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Last Updated: Thursday, 22 September 2005, 00:23 GMT 01:23 UK
Where is the extra NHS money going?
The NHS has received record budget increases since 2002.

Spending is rising by 7.4% a year until 2008 in an attempt to bring the UK up to European levels.

That equated to 5.9bn for 2004-5 in England, bringing total spending close to 70bn a year.

But just where is the new money going?

An NHS Confederation report gives an insight into how local health bosses are spending taxpayers money.

STAFF

About half of the new money went on staff, the NHS' single biggest cost.

A fifth - 1.4bn - went on employing new staff, which was one of the two key objectives of the 2000 10-year NHS Plan.

This money has helped pay for a sustained increase in nurses (67,880 more since 1999), consultants (7,330 more) and GPs (3,060 more).

But a larger proportion, nearly 30%, went on paying staff more. Since the NHS Plan in 2000, new contracts have been agreed for consultants, GPs and non-clinical staff such as cleaners and porters.

DRUGS

Rising drug costs have been a drain on NHS resources. In 2004-5, 686m items were dispensed - up 6% on the year before - at a cost of 8bn.

But there is not just more demand for drugs, they are also becoming more expensive. In the last five years, the NHS drugs bill has risen by 46%.

However, the spending is having results. One of the largest increases has been seen on the spending on statins, drugs which reduce cholesterol.

Spending has increased from 113m in 1997 to 720m in 2004, but it is now estimated they save 9,000 lives a year.

BUILDINGS

The NHS is in the middle of one of the biggest capital investment drives in its history.

Trusts are investing 18bn through the private finance initiative, which allows the NHS to rent buildings from the private sector.

Around 60 NHS trusts have PFI projects that are tying up about 11% of their income.

PENSIONS

Similar to many industries, the NHS is also facing problems meeting its pension commitments.

A fifth of the new money went on keeping its fund topped up.

The pressure from pensions has been further increased by the decision to transfer responsibility from the Treasury to the health budget for maintaining them in line with inflation.

THE REST

The NHS is also facing significant pressures from other areas.

Officials are spending more on clinical negligence cases. Last year, nearly 4% of the extra spending went on pay outs.

And the NHS is in the midst of a 6.2bn 10-year IT upgrade, which will see electronic prescriptions and a central database of patients' records over coming years.

OLD v NEW

Nearly three-quarters of the new money went on existing services as the NHS attempted to correct an historic underspend.

The 2002 Wanless report, an independent study on the future of the NHS, calculated that from 1972 to 1998 there was a 220bn underspend on the NHS in modern day prices.

The NHS Confederation said this lack of investment explains why so much of the new money is going on existing services.

Pay and pensions accounted for much of this spending.




SEE ALSO
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24 Aug 04 |  Scotland

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