“The Opposition need to take on board the fact that the cost of running PCTs has gone up by about £1 billion a year since they were first put in place.”
Daniel Poulter MP (Con), House of Commons, 31 January 2011

Whilst the NHS budget may be protected from the Government’s spending cuts, the proposed reorganisation of the way the NHS is administrated has provided ample opportunity to those wanting to probe ways in which the cost of service provision can be streamlined.

One such measure which, it has been mooted, might save the Treasury some cash is the scrapping of Primary Care Trusts (PCTs), which are due to be phased out from 2013. Conservative backbencher and former doctor Daniel Poulter has argued that the cost of running these bodies had been growing by £1 billion every year.

But what are these running costs, and have they been ballooning as swiftly as the MP for Central Suffolk and North Ipswich suggests?

Dr Poulter himself offers some insight on the former point, claiming that it was “the cost of bureaucracy and management” that was the source of the problem.

However evidence from the Health Select Committee on NHS management costs published last month suggested that the growth in these costs was much more modest.

For the financial year 2008-09 – the last year for which data was available – the total management costs for PCTs was £1.38 billion, which had grown from £1.19 billion the year before, a rise of just under £200 million. This actually represents a larger than average increase, with management costs in previous years rising by an average of £170 million per year.

So whilst it looks like management costs alone cannot account for the rise described by Dr Poulter, can it be accounted for when the “bureaucracy” he describes is factored in?

Again, this seems unlikely. The NHS White Paper published by the Health Secretary Andrew Lansley in July notes that PCTs have “administrative costs of over a billion pounds a year”, meaning that it cannot possibly account for an annual increase of the same sum, even when taken in conjunction with management costs.

Conversely, looking at the growth in the total amounts given to the PCTs in the annual revenue allocations, the increase is rather more than £1 billion per year. Since the 2000/01 financial year, the average annual rise in PCT funding has been £4.1 billion, or 8.2 per cent.

However the bulk of this funding is provided to PCTs for carrying out the medical duties not generally thought of as ‘running costs’.

So what exactly is Daniel Poulter pointing to when he talks of a £1 billion a year increase in these PCT running costs? As yet, we’re unable to answer this question, but those figures that we’ve looked at don’t tally with his. Indeed it would seem that Dr Poulter’s estimate might even be at odds with his party’s own Health Secretary, who in 2009 asserted that the “running costs” for PCTs had risen from £1.43 billion to £2.14 billion since 2005, a total increase of £710 million over four years.

We have been in contact with Dr Poulter’s office and look forward to receiving further details from him.