pounds 170m NHS payout to GPs `was illegal'

More than pounds 170m of taxpayers' money has been paid out illegally by the Government to smooth the path of its health service reforms, according to a powerful official watchdog. Detailed records of the scheme are said to have been destroyed.

The Commons Public Accounts Committee has been asked to look into payments by the NHS to GPs to enable them to manage their own budgets. A letter from the National Audit Office, highly critical of the payments, has been passed to Robert Sheldon MP, the committee chairman.

In the letter, the watchdog described the payments as "unsatisfactory" and said public money was "paid out for five years without explicit Parliamentary approval". Advice from solicitors at the Department of Health warning that the scheme was unlawful had been ignored by officials.

Files were destroyed and as a result, says the NAO, "our analysis of what went wrong and why, must be speculative to some extent".

In 1990, the Government's Community Care Act made no mention of payments to GPs and practice managers to cover the cost of hiring accountants and book-keepers to help them move to administering their own finances. Legislation authorising the cash was not passed or approved by Parliament.

Nevertheless, acting on orders from the health department, Family Health Service Authorities went ahead and handed out the money. In October 1992, says the NAO, "solicitors first drew attention to the lack of statutory authority".

In another minute, on 7 June 1994, the NAO says the department's lawyers pointed out that there was no lawful basis for FHSAs to make the payments to GPs.

The legislation was finally introduced last year, but not before payments totalling pounds 159.7m in England, pounds 8.95m in Wales and pounds 9.17m in Scotland, had been made.

The NAO held an internal inquiry after the matter was raised in October 1995 by the Labour MP, Rhodri Morgan.

One of the reasons for the payments being pushed through without MPs being given the opportunity to discuss them, was the desire of civil servants not to delay the Government's health reforms, the NAO found. "GP fundholding was one of the areas in which innovation and change was most evident and there was an active programme in the department to keep up the momentum, which may have led to work on the statutory approval of management allowance being given less priority than it deserved."

When the NAO came to look at the scheme it found staff had changed jobs and that files had been destroyed under the "five-year rule" covering the keeping of departmental records.

Mr Morgan said it was clear that "if scandals go on for more than five years they will go undetected". He said it was outrageous that it was impossible to discover who had destroyed the files and the MP also questioned the motives for getting rid of them.

It was obvious, said Mr Morgan, that staff were required to be "gung- ho about fund-holding - nobody dared raise the issue with ministers because they were afraid of bringing bad news."

He had written to Mr Sheldon asking for a PAC inquiry.