Director of Strategy and Performance Management

1. Section 7 of the Health and Medicines Act 1988 empowers Scottish Ministers to provide various services and carry out additional functions for the purpose of income generation for the NHS and to charge these on a commercial basis. Income generation is an ancillary of the NHS and in no way should detract from the NHS’s primary function to treat patients. Section 7(8) of the 1988 Act therefore prohibits any scheme which significantly interferes with the provision of NHS services.

2. Some of the broad areas of income generation that have been taken forward by the NHSiS following SHHD/DGM (1989)66 include:

• Sale of surplus products and equipment (eg equipment that is at the end of its useful life or has become surplus to requirements).
• Provision of amenity beds.
• Lease of accommodation (eg charging for the use of conference facilities).
• Lease of space, particularly when the use of the space will be directly beneficial to patients/staff (eg retail shopping outlets within hospital premises).
• Facilitating staff secondments to aid grant funded activity in the Third World.

3. The use of the powers in the Health and Medicines Act brings useful additional income to the NHSiS without diverting the Service from its primary task of treating patients. Ministers are agreed that these opportunities to generate income should therefore continue.

4. Section 84A of the National Health Service (Scotland) Act 1978 gives the NHS the power to engage in fundraising activities. These provisions are broad. They empower the Service to engage in activities intended to stimulate the giving of money or other property to assist in providing or improving any services or facilities or accommodation which is or are to be provided as part of the health service or to assist in connection with research.

5. There are clearly positive benefits from money raised through gifts or from fund raising both in the material sense and as an expression of public support. However, the key principles remain. These are that proposals for fundraising can continue so long as they do not disrupt NHS priorities and are designed to provide facilities or equipment that are important but not essential to a particular development. Any money raised in this way should not be used for core NHS functions but should be limited to non-core and non-medical matters. In addition, any facilities provided as a result of public appeal should not lead to revenue consequences.

6. Commercial practices involving sponsorship arrangements with private companies in return for buildings, furnishings, equipment etc have been commonplace within the NHSiS for many years. Furthermore a National Audit Office Report (Income Generation in the NHS – 1993/HC 605) identified sponsorship as a useful source of income generation for the NHS. This enables the NHSiS to use the public money that would otherwise have been spent on equipment to provide improved services and a better environment for NHSiS staff and patients. Ministers are agreed that these sponsorship arrangements can continue where they are appropriate and discreet and do not call into question NHSiS funding of core business.

7. Recent advice on the issue of car parking charges was set out in Miss T Teale’s letter of 15 February 2000. The principles are that –

• The decision of whether to charge for car parking facilities is one for local determination in the light of local circumstances.
• Charging for Car Parking in Hospitals should not be motivated by a desire to generate income.
• Charging may only be justified if it:
• Is to cover the cost of providing improved parking facilities;
• Is to make the car park more secure; or
• To better manage existing car park facilities by discouraging "fly parkers".