With more emphasis than ever on prevention and early intervention, it is crucial that the funding formula is right.
The Department of Health is consulting on proposals to allocate public health funding according to ‘need’ rather than on a historical basis.
Given the government’s aim to improve overall levels of health while elevating the lot of the poorest, a needs-based formula makes sense. However, new academic research shows that the proposed formula would give less priority and funding than the existing allocation to the most deprived areas. On average, the most deprived 20% of councils would get £8 less per head of population while the most affluent would get an average of £8 more. Some councils in the north-east would face a £17 per head reduction, while Hackney would see a £57 drop.
It is clear that poverty and social position have a profound impact on health
The formula, recommended by the Advisory Committee for Resource Allocation, is based on the number of deaths of under-75s and assumes that the 10% of areas with the highest mortality rates will receive three times the funding per head of those with the lowest rates. In other words, ‘need’ is based on age and not on poverty and deprivation.
It is clear that poverty and social position have a profound impact on health. Reducing health inequalities is not only important for those affected, but also has many economic benefits, including tackling business productivity losses from illness, reduced tax revenue, increased welfare payments and increased treatment costs.
The respected Marmot review stated that health inequalities arise from social inequality and cause many health issues and premature deaths. It argued that to reduce the “social gradient” in health it was necessary to take universal action but with a “scale and intensity proportionate to the level of disadvantage”.
While the funding proposals do seek to invest more in areas with greater need, several key questions remain. Is early mortality an adequate measure and is it sensitive enough to population changes? Is the ratio of three sufficient? Will shifting investment from deprived to more well-off areas achieve greater impact on health and economic measures and what will be in the impact of spending less in those deprived areas hardest hit?
With more emphasis than ever before on the importance of prevention, early intervention and demand management, it is crucial that the funding formula is right. The Marmot review emphasised that tackling health inequalities was a matter of fairness and social justice. But it is also a matter of effectiveness.
The scale of the challenge is exacerbated by a lack of clarity and the shrinking funding pot. The new formula is expected to be introduced over time, with the proportion of funds distributed according to need increasing over time. Yet it is still not known what proportion of funds will be distributed according to the new formula over what time period. Government must provide clarity on the pace of change.
It could also ease the transition considerably if the funding shift was not a zero-sum game. The call for NHS efficiency savings to support those hardest hit would be a good start.