Volume 1

Allocation of resources to health authorities : second report / Health Committee.

  • Great Britain. Parliament. House of Commons. Health Committee.
Date:
1996
Catalogue details

Licence: Open Government Licence

Credit: Allocation of resources to health authorities : second report / Health Committee. Source: Wellcome Collection.

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    74. One factor in determining growth in health authority budgets in 1996/97 was distance from target. Thus growth has ranged from zero per cent for Camden & Islington and Manchester to over four per cent for South Essex. Table 5 shows a number of authorities which would move from above to below target if either non-zero weighting option was adopted. As these have also been those authorities which received a minimal uplift of 0.5 per cent in their 1996/97 budgets compared to the national average of 1.1 per cent, this suggests there has already been an impact. 75. We consider, as does the DoH itself, that the current situation in which some 24 per cent of HCHS expenditure is unweighted for need is unsatisfactory. The sooner the gap in research in this area is filled the better. We strongly urge the DoH to ensure that the various studies it has commissioned are completed in time to allow an evidence-based weighting to be applied to this element in expenditure with effect from April 1997. If for any reason it proves impossible to do this, we recommend that from that date onwards the DoH should apply one of the two weighting options we have discussed in this section of our Report in place of the existing zero-weighting. 76. Further research would also be helpful into whether the needs indices currently contain the most appropriate mix of variables, with homelessness, low birth weight and ethnic origin being looked at as possible additions. We recommend that the DoH commission such research. V. THE MARKET FORCES FACTOR 77. The third weighting that is applied to the capitation figures under the new allocation formula is the Market Forces Factor (MFF), which is intended to compensate for unavoidable geographical variations in the cost of staff, land and buildings. 78. The previous formula employed three adjustments to take account of the fact that the cost of providing health services varies between areas. These were: @ London Weighting and Allowances Adjustment: to take account of these additions to the salaries of many staff working in the capital; ® Market Forces Factor: the old MFF was an adjustment over and above London Weighting to take account of higher labour costs in the Thames Regions. This MFF was calculated for three zones: Greater London, Rest of Thames, and Rest of England. It applied only to NHS staff without specific NHS qualifications, i.e. administrative and clerical grades, and maintenance workers. @ Thames Additions Adjustment: to take account of the special funding supplements of 3 per cent to North Thames and 1 per cent to South Thames.” 79. As part of the new formula, these adjustments are replaced by an integrated Market Forces Factor covering staff costs and capital charges. 80. The new MFF is based on four pay zones: 1 — Inher London 2 — Outer London 3 — Rest of South-East England 4 — Rest of England.” nnn ———. —— 999909090 89 NHS Executive, HCHS Revenue Resource Allocation: Weighted Capitation Formula (October 1994), para 41. ® Ey ppl09, 116. The grouping of DHAs within these zones is set out at Ev p117.