NHS England’s new funding formula shows it is treating health inequalities seriously but CCGs still face constraints on their budgets
Like many people, I eagerly awaited yesterday’s NHS England board meeting, at which − following last year’s stop-gap solution − it has set out its thinking on how the bulk of NHS money will get to where it needs to be, and on what basis, through allocations to clinical commissioning groups. This is a significant moment.
‘The NHS England board made a decision that no CCG would receive a real cut in spending’
Before getting to the detail, we should recognise two very important changes in the decision making process. First, this is the first time the public has ever been party to how these decisions are made, bringing welcome transparency to a hitherto obscure process. Second, it is the first time these decisions have been taken independently of government − more on this later.
The run-up to this round of allocations has been one of the most contested and commentated on for many years. As the King’s Fund predicted in August, the questions about which CCGs gets what − and why − have become more contentious as funding gets tighter.
A lot of the debate has focused on analysis of what implementing the Advisory Committee on Resource Allocation’s recommendations from last year − which NHS England decided not to pursue in isolation − would mean for the distribution of resources between CCGs. In short, that a stronger focus on the needs of older populations would come at the expense of younger, more deprived communities.
No more straw men
The fear that this straw man would become flesh and return this year led many to predict a wholesale switch of resources from disadvantaged areas in the north and parts of London, to more prosperous areas of the south with older populations. This was fuelled by Andrew Lansley arguing that funding should be more closely linked to age.
‘CCGs − as a whole − may be pleased with the slight increase in real terms that they have received’
However, in the same breath, he handed responsibility for decisions about funding to NHS England, a little noticed but hugely significant change in his NHS reforms. This was followed by NHS England announcing a fundamental review of resource allocation, providing an opportunity for fresh thinking.
So has this translated into allocation decisions? Yes, it has. Yesterday afternoon, the NHS England board made a decision that no CCG would receive a real cut in spending and that as a group they would receive a real increase of 1 per cent over two years (depending on the trajectory of inflation) but with a new weighting for deprivation.
The devil is, of course, in the detail, and we await allocations CCG by CCG. Much also depends on the pace of change, which will be slower, given the decision to give all CCGs a real increase in budgets. Separately, primary care funding will also have a new formula, with a higher weighting for deprivation, reflecting its crucial role in tackling health inequalities.
Just getting started
However, this is only the start of the story, not the end. The fundamental review continues and it needs to tackle deeper questions, including whether the current approach to allocating resources is fit for purpose in the new NHS − as we argued in our report on the allocation of health resources earlier this year.
‘NHS England has shown it takes health inequalities seriously, but CCGs will clearly have little room for manoeuvre’
CCGs − as a whole − may be pleased with the slight increase in real terms that they have received. But, as the King’s Fund’s chief economist John Appleby has already shown, the leeway that the NHS − and therefore CCGs − have over how it spends its budgets has narrowed significantly.
Funding for public health has been transferred to local authorities (with the functions that go with it) and the “better care fund” will place further constraints on CCG budgets. It is clear that the numbers on which the CCG allocations have been based rely very heavily on providers and commissioners meeting ever tighter efficiency targets. And this on the day that Monitor announced a further squeeze in the prices paid to hospitals.
NHS England has shown it takes health inequalities seriously, but CCGs will clearly have little room for manoeuvre.
David Buck is a senior fellow, public health and inequalities, at the King’s Fund. This article also appears on the King’s Fund blog