NHS cash promise for poor areas

16 Nov 00
Ministers have altered the formula used to calculate the funding allocations for health authorities, despite a pledge that it would remain unchanged until 2002, in order to pour extra cash into England's poorest areas.

17 November 2000

In the budget allocations for 2001/02 announced this week, Health Secretary Alan Milburn more than doubled the resources targeted at treating the health effects of deprivation.

Next year, £130m will be earmarked for these programmes, going mainly to inner cities in the North – Leeds will get the biggest slice, with £5m – as well as deprived parts of the South and London.

Stephen Thornton, chief executive of the NHS Confederation, said the move was logical. 'It seems to me to be a recognition that the existing formula doesn't take sufficient account of deprivation, so they have introduced a quick fix for the coming year,' he said.

The NHS is gradually moving all authorities to their target allocation but a new formula, which will take deprivation into account, is due to be unveiled in time for the 2002/03 allocations.

But this appears to have affected the amount of money going to the most under-funded areas under the current model.

The NHS will receive an extra £2.9bn next year – an 8.5% increase – and with so much extra cash going into the service, the money would normally be used to bring authorities closer to their target allocation.

However, most authorities, whether under or over target, will receive around 8% in cash terms, while only a handful will get more than 9%. Authorities will receive a cash increase of at least 6% over the following two years.

But Barry Elliott, chairman of the Healthcare Financial Management Association, raised concerns that cost pressures would drain much of the extra cash.

'We have known for a long time about the 2% increase in employers' superannuation contributions and the signs are we could see fairly generous pay review body awards as well as a series of announcements from Nice [the National Institute for Clinical Excellence].

'The new junior doctors' contract beginning on December 1 will increase pay by an average of 7%, so there is a big demand building up on the additional resources,' he added.


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