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Health and Social Care Act 2001

Section 3: Supplementary payments to NHS trusts and Primary Care Trusts

35.Section 3 enables the Secretary of State and the National Assembly for Wales to make payments direct to NHS trusts and Primary Care Trusts, outside the existing arrangements for funding such bodies. In particular it enables payments to be made to NHS trusts other than under NHS contracts and to Primary Care Trusts other than under NHS contracts or the provisions of section 97C of the 1977 Act (Health Authority allocations to Primary Care Trusts). This will facilitate direct payments to NHS trusts and Primary Care Trusts.

36.These supplementary payments may be made through Health Authorities rather than direct to trusts. Under section 16C of the 1977 Act (as inserted by section 12 of the Health Act 1999), the Secretary of State may direct Health Authorities to exercise his powers under the new paragraph 5A of Schedule 3 to the 1990 Act (NHS trusts) and/or section 97C(5A) of the 1977 Act (Primary Care Trusts). The Secretary of State would be able to control how Health Authorities made these supplementary payments to trusts by giving directions under section 17 of the 1977 Act.

37.Under current arrangements, the Secretary of State for Health makes allocations to Health Authorities under section 97 of the 1977 Act. He can direct that particular sums must be applied for the purpose of making payments to NHS trusts, but such payments are then made under “service level agreements” (i.e. NHS contracts). In relation to Primary Care Trusts, if the Secretary of State attaches conditions as to how sums are to be spent when allocating an amount to a Health Authority, the Health Authority can attach those conditions when allocating part of that amount to a Primary Care Trust (see section 97C(5) of the 1977 Act).

38.These existing arrangements may not be appropriate for supplementary payments to NHS trusts and Primary Care Trusts, for example where the Secretary of State wishes to make payments to trusts specifically for rewarding their staff performance and/or improving facilities. The section is intended to provide for a more efficient resource allocation route to NHS trusts and Primary Care Trusts for such supplementary payments, that will exist alongside income from NHS contracts or in the case of Primary Care Trusts, Health Authority allocations.

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