Money for tackling waiting lists was supposed to be targeted only at 'imaginative and effective' schemes. Patrick Butler queries the methodology

With his credibility - not to mention prime minister Tony Blair's - resting on shortening waiting lists, health secretary Frank Dobson is naturally loath to gamble his political future on the whims of health authorities.

So the 65m he doled out to HAs last week was allocated only after his officials had scrutinised hundreds of local plans to free hospital beds. The cash was earmarked to help clear the decks for 288m worth of elective operations allocated from the 500m extra funding announced by ministers in March.

The 900 HA initiatives will see money flow into primary care, community and mental heath services and social services.

They range from a 'handyman' service in Bradford - to install grab rails and other aids in people's homes so that elderly or frail people can return safely from hospital - to a 'rapid response' team providing short-term intensive care in Manchester.

In theory, this is a 'challenge fund' approach to allocating cash, which may well be copied in the share-out of the 5bn NHS modernisation fund announced in the comprehensive spending review a fortnight ago.

Rather than handing out sums to HAs strictly according to the usual weighted capitation formula and leaving them to get on with it, the new approach seeks to target local initiatives. Cash incentives will reward 'imaginative and effective' plans.

Theoretically, after scrutinising the bids, regional officials have the power to reward HAs that demonstrate a dynamic approach to preventing unnecessary hospital admissions and emptying hospital beds, and to penalise those that don't.

But in practice, this first tranche of 'challenge cash' has been distributed largely in the usual way. All HAs have been given cash, many of them allocated no more than their usual share according to population size, deprivation and so on.

North Thames regional office examined 141 bids from its 16 HAs, which submitted a varying number of schemes. Ealing, Hammersmith and Hounslow HA came up with 21 schemes, for example, while Hillingdon came up with only three.

Every bid was approved and every HA received its 'fair' share. Ealing, Hammersmith and Hounslow was awarded 1m, while Hillingdon - a third of the size - received 336,000. 'We were more than satisfied with the competencies of each of the plans put forward,' says a North Thames spokesperson.

In South Thames, although every HA bid for more than its 'fair share', they were given largely what they were due under weighted capitation. Tiny adjustments appear to reflect local need.

There were similarly equitable outcomes in the Anglia and Oxford, South West and West Midlands regions. In Northern and Yorkshire region adjustments reflect the needs of areas with waiting-list problems. Trent's allocations were close to formula with a 'twist of quality' factored in. 'They could have said: 'That's not a good idea, we are taking the money from you and giving it to someone else,'' says a North Thames spokesperson.

This time round, it seems there are prizes for everyone.