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NHS: Finance

Question for Department of Health

UIN 32944, tabled on 8 April 2016

To ask the Secretary of State for Health, what (a) demographic factors, (b) deprivation level factors and (c) factors of difference in distance from target market forces he took into account when determining the funding allocated for (i) Vale of York CCG, (ii) NHS West Cheshire, (iii) NHS North East Essex, (iv) NHS South Warwickshire, (v) NHS Canterbury and Coastal, (vi) NHS Lincolnshire West and (vii) NHE East Riding of Yorkshire.

Answered on

18 April 2016

Responsibility for clinical commissioning group (CCG) allocations rests with NHS England and the funding allocated to all CCGs is based on the CCG allocations formula. This is based on advice provided by the Advisory Committee on Resource Allocation (ACRA). ACRA is an independent committee and reports jointly to the Secretary of State for Health (in regard to public health allocations) and NHS England in regard to CCG and primary care allocations. The formula was initially approved by NHS England in 2013 and they have now reviewed and updated the formula for 2016-17 onwards.

The formula is based on the size of the population of each CCG and adjustments, or weights, per head for relative need for health care services and unavoidable costs between CCGs. The weights per head are based on the following:

― need due to age (typically, the more elderly the population, the higher the need per head, all else being equal);

― additional need over and above that due to age (this includes measures of health status and a number of proxies for health status such as deprivation);

― an adjustment for unmet need and health inequalities;

― unavoidable higher costs of delivering health care due to location alone, known as the Market Forces Factor (this reflects that staff, land and building costs are higher in for example London than other parts of the country); and

― an adjustment for the higher costs of providing emergency ambulance services in sparsely populated areas, and an adjustment for the higher costs of unavoidably small hospitals with 24 hour accident and emergency services in remote areas.

The final step of the allocations process is to determine how quickly to move CCGs from their current allocation to the target allocation determined by the formula. The objective is to reduce the ‘distance from target’ so that areas furthest below their target allocation receive the biggest increases. This needs to balance against the need to ensure service stability for those areas above target, and that increases are not so large that resources are not used efficiently. The approach also takes account of the distance from target in each area for primary care and specialised services so that the overall funding position for the area is taken into account.

NHS England recently published a technical guide to allocations which sets out all the individual factors used in determining the allocation levels. The guide is available here:

https://www.england.nhs.uk/2016/04/allocations-tech-guide-16-17/#