‘We must tackle health inequalities’ says NHS England’s chief financial officer

  • New funding formula for local health commissioners more accurately reflects population changes and includes a specific deprivation measure
  • Funding for NHS commissioners will rise from £96bn to £100bn over the next two years, so despite wider public sector budget cuts the NHS is being protected from inflation at a time of austerity. 

Changes to the way in which funding levels for local health services are worked out will help ensure that funding matches the needs of local populations, it was heard yesterday.

Following an extensive review, NHS England’s Board yesterday agreed a new funding formula for local health commissioning based on more accurate, detailed data and including a deprivation measure specifically aimed at tackling health inequalities.

It means that all the Clinical Commissioning Groups (CCGs), that decide on local health services, will receive a funding increase matching inflation in the next two years (2014/15 and 2015/16), with the most underfunded areas, and those with fast-growing populations, receiving even more.
The funding allocations will be aligned with new NHS planning guidance that will be published this week, following discussion at yesterday’s Board. The new guidance will ask commissioners to prepare both two year operational plans and five year strategic plans.
Paul Baumann, Chief Financial Officer for NHS England, said: “We have an absolute duty to tackle health inequalities and to ensure equal access for equal need right across the country. That is why we conducted a year-long review of funding allocations taking on board many views and extensively engaging with local healthcare commissioners and partners.

“We must ensure funding is equitable and fair and we have used the review period to ensure that funding is based on up-to-date and detailed information and it takes into account the three main factors in healthcare needs: population growth, deprivation and the impact of an ageing population.

“What is clear is that doing nothing is not an option. Some areas have not had the funding per head that they need, particularly where population has grown quickly and funding has remained relatively static.  These areas are now at risk of not being able to provide the services needed by their population, so we need to tackle these differences in funding as a matter of urgency.

“That is exactly what these changes are about and this will mean that some local health services need to receive a settlement that is bigger than inflation to start reducing the local underfunding which has arisen, whether this reflects deprivation, ageing or population growth.

“Over the last year we have developed and refined the funding formulae to ensure that they accurately predict the needs of individual communities.  A particular challenge in this respect is the best way to reflect the needs of the most deprived communities, who may not currently be accessing the services they need at the right time. The new formula now includes a measure for ‘unmet need’ which aims to address this.

“This is a very testing period for the NHS and every pound we spend needs to be invested wisely to drive the best outcomes for the patients and communities we serve. We now have a funding formula that we think does this more accurately and more fairly.”

Clinical Commissioning Groups (CCGs) are responsible for the majority of local health services. Within the CCG allocations, 10% of the total available funding will be based on a deprivation indicator to reflect unmet need, enabling CCGs to tackle the impact of health inequalities.

Primary care also has a central role to play in tackling deprivation and the ‘unmet need’ adjustment will be based on 15% of the total budget.

The CCG allocations will be published on the NHS England website by the end of the week.

The full Board papers are now available.