Part 1

National Health Service, etc

Financial arrangements: England and Wales

Funding of Local Health Boards
9
1
After section 97E of the 1977 Act there is inserted—

Public funding of Local Health Boards
97F
1
It is the duty of the National Assembly for Wales, in respect of each financial year, to pay to each Local Health Board—
a
sums equal to their general Part 2 expenditure; and
b
sums not exceeding the amount allotted by the National Assembly for Wales to the Local Health Board for that year towards meeting the Board’s main expenditure in that year.
2
In determining the amount to be allotted for any year to a Local Health Board under subsection (1)(b) above (or in varying the amount under subsection (7) below), the National Assembly for Wales may take into account, in whatever way the Assembly thinks appropriate—
a
the Board’s general Part 2 expenditure; and
b
expenditure which would have been the Board’s general Part 2 expenditure but for an order under section 103(1) below,
during any period the Assembly thinks appropriate (or such elements of that expenditure as it thinks appropriate).
3
Where the National Assembly for Wales has made an initial determination of the amount (“the initial amount”) to be allotted for any year to a Local Health Board under subsection (1)(b) above, the Assembly may increase the initial amount by a further sum if it appears to it that over a period notified to the Board—
a
the Board satisfied any objectives notified to it as objectives to be met in performing its functions; or
b
it performed well against any criteria notified to it as criteria relevant to the satisfactory performance of its functions (whether or not the method of measuring its performance against those criteria was also notified to it).
4
In subsection (3) above, “notified” means specified or referred to in a notice given to the Local Health Board by the National Assembly for Wales.
5
In making any increase under subsection (3) above, the National Assembly for Wales may (whether by directions under subsection (8) below or otherwise) impose any conditions it thinks fit on the application or retention by the Local Health Board of the sum in question.
6
Where the National Assembly for Wales has, under subsection (3) above, increased by any sum the amount to be allotted for any year to a Local Health Board and notified the Board of the allotment and it subsequently appears to the Assembly that the Board has failed (wholly or in part) to satisfy any conditions imposed in making that increase, the Assembly may—
a
reduce the allotment made to the Board for that year; or
b
when the Assembly has made an initial determination of the amount (“the initial amount”) to be allotted for any subsequent year to the Board under subsection (1)(b) above, reduce the initial amount,
by any amount not exceeding that sum.
7
An amount is allotted to a Local Health Board for a year under this section when the Board is notified by the National Assembly for Wales that the amount is allotted to the Board for that year; and the National Assembly for Wales may make an allotment under this section increasing or reducing (subject to subsection (6) above) an allotment previously so made, and the reference to a determination in subsection (3) above includes a determination made with a view to increasing or reducing an allotment previously so made.
8
The National Assembly for Wales may give directions to a Local Health Board with respect to—
a
the application of sums paid to the Board under this section, or
b
the payment of sums by the Board to the National Assembly for Wales in respect of charges or other sums referable to the valuation or disposal of assets.
9
Sums falling to be paid to Local Health Boards under this section shall be payable subject to compliance with such conditions as to records, certificates or otherwise as the National Assembly for Wales may determine.

Financial duties of Local Health Boards
97G
1
It is the duty of every Local Health Board, in respect of each financial year, to perform its functions so as to secure that the expenditure of the Board which is attributable to the performance by the Board of its functions in that year (not including expenditure within subsection (1)(a) of section 97F above) does not exceed the aggregate of—
a
the amount allotted to it for that year under subsection (1)(b) of that section;
b
any sums received by it in that year under any provision of this Act (other than sums received by it under that section); and
c
any sums received by it in that year otherwise than under this Act for the purpose of enabling it to defray any such expenditure.
2
The National Assembly for Wales may give such directions to a Local Health Board as appear to be requisite to secure that the Board complies with the duty imposed on it by subsection (1) above.
3
Directions under subsection (2) may be specific in character.
4
To the extent to which—
a
any expenditure is defrayed by a Local Health Board as trustee or on behalf of a Local Health Board by special trustees; or
b
any sums are received by a Local Health Board as trustee or under section 96A above,
that expenditure and, subject to subsection (6) below, those sums shall be disregarded for the purposes of this section.
5
For the purposes of this section sums which, in the hands of a Local Health Board, cease to be trust funds and become applicable by the Local Health Board otherwise than as trustee shall be treated, on their becoming so applicable, as having been received by the Local Health Board otherwise than as trustee.
6
Of the sums received by a Local Health Board under section 96A above so much only as accrues to the Local Health Board after defraying any expenses incurred in obtaining them shall be disregarded under subsection (4) above.
7
Subject to subsection (4) above, the National Assembly for Wales may by directions determine—
a
whether specified sums are, or are not, to be treated for the purposes of this section as received under this Act by a specified Local Health Board;
b
whether specified expenditure is, or is not, to be treated for those purposes as expenditure within subsection (1) above of a specified Local Health Board; or
c
the extent to which, and the circumstances in which, sums received by a Local Health Board under section 97F above but not yet spent are to be treated for the purposes of this section as part of the expenditure of the Local Health Board and to which financial year’s expenditure they are to be attributed.
8
In subsection (7) above, “specified” means of a description specified in the directions.

Resource limits for Local Health Boards
97H
1
It is the duty of every Local Health Board to ensure that the use of its resources in a financial year does not exceed the amount specified for it in relation to that year by the National Assembly for Wales.
2
For the purpose of subsection (1) above no account shall be taken of any use of resources for the purposes of a Board’s general Part 2 expenditure (within the meaning of paragraph 6A of Schedule 12A).
3
But in specifying an amount for a Local Health Board under subsection (1) above (or in varying the amount under subsection (5) below), the National Assembly for Wales may take into account (in whatever way it thinks appropriate)—
a
any such use of resources; and
b
the use of any resources which would have been for the purpose of the Board’s general Part 2 expenditure but for an order under section 103(1) below,
during any period the Assembly thinks appropriate (or such elements of such uses of resources as it thinks appropriate).
4
For the purpose of subsection (1) above the National Assembly for Wales may give directions—
a
specifying uses of resources which are to be, or not to be, taken into account;
b
making provision for determining to which Local Health Board certain uses of resources are to be attributed;
c
specifying descriptions of resources which are to be, or not to be, taken into account.
5
Where an amount has been specified under this section in respect of a financial year, it may be varied by a later specification.
6
Subsections (4) to (6) of section 97G above shall apply in relation to the duty under subsection (1) above as they apply in relation to the duty under section 97G(1); and for that purpose references to the defraying of expenditure and the receipt of sums shall be construed as references to the incurring of liabilities and the acquisition of assets.
7
The provisions in section 97G(2) and (3) above about the giving of directions by the National Assembly for Wales shall apply in relation to the duty under subsection (1) above as they apply in relation to the duty under section 97G(1).
8
In this section a reference to the use of resources is a reference to their expenditure, consumption or reduction in value.