§ Mr. Michael
To ask the Secretary of State for Wales (1) if he will outline the process, following implementation of the National Health Service and Community Care Act, whereby a service provider within a district health authority would make application to the Welsh Office for capital funding; what conditions will determine eligibility for capital funding; and what continuing conditions will attach to such funding should an allocation be made;
(2) if he will outline the process, following the implementation of the National Health Service and Community Care Act, whereby a service procurer or purchasing body would apply to the Welsh Office for capital funding; what conditions will determine eligibility for capital funding; and what continuing conditions will attach to such funding, should an allocation be made;
(3) if he will list the sources of capital funding that will be available to any hospital trust or any other self-governing trusts in Wales; what process of approval such trusts would have to go through following implementation of the National Health Service and Community Care Act in respect of such capital projects; what conditions will determine eligibility for any public contributions towards such projects; and what continuing conditions will attach to such funding should an allocation be made.
§ Mr. Grist
A paper setting out proposals for further arrangements for allocating capital funds to the health service in Wales was issued to the service for comment this week. Copies will be placed in the Library of the House and the Vote Office.
The proposals distinguish between 'minor' capital—required for routine equipment replacement and relatively small developments—and 'major' capital—for strategically significant developments. The former would be allocated to health authorities for their discretionary use in proportion to their revenue formula shares. Authorities would be expected to use these funds to maintain and develop the services provided to their residents by hospitals with which they have contracted, including those which they do not themselves manage. The use of capital would be determined in negotiations between health 512W authorities and providing hospitals. The existing rules governing virement between capital and revenue would still apply, but otherwise the Department would not place any conditions on the use of these funds, although authorities would be accountable for their spending in the usual ways, and expenditure would have to be consistent with local strategies for health.
Major capital would be allocated to specific projects according to their benefits in terms of health gain and return on investment. Health authorities or providing hospitals would be eligible to bid for these resources independently, but, in the case of hospitals, their bids would need to be supported by the potential purchasers of their services. Capital provided for major schemes would, of course, be earmarked specifically for those schemes and would form part of a centrally managed programme.
Any NHS trusts in Wales would include the cost of the depreciation of their assets in their charges and this could then be used to fund further capital expenditure. For new developments and major equipment purchases trusts would borrow funds either from the Secretary of State or from elsewhere. The level of borrowing would be subject to an agreed financing limit which would reflect the need for working capital and investment set out in each trust's business plans. No specific conditions would be attached to a trust's borrowing limits, but trusts would be held to account for the funds borrowed and would, of course, be subject to audit.