§ Mr. Woodasked the Secretary of State for Social Services if he will publish the report of the National Health Service Management Board on the review of the resource allocation working party formula; and if he will make a statement.
§ Mr. FowlerI have now received a report from the NHS management board on its review of the resource allocation working party (RAWP) formula for calculating targets for regional health authorities. I am publishing that report today. Copies are available from the Vote Office.
The Government remain committed to the principle of allocating resources more fairly across the country. Substantial progress has been made towards bringing regions closer to their target fair shares. As they move closer to target, it becomes increasingly important that the targets themselves should be as soundly based as possible.
The board's report confirms the need for a formula approach at a national level. It also confirms the general principles underlying the present formula. But it concludes that there are aspects where there is scope for improvement. These include my original concerns about the way the formula estimates relative need for health services, taking account of such factors as the pattern of illness across the country, the effects of social deprivation on health service use, and the costs of teaching hospitals and of patients living in one region but being treated in another. Other areas of concern are also identified, including the way the formula allows for higher than average labour costs in some regions. The board was able to draw on the work already done within certain regions to improve some aspects of the present formula. But this work, and other existing data and research, did not in themselves provide a basis for deciding on the precise form of the changes which should be made to the national formula. The report therefore proposes a programme of further work next year. I endorse this proposal, and the necessary further work is being pursued.
The review was concerned with the distribution of national resources to regions. However, the consultation process on the review also highlighted that many of the problems of resource allocation arise at sub-regional level. The main areas where there is scope for improvement have a much greater impact on relative need between districts within a region than between regions. I hope, therefore, that the research which we are now going to carry out will be a great help to regions in allocating resources to districts.
Meantime, I firmly endorse the report's conclusions that allocations to districts must be based on a realistic and manageable plan for services, not on the mechanistic application of a financial formula. The report recommends that I should issue planning guidelines to regions which reemphasise the need for them to have plans which are manageable and sensitive to factors affecting service provision locally, and for allocations to be based on those plans. Regions also need to plan explicitly for factors which are not fully covered by the present formula. I welcome these recommendations and will be in touch with regional health authorities about them. In addition, I shall be using the special fund, announced last month, to provide transitional help to those regions which received the lowest growth next year under national RAWP. This is to ensure that they are able to continue to make progress 711W towards improving services for priority groups and for patients living outside the main cities, without damaging inner city services. I shall he announcing details of the arrangements for distributing that special fund when announce details next week of the cash increases for regions for 1987–88.