Resource Allocation Working Party Formula (Hansard, 16 February 1978)

§ Mr. Ennals

I consider that my statement to the Press on 19th September 1977, a copy of which is reproduced below, constitutes sufficient terms of reference for this small informal working group of people from my Department and the National Health Service. I shall ensure that the latter include at least one from a teaching area or district.

Following is the statement:

1978–79 ALLOCATION OF RESOURCES TO HEALTH AUTHORITIES

Mr. David Ennals, Secretary of State for Social Services, today (Tuesday) announced the basis on which he would be distributing next year's money to health authorities. Last year, I made it clear that I was determined to see that in future the resources of this national service would be more fairly shared. I announced that I would be following the broad principles recommended in the report 'Sharing Resources for Health in England' by the Resource Allocation Working Party (RAWP) in distributing budgets to health authorities for this current financial year. I promised to consider all the comments I had by then received before making any decisions for later years. Since then I have received more comments and studies have been set up on a number of specific questions. We should be able to improve on the RAWP formula when better information becomes available and when we have the results of the studies which are being made. This was expected by the Working Party itself. I am however not satisfied that any of the suggestions so far made would achieve this. I have given special consideration to two proposed changes—to relate the population base more closely to the expected levels of population in the year for which the allocation is made, and to allow for the effect of varying price levels and other costs in different parts of the country. But neither of these changes would have made a significant difference to the actual allocations for 1977–78. While I am willing to change the formula as new or improved indicators of needs for resources become available, I must be satisfied first that any change is soundly based, and secondly that 350W it will produce a worth while improvement in the formula by making a significant difference to actual allocations. Small improvements may be bought at too high a price in greater complexity and uncertainty. I have therefore decided to apply in 1978–79 the same method of revenue allocations which was used for 1977–78. This again does not indicate what will be right for later years. I cannot yet announce the range of revenue increases which regional health authorities will receive for next year because decisions on total NHS expenditure for 1978–79 have not yet been taken by the Government. I will be introducing over the next few years a system of dividing up the capital allocation which broadly follows the principles set out in RAWP. It may well be adjusted as a result of a review of NHS capital which we are undertaking. I am setting up a small working group consisting of people from the Service and my Department to advise me on whether any changes of detail in the method of allocation should be made. This group will consider evidence which is now available on the effect of prices and other costs. It will also consider the findings of studies undertaken by health authorities, University and research workers as they become available on issues such as the use made of standardised mortality ratios, the costs of teaching hospitals, the effect on health service needs of general social deprivation and the costs of treating particular conditions. I shall also do my best to ensure that we use the population base that provides the most reliable indicator available of the relevant distribution of the population in the year of allocation. I still expect Health Authorities to take account of the RAWP formula when allocating money to areas and districts. This does not mean that I expect every area or district to try and build up a comprehensive service for its own population. Of course some patients will continue to use services outside their own area or district.