Health Act 1999

The Health Act 1999 aimed to improve the quality of care provided to patients by the NHS and made a number of provisions intended to improve the coordination of care between local authorities and the NHS.

The Act formally abolished GP fundholding and made provision for the establishment of primary care trusts (PCTs), which would evolve from primary care groups (PCGs). PCGs had been established from 1 April 1999 under existing powers as health authority committees.

The establishment of PCTs

The Act gave the secretary of state powers to establish PCTs, which would take on the commissioning functions undertaken by health authorities and GP fundholders. The Act also gave PCTs powers to directly provide some services and exercise some limited functions in relation to general medical services.

It was thought that, initially, PCTs would only provide community health services or some personal medical and dental services. PCTs would typically serve a population of at least 100,000 and have a budget of around £60m. PCTs would be accountable to the local health authority and subject to directions from the secretary of state.

The first 23 primary care trusts (PCTs) became operational from 1 April 2000.

Rewarding performance

The 1999 Act allowed the secretary of state to increase initial allocations made to health authorities, where certain conditions were satisfied. The intention was to reward those health authorities that made the most progress in implementing plans for improving healthcare. Performance would be assessed against the achievements of targets and objectives set out in local health improvement programmes. The secretary of state was able to attach conditions to additional funding.

Integrating NHS and social services

Flexibilities were also introduced to encourage more effective integration between the NHS and social services departments by:

• allowing the setting up of pooled budgets
• 'lead commissioning', where either the health or local authority could delegate functions by nominating a lead commissioner
• the integration of service provision covering both health and social services functions to enable one-stop shop-style care services.

The Commission for Health Improvement

The 1999 Act also established the Commission for Health Improvement (CHI) as an independent non-departmental public body to:

• provide advice or information on the monitoring and improvement of care quality
• conduct reviews of and make reports on the arrangements set in place by primary care trusts and NHS trusts to monitor and improve care quality
• carry out investigations into and report on the management, provision or quality of health care by health authorities, primary care trusts or NHS trusts
• conduct reviews and report on the management, provision, quality of and access to particular types of healthcare for which NHS bodies or providers were responsible, and other prescribed functions.

CHI started operating on 1 April 2000.

Later developments

The NHS Plan 2000 initially suggested that PCGs would become PCTs by April 2004, but the date was brought to April 2002 by the government's Shifting the balance of power within the NHS white paper.

The white paper also proposed widespread reorganisation. The existing 95 health authorities would be replaced with approximately 30 strategic health authorities (later 28) which would be responsible for overseeing PCTs. PCTs gained additional powers and became responsible for securing the provision of the full range of services for their local populations.

The establishment and steadily increasing powers of PCTs destabilised the whole system from the Department of Health downwards, as health authorities ceased to have much role and were eventually abolished, with changing powers introduced for the new strategic health authorities and the Department of Health.

On 1 October 2006, 303 PCTs were reduced to 152.

The government outlined plans for the abolition of PCTs in Equity and excellence: liberating the NHS. Prior to their abolition on 1 April 2013, PCTs were required to come together to form clusters that would allow single executive management teams to manage multiple PCTs while planning for transition to Clinical Commissioning Groups (CCGs) – the successor organisation to PCTs.

CHI's powers were extended by the NHS Reform and Health Care Professions Act 2002, giving it the ability to inspect any aspect of the NHS, produce performance ratings and to publish an annual report on the state of the NHS. CHI was replaced in 2004 by the Commission for Healthcare Audit and Inspection.