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Report 'NHS Pay Modernisation: New Contracts for GP Services in England', published today by the Public Accounts Committee, says GP income increased by 58 per cent since 2003.

GPC chairman Dr Laurence Buckman said: ‘The GP contract is now quite different to the deal originally agreed in 2003 and much of the criticism in this report is based on an out-of-date understanding of the current situation.

‘Issues such as the phasing out of MPIG are already being worked on through negotiation. We want to reduce practices' reliance on MPIG and create a fairer system but if it's done too quickly it will damage practices and the services they provide for patients.'

Practice income rose sharply after 2003 but global sums have been frozen for the last three years. GPC deputy chairman Dr Richard Vautrey told the RCGP's annual conference in Bournemouth last week that the credit crunch meant pay awards will be ‘a challenge for next few years'.

The report shows that the overspend on the first three years of the new GMS contract was recouped by the end of March this year.

It estimates the overspend at £1.8 billion between 2003/4 and 2005/6.

It says: ‘The DoH believes the cost of the contract is now under closer control and that by the end of 2008 it will have recovered any overspend.'

However, the supplementary evidence in the 52-page report shows that NHS chief executive David Nicholson put the overspend at £400 million, rather than £1.8 billion.

The report adds: ‘There is evidence that the DoH reduced its estimation of performance under the framework when budgeting for the increased cost due to the MPIG.'

In evidence to the PAC in March Mr Nicholson said: ‘It's true that we did overspend the amount of money available to us but in the last two years we will have clawed the money back.'

The report estimates that the major reasons for the overspend were the extra costs of the quality framework (£332 million) after practice performance exceeded expectation and the higher price of allowing practices to opt out of 24-hour responsibility (£182 million).

Report recommendations include piloting major change so cost can be more accurately predicted.

Another recommendation is that: ‘The DoH should consider replacing the MPIG with a redesigned global sum allocation in order to move the money into areas of greatest need.'

Another recommendation calls for the quality framework to be better aligned with national health priorities, giving greater priority to outcomes rather than procedures.

The report adds that in 2006/7 71 per cent of PCTs did not spend their allocation for local enhanced services.

‘These allocations were expected to be the minimum level that a trust would spend on enhanced services,' it adds.

Shadow Conservative health secretary Andrew Lansley said: ‘It is important that GPs are properly rewarded for their hard work, but the government's complete failure to understand the level of service they provide has left us with the worst of all worlds - GPs paid more than originally intended but left demotivated by how they have been treated.'

Shadow Liberal Democrat health secretary Norman Lamb said: ‘The government's handling of the GP contract has been staggeringly incompetent.'

neil.durham@haymarket.com

• Editor's blog: Why practices deserve their 'eye-watering' income increases

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