§ Mr. Ridley
asked the Secretary of State for Social Services if she will publish in the Official Report a copy of the rules for hospitals to spend revenue money referred to in her answer to Question No. 20 by the hon. Member for Cirencester and Tewkesbury on 10th June 1975; when she hopes to revise them and in what way.
§ Dr. Owen,
pursuant to his reply [Official Report, 14th July 1975; Vol. 895, c. 370–1], circulated the following copy of the rules, Definition of Capital Expenditure.
Definition of Capital Expenditure
1. "Capital expenditure" is defined in the National Health Service (Hospital Accounts and Financial Provisions) Regulations 1969.
2. This definition should be taken as including expenditure on:
- (a) Initial construction, installation, reconstruction, extension and demolition of buildings, external works, and engineering plant, services and equipment.
- (b) Improvement or alteration of buildings, external works and engineering services (see paragraphs 3(b) and (c) below).
- (c) All equipment required to bring a new building or a newly acquired building into use, or required in connection with other capital schemes as so defined.
- (d) Initial purchase, improvement or replacement of vehicles and items of medical, dental and computer equipment, with an estimated cost of £1,000 or more per item.
- (e) Acquisition of land and premises.
3. The 'distinction between maintenance expenditure and improvements and other capital expenditure is not always easy to drake. The general position on renewals and replacement and maintenance expenditure is set out below.
- (a) Maintenance expenditure except as later provided is charged to revenue account regardless of cost. This is expenditure undertaken to keep (or restore) every part of a site, a building or contents, or a vehicle in an efficient state, in efficient working order or in good repair. This includes for example interior and exterior decorating, and repointing of brickwork. It also includes replacement of parts of vehicles, medical, dental and computer equipment (for example X-ray tubes).
- (b) Renewal or replacement of building and engineering elements (for example electric wiring systems, plumbing and drainage, roofs) and engineering equipment because they are beyond economic repair, or for reasons of safety or hygiene, even though some improvement is effected at the same time, are charged to revenue when the estimated cost of the scheme or item is less than £5,000. If the estimated cost is £5,000 or more per scheme or item the expenditure is charged to capital.
- (c) Renewal or replacement of the items set out in paragraph 3(b) for other reasons (such as to provide an improved standard of service or facility, or to reduce maintenance or operating costs before the items are worn out) are charged to capital when the estimated cost of the scheme or item is £500 or more; and to revenue when the estimated cost is less than £500.
- (d) Maintenance expenditure with an estimated cost of less than £500 which is carried out at the same time as and directly connected with a capital scheme may be treated as part of that scheme and charged to capital account.
4. Fees in respect of capital schemes as defined above are charged to capital.
5. Salaries of Boards' architects, engineers, quantity surveyors and all staff of their departments (including typists, clerks and administrative staff) are charged to capital (except for any staff who are fully or mainly engaged on schemes counting as revenue expenditure).
Notes:(a) Schemes with an estimated cost of less than £500 which under this definition would be capital, should be counted as revenue expenditure.(b)"Equipment" has the definition ascribed to it in the Hospital Equipment Notes viz:The term 'equipment' covers all items necessary for the functioning of the services of the hospital and includes both non-technical (for example furniture) and technical equipment. Short term consumable supplies such as fuel, stationery, food, drugs and dressings are not included.Engineering equipment under the definition includes fixed equipment for laundering, catering, sterilising, CSSD, telephones, radio and signalling systems.(c) If a hospital management committee is in doubt whether proposed expenditure should rank as capital or revenue the question should be referred to the chief financial officer of the regional hospital board for decision.(d) Where expenditure of a maintenance nature is charged to capital under the provisions of paragraph 3b or d, the costs should be analysed and recorded as maintenance in the Maintenance Expenditure Analysis Statements M/P or M/S.(e) For financial limits relating to works expenditure, the estimated cost is inclusive of associated equipment and fees. For financial limits relating to purchases of equipment and plant, the estimated cost is inclusive of incidental fees, building and engineering expenditure incurred as part of installation. The estimated cost for this purpose is the amount payable by the hospital authority before the deduction of any specific sum allowed by the supplier for the items to be replaced.(f) "Scheme" under this definition means work and associated purchases of equipment planned to proceed straight through design to completion in sequence even though the work may be carried out in phases.