Cash for NHS trusts cannot be itemised: Audit Office says no breakdown available for pounds 40m set-up costs

MILLIONS of pounds of taxpayers' money is being spent setting up National Health Service trusts but there is no independent means of checking where the money has gone, according to information provided by the Government's public spending watchdog.

The Government has spent more than pounds 40m on its opt-out policy, helping hospitals and other health care bodies leave the NHS and set up as independent trusts.

The money is thought to have been used during the 'shadow' trust period, on taking advertisements in the local press, holding public meetings to explain what the changes will mean, hiring management consultants to smooth the handover, and on conveyancing fees incurred as building ownership is transferred. But nobody really knows exactly how it has been spent.

In a letter to Alan Milburn, the Labour MP for Darlington, the National Audit Office has admitted that it has no way of discovering what the money has been used for. Ray Bennett, director of health at the NAO, confirmed that the Department of Health does not hold information on the breakdown of development costs incurred by would-be trusts. Nor, he said, was the expenditure 'separately identifiable in the local district health authority's audited accounts'.

In an earlier letter, Robert Le Marechal, the Deputy Comptroller and Auditor General at the NAO, said the way the funding was allocated and the array of different NHS accounting practices made it impossible to determine where the money went. 'On the question of accounting for the cost of implementing the reforms, I can confirm that expenditure is not brigaded in this way in the health authorities' or trusts' financial accounts; nor are such costs identified in the summarised accounts of the health authorities, trusts and other NHS bodies (which are audited by the National Audit Office).'

Mr Le Marechal continued: 'Some of the more detailed information, such as the cost of establishing the NHS trusts, may be held in local management accounts but there are currently many different management accounting systems across the health service at local level and these make it difficult to identify the aggregate costs on a specific activity.'

Mr Milburn wrote to the NAO after becoming concerned about two opting-out NHS bodies in his constituency. Darlington Memorial Hospital, which is planning to become a trust, told him that it had received pounds 25,000 from the Government to be used on making the switch. The hospital gave him a detailed breakdown of where the money had gone: hire of a hall for a public meeting, taking an advertisement in a local paper and legal fees.

South Durham Healthcare, which runs community health programmes in Darlington, had also received pounds 25,000. But when Mr Milburn inquired where the money had gone, he received only a broad-brush reply that it had been used to help prepare for the move towards becoming a trust.

In 1990-91, the Government spent almost pounds 12.5m administering the first wave of NHS changes in England and Wales. In 1991-92, the cost had more than doubled to pounds 26.5m. In 1992-93, more hospitals and NHS bodies opted out, taking the total expenditure above pounds 40m. The three health regions spending the most on creating NHS trusts are North East Thames, South Western and Mersey.

'Millions of pounds have disappeared into a bureaucratic black hole,' Mr Milburn said. 'It is a national scandal that at least pounds 40m has been handed out willy-nilly without being properly accounted for. Red- tape costs are soaring in the NHS, diverting precious resources from patient care. The health of the nation is becoming bogged down in costly and continual administrative change.'

Mr Milburn said he was disappointed the NAO was unable to discover where the pounds 40m-plus expenditure had gone. 'I urge the NAO to conduct a full investigation,' he said.