The report, from the National Audit Office (NAO), also recommends abolishing the MPIG, so that money can be redirected to high-need areas.
The new GMS contract was designed partly to tackle local health priorities and deal with health inequalities.
But the cost of the new contract was higher than expected, because the DoH underestimated achievement levels on the quality framework.
Money was also diverted to fund the MPIG, which ensured that existing practices were not destabilised, so less money than expected has flowed to local priorities or under-doctored areas.
To tackle these problems the NAO recommends that SHAs and PCTs should make wider use of local enhanced services (LESs) and APMS contracts, and be given control over a proportion of the quality framework.
It also calls on the DoH to 'consider phasing out the MPIG and moving the money into funding quality incentives'.
The NAO examined the cost and benefits of the new contract over its first three years of life.
It found that over the period 2004/5 to 2005/6, a reported 53 per cent of PCTs did not spend to minimum levels on enhanced services set by the DoH. The figure was 69 per cent in 2006/7.
New GMS had been successful in improving recruitment, with the number of full-time equivalent GPs increasing by over 15 per cent since 2003.
But the NAO criticised the fall in GP productivity, and warned that salaried GPs were not benefiting from increased spending.
- Improve contract costing.
- Develop a long-term strategy for the QOF based on outcomes.
- Allocate some QOF funding for local negotiation.
- Phase out the MPIG.
- Make wider use of APMS and LESs.
- Improve commissioning skills and performance management.