The controversial traffic-lights system for measuring performance will be adjusted to ensure that NHS organisations in deprived areas are not stuck on red, promises the Department of Health.

In a consultation document fleshing out how the system will work, the DoH says that this summer all health authorities and acute trusts will be issued with a traffic-light colour reflecting their performance during 2000-01.

A designation of 'green' will go to the top 25 per cent, 'red' to the worst performing, and 'yellow' for organisations which meet core national targets but fall outside the top 25 per cent.

Fears that organisations in less affluent areas will be unfairly penalised were highlighted by a King's Fund study, published in HSJ last December, which used DoH methodology to show that 71 per cent of 'green' HAs in England would be in the south, with 83 per cent of 'red' HAs in the north. But the DoH document, issued last week, accepts the argument for adjusting rankings to reward year-on-year improvements as well as absolute performance, and says traffic lights will reflect the 'differing starting points in different parts of the NHS' and factors outside local organisations' control.

The traffic-light system will use a criterion that incorporates a 'value-added' element to recognise how socio-economic factors affect performance in areas such as mortality, morbidity and access to treatment.

Liverpool HA emergency services action team co-ordinator Gareth Jones said his organisation had lobbied hard for such a 'concession': 'When you are below average and you have the task of improving against a moving target, that is quite formidable.

'But It is difficult to know how this concession will work out. Because of the severity of our problems we could still be in the red.'

Mr Jones regretted that 'redlight' authorities would be denied the freedoms and benefits being offered to 'green' organisations:

'Where we have been given freedom of action we have used it very well.'

Under the proposed 'earned autonomy' package intended to stimulate innovation and reduce bureaucracy, successful organisations will enjoy 'lighter touch' monitoring. They will also be allowed to retain land sale receipts of up to£5m instead of the current£1m limits, and have their business-case approval threshold raised to£5m.

Nigel Edwards, policy director of the NHS Confederation, said he was pleased the consultation document gave a 'clearer picture' of what the traffic-lights system would involve.

But he warned that limiting 'green' status to a top 25 per cent would create difficulties even for high-performing organisations.

'You could quite easily slip from being 'green' to being 'amber' through no fault of your own, just because somebody else was improving at a faster rate. What message does that send out?'

The document is based on preliminary discussions between DoH officials and the NHS, and demonstrates the department's eagerness to get the service's input - even asking for suggestions on how many core national targets organisations would have to fail to warrant 'red' status.

Funding for the new performance system this year will be issued in two tranches, with£100m released 'as early as possible' once local proposals have been signed off with regional offices, with a further£150m witheld until after the end of the financial year 2001-02.

A total of£500m is due to be released over three years. Responses to the consultation document should be received by 19 February. E-mail nhsperformance@doh.gsi.gov.uk