27 October 2006
NHS deficits have been caused by 'systematic flaws' in the way funding is allocated across the country rather than poor local management, the Commons health select committee was told last week.
'I think it is extremely unlikely that we have a fair funding formula,' said Professor Sheena Asthana of Plymouth University. 'It discriminates against… rural areas. If we are going to base hospital closures on deficits which are actually the result of an unfair funding formula, then that has got to be stopped now.'
The current formula gave more priority to deprivation than it did to age, said Asthana. That meant that wealthy but elderly populations were less well funded than young, deprived populations.
The problem was then magnified, said Asthana, as richer areas tended to be rural and poorer areas urban. The current formula tended to give urban areas greater funding, yet services were often more expensive to provide in dispersed rural communities.
'There is strong evidence of a systematic pattern that certain areas with certain population characteristics are far more likely to be in deficit. This suggests that it is not just a problem of local management, but that there is something systematically flawed… the risk of deficit is strongly associated with level of funding,' she said.
The Department of Health has acknowledged a North-South and rich-poor pattern in last year's deficits but has denied that is linked to underfunding.
Professor Barry McCormick, chief economic advisor to the DoH, said the formula had been developed and was monitored by an independent panel of experts and that a link between deficits and the formula had 'not been well established'.
PFoct2006
