NHS finance for dummies
The HSJ’s coverage of the budget and former NHS finance director Noel Plumridge’s occasional articles on “underspend” are recommended reading for students of creative accounting, NHS employees and the general public.
A cynic might conclude that the government routinely publishes a politically expedient NHS budget but pegs real spending at a significantly lower level – £2.2 billion lower, say – so that the Treasury can balance the books.
We have no truck with cynicism here but we are nothing if not expedient, so without further ado here is the 2012/13 NHS Networks budget statement and forecast for the next financial year. Read this and it will help you understand the bigger picture.
In the interests of transparency and because neither our readers nor our finance team are financial experts, we have used plain English* and round numbers throughout.
2012/13 budget statement – NHS Networks
• Total financial allocation: £2.2 billion
• Ring-fenced funding: £1.5 billion
• Surplus: £499 million
• Income from wrongly addressed invoices to NHS Net: £15 million
• Productivity target: 98%
• Quality premium: £1.49
• Reinvestment in patient care: 37 pence (estimated)
• Staff costs: £211
• Assets: £3.72 (approximate value of unredeemed Tesco Clubcard points)
• Total underspend: £2.19 billion
2013/14 forecast – NHS Networks
• Total financial allocation: £91 billion
• Total underspend: £151 billion
• Balance (owing to the Treasury): £60 billion
Notes to financial accounts
Achievement – financial balance; not to be confused with real achievement
Allocation – total funding as evidenced in press releases and headlines such as “NHS Networks budget to exceed global famine relief spending for tenth year running”
Spend – actual NHS Networks spending as evidenced by aid workers and food parcels for staff
Reinvestment – cash left for Paul when the service run for Peter was decommissioned
Ring-fenced funding – money that appears in total allocation but can only be spent to mitigate exceptional risks, such as invasion by killer bees, a clotted cream tsunami on the Cornish coast or the end of time (requires approval of secretary of state)
Surplus – system of credits or tokens roughly equivalent to Tesco Clubcard points; can be used for career advancement or balancing overall NHS budget; not suitable for spending on patients
Underspend – another word for “surplus”; cash you never actually had donated to a good cause of your non-choosing (eg defence budget, tax relief on beer, dairy product flood defences in the south-west)
*As defined in the government white paper entitled Telling it Like it Is: appropriate use of clear, concise and proportionate language to convey reasonable messages without causing offence to achieve an outcome close to or approximating plain speaking in any situation requiring written or verbal communication between individuals, organisations, communities and as yet undiscovered life-forms and entities irrespective of origin, culture, sexual orientation, political affiliation or choice of footwear
Editor’s note: All figures for NHS Networks are made up. Any similarity between these and figures made up by the government is purely coincidental.
For the serious financial news read Crispin Dowler's analysis in the HSJ (subscriber only access).
A. Dummy