in cash surpluses they generated last yr by meeting the PSF targets. So no, that is not new cash for the nhs. It is rather allowing it to spend the cash it already earned
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