News / NHS England fair play concern

27 September 2013

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NHS England raised concerns that two of the recommendations of Monitor’s Fair playing field report could lead to greater variability in the tariff, according to documents published by the regulator.

In its initial response to the report, NHS England said greater tariff variability could put services at risk. It was concerned about a potential Department of Health review of provider eligibility for VAT refunds. But documents published by Monitor, as it launched a high-level Fair playing field implementation group last month, confirmed the government had no plans to change the refund scheme for NHS providers.

NHS England also called for greater clarity on the potential implementation of risk-reflective cost of capital for public sector providers. The Fair playing field review had said governments failed to take risk levels into account when lending to public providers, creating a distortion in the market as bank lending to independent providers was largely risk based.

In a letter, Bill McCarthy, NHS England national policy director, said NHS England understood the intentions behind the recommendations, but the full consequences of a shift in system costs between providers and commissioners would have to be reflected in the tariff and other funding mechanisms. The upshot would be greater tariff variability.

The Department, Monitor and NHS England are discussing the scope of a project to evaluate the impact of raising the cost of capital for public providers. It is expected this will be completed by the end of April next year.