Headlines: October 6th, 2014

The Department of Health and NHS England are struggling to allocate funding fairly to local commissioners of healthcare, according to the National Audit Office.

A total of £79 billion has been allocated to local commissioners in 2014-15, equivalent to £1,400 per person. Following the reforms to the health system in 2013, the three different sets of commissioners (clinical commissioning groups, NHS England area teams and local authorities) receive separate funding allocations to commission services for their local populations.

The NAO report says that the approach of the Department and NHS England to allocating funding is generally sound, but there are failures in allocation that mean that the twin aims of fairness and financial stability are not always met.

There is wide variation in the extent to which the funding received by local commissioners differs from their target allocations, which are based on relative need. In 2014-15, over three-quarters of local authorities, and nearly two-fifths of clinical commissioning groups, are more than five percentage points above or below their fair share of funding per person.
Funding for clinical commissioning groups varies from £137 per person below target to £361 per person above target.

The report highlights a clear relationship between the financial position of clinical commissioning groups and their distance from target funding allocations. Of the 20 groups with the tightest financial positions at 31 March 2014, 19 had received less than their target allocation. And, of the 20 groups with the largest surpluses, 18 had received more than their target allocation.

Amyas Morse, head of the National Audit Office, said: “Funding allocations have reflected, among other factors, a desire not to upset local health economies by taking funding away or even by increasing it by less than inflation. This has significantly slowed progress towards a fair distribution where funding fully reflects need across the country. The Department and NHS England need to consider carefully whether this approach is fast-moving enough to sustain hard-pressed local areas in the next few years.”

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