Audit Commission

Findings released in the report 'Managing Finances in Mental Health: A Review to Support Improvement and Best Practice' show that mental health trusts (MHTs) perform better than acute sector trusts in terms of financial standing; however there are underlying gaps. The NHS spends more money on mental health than any other programme. It accounts for 12.2 per cent (£7.2 billion) of total NHS expenditure. Over the last three years MHTs have been more likely to break even than those in the acute sector. However, beneath the headline figures, MHTs and other mental health services face a number of challenges. These include the availability and quality of data to support effective financial decision making; the move to foundation status and the need to strengthen partnership arrangements so that services which are delivered jointly by different agencies are underpinned with sound management arrangements.

There are also large variations in primary care trust (PCTs) spending on mental health which are not wholly accounted for by differences in need. PCTs generally do not have the information necessary to understand the financial implications of current and potential alternative policies, programmes and activities.

The future NHS will be characterised by a slower pace of growth, greater transparency in commissioning and foundation trusts operating in a more commercial regime. All of these are likely to place much greater demands on the information available to MHTs and PCTs to enable them to make financial decisions which give the best value for money. There are risks that MHTs and mental health commissioners will not be able to keep pace with these developments.

The report makes a number of recommendations aimed at improving the data available and the information flows between MHTs and PCTs: strengthening partnership arrangements and encouraging PCTs to understand more clearly the links between the needs of their communities, their own spending and what the money is actually buying. The report also includes a series of case studies and good practice examples from which MHTs and PCTs can draw.

Adopting these recommendations and following the good practice available should help commissioners and providers to strengthen their financial management systems and MHTs to prepare for foundation trust status.

Andy McKeon, Managing Director, Health at the Audit Commission, said:
'Mental health services have been improving and mental health trusts have a solid financial position on which they can build. There are, however, weaknesses in data, partnership arrangements, information flows and in systems which ensure delivery of value for money. These need to be addressed if mental health trusts and their commissioners are to meet the challenges they face, including achieving foundation trust status. Some trusts and primary care trusts are beginning to do this and others need to follow their example.'

Notes to editors

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.

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.