APPENDIX I

"ECIAL ARRANGEMENTS FOR TEACHING DISTRICTS.

These districts will be administered as part of the areas in which they are tuated. But, to help in achieving the objects set out in paragraph 23, i.e, to ecure that the inclusion of the teaching hospitals will benefit all the health ervices in the districts in which they are situated, to retain hospitals' individual Hentity and historic traditions, and to maintain the special services they provide, here will be the following arrangements:

(a)

(b)

(c)

(d)

(0)

the regional health authority will appoint a special
regional committee to deal with planning matters relating
to teaching and research;

expenditure for the services in a teaching district will be
separately identified in the regional health authority's
approval of expenditure for the area;

the area health authority will be required to appoint a
district committee to manage the services in each teaching
district (which will normally carry the teaching hospital's
name). This committee will consist partly of members of
the area authority itself and partly of others; in the early
years of the reorganised service, the Secretary of State
will appoint the chairman and some members; it will doubtless
usually hold its meetings at the teaching hospital;

when a consultant is being chosen to serve in a teaching
district, the advisory appointments committee will always
include in its membership one or more members nominated
by the district committee; and

arrangements will be made for one or two members of

existing boards of governors and university hospital management committees to be appointed to each of the area authorities concerned and to each teaching district committee.

APPENDIX 2

ENDOWMENTS.

1.

Endowments other than those belonging to boards of governors and university hospital management committees will be vested in the area health authority and applied and administered by it according to the categories in which they fall:

2.

(a)

(b)

(c)

those held for "special purposes" will continue to be
applied only for purposes within the scope of the trust;

those held for the "general purposes" of a particular hospital will continue to be applied only for the purposes of that hospital;

those held for the "general purposes" of a hospital management committee will become available for application within the area of the successor area health authority, and will be available not only for hospital purposes (to which they are at present limited) but for any purpose relating to the health services provided for the people of the area, including research and capital works.

Endowments vested in boards of governors and university hospital management committees will be vested in the teaching district committee. It will be made possible for the district committee to apply funds in category (c) for any purpose related to the health services provided for the district, not only for hospital purposes.

APPENDIX III

MEMORANDUM

PREPARED BY

THE SCOTTISH HOME AND HEALTH DEPARTMENT

INANCIAL CONTROL: THE BUDGET PROCESS FOR THE HOSPITAL SERVICE IN SCOTLAND

The programme of major projects (replacement and modernization of the ain teaching hospitals, the provision of new district hospitals and otherwise esigned to remedy major deficiencies in accommodation) is settled and approved n general by the Secretary of State in the light of proposals put forward by egional Boards. Each individual major project requires departmental approval nd authorization of cost limits at certain stages. The total hospital resources lso include provision for a range of smaller projects (broadly costing up to round 250,000 pounds), from which each Regional Board receives an annual global allocation, within which it is free to determine its own priorities and carry ut its smaller, schemes.

b) Hospital Revenue Expenditure

Forecast estimates for a four year period are prepared each year by ospital authorities and these provide the Department with the information necessary to take account of the needs of the hospital service, The estimates do not reflect the total cost of the service in the period under review but relate only to the new developments which will take place, on the assumption that the current level of total expenditure (though not necessarily its components) is fully required for existing services and that continuing growth Over this level is necessary. It is the rate of growth which can be permitted in the period under review that is settled in the estimates exercise. Although planning may be permitted at an agreed growth rate for a four year period, only the first year is authorized as a firm commitment for expenditure and revenue allocations to hospital authorities can only be approved for one

year.

The funds allocated to the hospital service have then to be allocated by the Department, before the start of each financial year, between the five Regional Boards.

Until 1971-72, each Board's allocation was built up from:

(1)

the previous year's approved level of expenditure,
adjusted for price and wage increases;

(11)

the "growth money", 1.e., the Board's share of the
rate of growth which has been allocated to the service

In distributing the growth money, account was first taken of special commitments incurrent by each Board, and the remainder distributed on a pro rate basis (staffed beds). The main commitments are running costs of new buildings, development of teaching hospitals and items of service which are, by agreement, confined to one or two Boards. Approximately half of this total is estimated to be required for the running costs of new buildings. Growth is calculated in real terms, 1.e., it is in addition to the amount required to cover the cost of salary and wage awards and price changes.

Though built up in this way, the allocation is made to each Board as a global sum; separate sums within it are neither identified, nor are they reserved to be used for particular purposes. Moreover, the total sum available to the Department is distributed to Boards in the allocations at the beginning of the financial year, so that further sums cannot be provided in the course of the year for particular projects. There are two exceptions to this:

(1) a small contingency allowance is reserved to meet compen-
sation payments and cash losses which cannot be budgeted for;

1

(2) The estimated running costs of very large capital projects,
represent a disproprotionate part of any one region's total
allocation, are reserved and allocated as commissioning
progressesв.

Regional Boards are entirely free to decide priorities within their

own areas.

A revised distribution formula was introduced, starting in 1971/72, the main changes being:

(1) The revenue consequences of capital schemes continue to be
taken into account specially, but only for the major schemes
individually approved by the Secretary of State. Regional ·
Boards are not expected to budget for the revenue consequences
of all smaller schemes within their bulk allocations.

(2) The formula determining the ratio of distribution of un-
committed funds between Regions has been revised on a more
refined basis relating to population, beds, and cases.

(3) The formula applies to total revenue money less committed
items instead of, as previously, to the balance of growth
money only.

(4) Since (3) results in a substantial re-distribution of resources
between the Regions, the change-over is not being applied as a
one-stage operation, but phased over several years. Meanwhile
there is a "safety-belt" arrangement whereby each Region is
guaranteed a minimum free growth element of 1% of their
previous year's up-dated allocation.

In general, therefore, Regional Boards have a limited discretion on capital programmes, while on the revenue side, within the system of bulk annual allocations, of deciding their own priorities as between the level of expenditure in running new buildings (bearing in mind the needs of existing hospitals and the general level of services elsewhere in their areas).

Under the forthcoming National Health Service re-organization, it is likely that control of capital programmes will continue broadly on present lines. The revenue distribution arrangements will clearly need radical review before they could be made suitable for application to some 14 health boards, as opposed to the present 5 Regional Boards.

71-413 O 73-8