Magazine article Public Finance

Double Jeopardy

Magazine article Public Finance

Double Jeopardy

Article excerpt

Resource Accounting and Budgeting, or Rab as it is unaffectionately known, has not had an easy time in central government. Introduced in 1998, this form of commercial-style accounts has proved complex and time-consuming to those at the sharp end.

So much so that the Public Accounts Committee has regularly lambasted government departments for their tardiness and inefficiency in using the system.

But the debate took a new twist this week when the Audit Commission attacked the way that Rab is implemented in the NHS. It took particular exception to the 'double deficit' phenomenon.

For the uninitiated, this means that overspending trusts are punished twice: their income is reduced by an equivalent amount in the following year and the deficit is carried forward and used to decide whether they have achieved their statutory duty to break even over three years.

According to the commission, Rab principles are incompatible with the NHS's financial system. The existing approach must be thrown out and, instead, the Department of Health should introduce a 'buffer' fund, which will ensure that overall finances are kept in balance. …

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