The Review of the NHS Financial Management and Accounting Regime recommends major changes in the National Health Service (NHS) financial management and accounting regime to help improve the financial performance of the NHS and lessen financial risks for individual bodies. It also suggests that the current system has weaknesses and needs to adapt to the new demands placed on it by the Department of Health’s reform programme. Recommendations in the review, which is based upon a substantial body of previous Commission work and wide consultation, are designed to address these issues. Key recommendations include:
- the principles of Resource Accounting and Budgeting (RAB) should no longer be applied to NHS trusts, and that NHS trusts should move onto a regime which offers sharper, more appropriate incentives for good financial performance
- changes to PCT planning and financing arrangements which would put them in a stronger position to manage their financial risks;
- specific improvements to the DH and strategic health authorities’ oversight and management of the service, covering the costing of policy initiatives, the way the Payment by Results tariff is developed and given greater certainty over the medium term, and the accuracy and availability of data;
- key elements of a more effective and swifter mechanism for identifying and dealing with financial distress at NHS bodies. In addition, financial support for organisations should be provided in the form of working capital and that the DH should establish a banking arrangement to do this;
- the specific steps to be taken to improve the skills of finance staff and the capacity of boards.