Payments by NHS bodies to local authorities, voluntary organisations and others (section 256 and 257 payments) and payments by local authorities to NHS bodies (section 76 payments) ? new Directions

Three sets of Directions have been issued relating to these payments:

  • The National Health Service (Conditions Relating to Payments by NHS Bodies to Local Authorities) Directions 2013 (section 256/257 Directions).
  • The National Health Service (Conditions Relating to Payments by Local Authorities to NHS Bodies) Directions 2013 (section 76 Directions).
  • The National Health Service Commissioning Board (Payments to Local Authorities) Directions 2013 (NHSCB Directions).

The first two came into force on 20 May 2013 and the third on 1 April 2013.

Section 256/257 Directions and section 76 Directions

These Directions place conditions on any payments made by NHS England or CCGs under sections 256/257 and section 76 NHS ACT 2006. The purpose of the Directions is to ensure that any such payments are subject to common conditions of financial management.

These Directions also apply to payments made by NHS England under the NHSCB Directions - see below - as well as payments agreed at local level.

It is also worth noting that under section 13X of the 2006 Act NHS England has a separate and freestanding power to "make payments by way of grant or loan to a voluntary organisation for the provision of services which are similar to the services in respect of which the Board has functions" and these payments may be made subject to such terms and conditions as the Board considers appropriate.

The new Directions replace those that came into force in 2000. Although no new conditions have been created there have been some clarifications and the conditions have been updated to reflect the NHS reforms.

The conditions therefore remain that:

  • the payer must be satisfied that the payment is likely to secure a more effective use of funds than if an equivalent amount was spent by the payer;
  • if payment is made towards the capital cost of a project the amount of the payment must be determined before the project begins and the payer must be satisfied the recipient will meet any costs not covered by the payment and for so long as the project is considered necessary or desirable;
  • if the recipient fails to provide the agreed level of services the payer must reduce accordingly any future payments;
  • the payer must so far as is practicable ensure the payment is used in the most efficient and effective way possible;
  • the payer must prepare a memorandum of agreement in the form set out in Annex 1 of the relevant Directions;
  • if the payment is used to purchase land or property and the recipient subsequently disposes of that land or property or uses it for an unintended purpose the payment must be repaid; and
  • after the end of the Financial Year recipients must provide an annual voucher in the form set out in Annex 2 of the relevant Directions to their external auditor by 30 September for certification and submission to the payer by no later than 31 December.

NHSCB Directions

These Directions to the NHS Commissioning Board (NHS England) require the transfer of funding to local authorities in the financial year 2013/14 to promote partnership working and to support investment in social care that benefits health.

In the two financial years to 31 March 2013 the Department of Health increased PCT allocations to support social care. This was in addition to additional funding that had been paid to them within their allocations for reablement services. This funding allocation has now passed to NHS England.

In the financial year 2013/14 NHS England will transfer £859m to local authorities and this figure is expected to rise to £900m in 2014/15. The amounts to be paid to individual local authorities have been determined as before by reference to the adult social care relative needs formulae and the actual amounts are set out in the Schedule to the Directions.

These Directions specify the uses to which the additional funding may be used:

  • the funding must be used to support adult social care services which also have a health benefit but local areas may determine exactly how the money is used; and
  • the funding may be used to support existing services where they are: of benefit to the wider health and care system; provide good outcomes for service users; or would be reduced due to budget pressure without the additional investment.

Payments will need to be made under section 256 NHS Act 2006 and NHS England will need to enter into appropriate agreements with each local authority. The usual section 256 conditions (as summarised above) will apply including that NHS England must be satisfied that the payment is likely to secure a more effective use of funds that if an equivalent amount was spent by NHS England. In addition a number of extra conditions apply:

  • the local authority must agree with its local CCGs how the funding is best used within social care and the expected outcomes - it is expected that these discussions will take place at Health and Wellbeing boards;
  • the local authority and its CCGs must have regard to the Joint Strategic Needs Assessment for their local population as well as existing commissioning plans for both health and social care in deciding how to use the funding;
  • local authorities must be able to demonstrate how the funding will be used to improve social care services and outcomes for service users compared to service plans without taking into account the additional funding;
  • NHS England must also have regard to the Caring for our future White Paper which anticipated that the funding might be used to cover the small revenue costs to local authorities of the commitments made in the White Paper (excluding the Guaranteed Income Payments disregard which is funded by a grant from the Department of Health).

NHS England should include reporting requirements in its agreements with local authorities so that it is kept informed as to how the money is being spent can account for this expenditure and can assure itself that the conditions for each funding transfer are being met.

If NHS England wishes to impose any further conditions on the funding transfers it must first obtain written agreement from the Department of Health.

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