By Richard Johnstone | 15 June 2012
Local authorities will be given extra cash for health improvements in their area when they take over responsibility for public health next year, the Department of Health announced yesterday.
However, they will not receive this top-up money, known as the health premium, until 2015.
The department also confirmed that the £2.2bn of funding for public health will be ring-fenced when it is allocated to local authorities next year. These are the interim recommendations of the independent Advisory Committee on Resource Allocation, which was asked to devise the criteria for local authority allocations.
Publishing the conclusions of the committee, the DoH said it would ensure no council would lose out. Areas will either receive funding equivalent to present NHS spending, or be better off.
The allocation to authorities will be finalised later this year based on health need, as estimated by a standardised mortality ratio for those aged under 75 years. This is a measure of how many more or fewer deaths there are in an area compared with the national average. It is also adjusted for different age profiles.
The ACRA also recommended that the funding formula account for ‘unavoidable differences in the costs of delivering services across the country’.
The health premium will target areas with the worst health outcomes and most need, rewarding town halls that improve the health of their local population.
A consultation by the committee found there was support for an incentive scheme but concern about how it would work. Respondents highlighted the risk of ‘perverse’ unintended consequences, such as that an area with improved health outcomes would receive the incentive cash, but find its core allocation reduced.
In its report, Healthy lives, healthy people: update on public health funding, the DoH said that it had ‘reflected carefully on how best to introduce the health premium incentive’, and would not pay the extra funds until 2015/16.
‘The significant data lag on many of the indicators in the public health outcomes framework would mean that if it was paid in 2013/14 we would be rewarding local authorities for decisions taken by primary care trusts,’ it said.
‘We are therefore planning to delay the first payments until 2015/16, the third year of local authority responsibility for public health responsibilities.’
The ACRA will use this time to develop the funding allocation formula to avoid ‘the perverse incentives’.
Health Secretary Andrew Lansley added: ‘This is the first government to ring-fence public heath funding. The next step is to ensure that funding gets to where it is needed most and can have the greatest impact.
‘Every area of the country is different and has contrasting needs. The interim recommendations published by the independent Advisory Committee on Resource Allocation today provide a solid basis for local authorities to begin planning for next year.’
David Rogers, chair of the Local Government Association’s community wellbeing board, said the announcement was a ‘workable basis on which to plan for the transfer of public health’.
However, he added: ‘There is also clearly more work to be done before the final allocations for next year are decided. We have long argued that funding cannot be based solely on historic data that is no longer fit for purpose.
‘While these recommendations include a measure of health needs – standard mortality rates for people aged under 75 – it is vital that this is not considered in isolation. Other key factors such as migration, seasonal peaks and the numbers of children, are likely to have a major impact on demand for public health services and also need to be taken into account.’
