Department of Health Resource Accounts 2009-10 HC

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Department of Health Resource Accounts 2009-10 HC Presented to the House of Commons pursuant to Section 6 of the Government Resources and Accounts Act 2000. Department of Health Resource Accounts 2009-10 (For the year ended 31 March 2010) Ordered by the House of Commons to be printed 26 July 2010 LONDON: The Stationery Office 26 July 2010 HC 208 Price: £20.00 Presented to the House of Commons pursuant to Section 6 of the Government Resources and Accounts Act 2000. Department of Health Resource Accounts 2009-10 (For the year ended 31 March 2010) Ordered by the House of Commons to be printed 26 July 2010 LONDON: The Stationery Office 26 July 2010 HC 208 Price: £20.00 Department of Health Resource Accounts 2009-10 Contents © Crown Copyright 2010 The text in this document (excluding the Royal Arms and other departmental or agency logos) may be reproduced free of charge in any format or medium providing it is reproduced accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the document specified. Where we have identified any third party copyright material you will need to obtain permission from the copyright holders concerned. ISBN: 9780102967678 Printed in the UK by The Stationery Office Limited on behalf of the Controller of Her Majesty’s Stationery Office ID P002376260 07/10 4388 Printed on paper containing 75% recycled fibre content minimum. 0 Department of Health Resource Accounts 2009-10 Contents Contents ANNUAL REPORT ............................................................................................................. 2 STATEMENT OF PRINCIPAL ACCOUNTING OFFICER'S RESPONSIBILITIES .......... 28 REMUNERATION REPORT ............................................................................................. 29 RELATIONSHIP BETWEEN ACCOUNTING OFFICERS IN THE DEPARTMENT OF HEALTH, ITS AGENCIES AND THE NHS ....................................................................... 38 STATEMENT ON INTERNAL CONTROL ........................................................................ 39 THE CERTIFICATE AND REPORT OF THE COMPTROLLER AND AUDITOR GENERAL TO THE HOUSE OF COMMONS .................................................................. 46 ACCOUNTING SCHEDULES Statement of Parliamentary Supply .................................................................................. 48 Operating Cost Statement ................................................................................................ 49 Consolidated Statement of Financial Position .................................................................. 50 Consolidated Cash Flow Statement 51 Statement of Changes in Taxpayer’s Equity .................................................................... 52 Consolidated Statement of Operating Costs by Departmental Strategic Objectives 53 NOTES TO THE DEPARTMENTAL RESOURCE ACCOUNTS ...................................... 54 Annex A .......................................................................................................................... 114 Annex B .......................................................................................................................... 116 Annex C .......................................................................................................................... 120 Annex D .......................................................................................................................... 124 1 Department of Health Resource Accounts 2009-10 ANNUAL REPORT ANNUAL REPORT 1 The Accounting Boundary 1.1 These Resource Accounts present the financial results for the Department of Health. They consolidate the financial information of organisations within the Department’s Resource Accounting Boundary. As such, this consolidation includes the Department itself, the NHS Purchasing and Supply Agency, those Special Health Authorities that are not funded by trading activities, Strategic Health Authorities, and Primary Care Trusts. The relationship between organisations within this boundary is substantially different from the concept of a group in the commercial sector as it is based on in-year budgeting controls, rather than strategic controls or profit motive. In general terms, the primary focus of the Government- funded organisations within the Resource Accounting boundary lies with the commissioning of healthcare from the provider sector. 1.2 A wide range of organisations lie outside the Department’s Resource Accounting boundary, but remain within the much broader parameters of the Departmental Budgeting boundary. The latter is significantly different from the Department’s Resource Accounting Boundary, in that it also includes the Special Health Authorities that receive their funding directly from trading activities, Non-Departmental Public Bodies, NHS Trusts and NHS Foundation Trusts. By far the majority of this group of organisations operate as providers of healthcare, and work within what may be described as a trading environment with commissioners. 1.3 Note 36 to the financial statements provides a comprehensive list of all organisations within the Departmental Budgeting Boundary, indicating those inside and outside the Resource Accounting boundary. A reconciliation between the financial results of the organisations within the two boundaries is given on page 21. 2 Summary of Financial Results 2.1 These Accounts show how the Department’s activities have been funded, and its resources deployed, during the 2009-10 financial year. For the first time, and in a significant change to previous years, the financial statements and supporting notes have been prepared in accordance with the requirements of International Financial Reporting Standards (IFRS). 2.2 Consequently, in order that direct comparisons can be made between the two years’ results, the 2008-09 financial figures included for comparative purposes in the 2009-10 accounts, have been restated to reflect the changes arising out of the switch from UK Generally Accepted Accounting Practice (UKGAAP) to IFRS. It is not therefore possible to compare the 2008-09 comparators directly with the published 2008-09 DH Resource Account (HC456). However, any 2008-09 Budgeting or Parliamentary Estimates figures included in these Accounts have not been restated to reflect the change to IFRS, and therefore remain on a UKGAAP basis. 2.3 The Department has two primary sources of funding: Parliamentary (Supply) funding and National Insurance Contributions, with the latter treated as operating income. In 2009-10, National Insurance Contributions amounted to just over £18 billion. HM Treasury sets the Department’s budgets independently from the level of National Insurance Contributions and, as such, they have no impact on the resources available to cover expenditure on healthcare. 2.4 The Department must contain expenditure within a series of controls operated by HM Treasury and Parliament. HM Treasury controls relate to expenditure by organisations within the budgeting boundary and Parliamentary controls relate to expenditure by organisations within the accounting boundary. HM Treasury also operates controls over the Department’s running costs through the Administration Cost Limit (ACL). 2.5 In 2009-10, the Department met all its financial duties, managing resources within the budgets set by HM Treasury and the amounts voted by Parliament. The following paragraphs summarise performance in 2009-10 for revenue, capital and administration expenditure. 2 Department of Health Resource Accounts 2009-10 ANNUAL REPORT REVENUE Revenue expenditure within the budgeting boundary: 2.6 The Department is required to manage the revenue expenditure of all organisations included in the budgeting boundary within its Revenue Departmental Expenditure Limit (RDEL). Expenditure within the budgeting boundary in 2009-10 was £98,781 million, an increase of £6,643 million or 7.2% compared to the prior year. This increase was largely driven by increases in allocations to the NHS (both general allocations and allocations for Family Health Services) of around £5.4 billion and increases in central spending, including expenditure of around £470 million on antiviral medicines to respond specifically to the swine flu pandemic and more generally in terms of pandemic flu preparedness. 2.7 Expenditure was £1,407 million, or 1.4%, less than the total DEL provision for the year of £100,188 million. 2.8 Expenditure that HM Treasury has deemed to be demand-led or exceptionally volatile scores against the Annually Managed Expenditure (AME) budget. For DH, this includes expenditure on certain impairments and Credit Guarantee Finance. Expenditure that was scored against the AME budget in 2009-10 was £2,478 million, an increase of £2,103 million or more than five times the amount in the prior year. This increase resulted from asset impairments due to market valuations (both planned and as a result of prevailing economic conditions) and changes in valuation methodology. Revenue expenditure within the resource accounting boundary: 2.9 Net expenditure within the accounting boundary increased by £7,866 million or 10.6%, from £74,518 million in 2008-09 to £82,384 million in 2009-10. In addition to the expenditure noted in paragraph 2.6, technical items accounted for almost £1 billion of the total increase and included: • An increase of around £400 million on asset impairments due to changes in valuation methodologies and market valuations for bodies within the Resource Accounting Boundary (mainly PCTs); and • A reduction of around £600 million in National Insurance
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