Audit Commission

The Audit Commission today publishes for the first time judgements that show how well or how poorly individual National Health Service (NHS) trusts and primary care trusts (PCTs) are managing and using their financial resources.

The Auditors’ Local Evaluation (ALE) gives a rating on the use of resources at 538 NHS organisations for 2005/06. On a scale of 1 to 4, the ALE rates performance over five areas: financial reporting, financial management, financial standing, internal control, and value for money.

The overall ALE score forms a use of resources score, which is part of the Healthcare Commission’s Annual Health Check for NHS trusts and PCTs. Detailed use of resources scores for each organisation and the main national findings are published (12 October) in the Audit Commission’s briefing, Auditors' Local Evaluation 2005/06 – Summary Results.

Among the key findings of the first evaluation is that 61 per cent of NHS bodies demonstrated adequate or more than adequate use of their resources. But only two trusts, both of which have become NHS foundation trusts, demonstrated strong performance.

The majority of NHS bodies have shown adequate or more than adequate performance in the areas of financial reporting, financial management, internal control and value for money.

Thirty-nine per cent of bodies are judged inadequate in their overall ALE performance, reflecting the number of NHS bodies that failed to achieve financial balance in 2005/06. This part of the evaluation, called financial standing, is the area of poorest performance, where 35 per cent of NHS trusts and 38 per cent of PCTs were assessed as inadequate.

Steve Bundred, Chief Executive of the Audit Commission, said:
'The Auditors' Local Evaluation has identified strengths and weaknesses in the use of resources of individual NHS bodies and across the whole NHS. Most are meeting minimum requirements but it is disappointing that more NHS organisations are not in the top two categories. We have pinpointed the individual areas that most need improvement to ensure each NHS body achieves better use of their resources. A small minority of organisations need to make significant progress across the board. Individual NHS trusts and PCTs will receive their own assessment of where their weaknesses or strengths may lie and how they can improve to achieve better value for money for patients and taxpayers.'

Some examples of the ALE findings are that:

• 61 per cent of NHS bodies demonstrated adequate or more than adequate performance in their overall use of resources;
• 210 of the 538 NHS bodies failed to meet minimum requirements and therefore were assessed as having inadequate performance (in other words, they had scored 1 in financial standing, financial management or value for money, or in some cases a combination of these); and
• the performance of mental health trusts, learning disability and specialist trusts was better than that of acute trusts and PCTs, and this is consistent across the five categories assessed.

Each NHS trust and PCT will receive an ALE summary report and auditors will use each NHS organisation's results to help identify local improvements. The 2005/06 judgements will also be a yardstick for progress against a further ALE assessment in 2006/07.

Notes to editors

The ALE scores (below) are combined into a single overall score, from 1 to 4.

Score/Level

1. Below minimum requirements - inadequate performance
2. At minimum requirements - adequate performance
3. Consistently above minimum requirements - performing well
4. Well above minimum requirements - performing strongly

1. The Audit Commission's ALE applies to NHS trusts and PCTs in England.
2. 2005/06 is the first time the Commission has carried out the ALE.
3. The ALE scores provide the use of resources score in the Healthcare Commission's Annual Health Check and this work is done by the Commission’s appointed auditors. (The Annual Health Check replaces the Healthcare Commission's former star rating system.)
4. The ALE briefing offers analysis of the ALE scores and identifies where improvements can be made.
5. The Audit Commission is an independent body responsible for ensuring that public money is spent economically, efficiently and effectively, to achieve high-quality local services for the public. Our remit covers around 11,000 bodies in England, which between them spend more than £180 billion of public money each year. Our work covers local government, health, housing, community safety and fire and rescue services.
6. As an independent watchdog, we provide important information on the quality of public services. As a driving force for improvement in those services, we provide practical recommendations and spread best practice. As an independent auditor, we ensure that public services are good value for money and that public money is properly spent.
7. For further information about the Audit Commission, visit our website at www.audit-commission.gov.uk.