An influential committee of MPs has called for “unnecessarily inflexible” restrictions on NHS spending to be “abolished”, to allow providers to invest their accumulated reserves in reforming services.
The Commons health committee also called on the Department of Health and the Treasury to review the operation of all “accounting policies and rules governing revenue and capital expenditure on health services”.
The committee began investigating health underspends after LGC’s sister title Health Service Journal reported that the department had effectively returned nearly £3bn of its budget to the Treasury over the past two financial years, despite an unprecedented squeeze on NHS finances.
Its report, published last week, states: “While the committee heard that underspending of budgets has been common practice in the NHS under the present and previous administrations, it is clear that excessive inflexibility around year-end financial controls risks re-introducing into the NHS a perverse incentive to spend a budget against a year-end deadline rather than to use the budget to seek an optimal outcome.
“In a period of unprecedented budgetary challenge, this is particularly damaging”.
Mr Dorrell told HSJ his view was that “the solution to this is relatively simple. It’s a discussion with the Treasury around the way the spending control limits work.”