A National Audit Office (NAO) report, Funding healthcare: Making allocations to local areas looks at how the Department of Health (DH) and NHS England (NHSE) allocate funds to local commissioners of healthcare. Since the reforms to the health system in 2013 the three groups of commissioners (clinical commissioning groups (CCGs), NHS England area teams and local authorities) receive separate funding allocations to commission services for their local populations.

The audit finds a ‘wide variation’ in the allocation of £79 billion in central funding to local commissioners which in 2014-15 terms is equivalent to £1,400 per person.

According to the report the distribution of resources to local commissioners differs from their target funding allocations which are based on relative need. In 2014-15 over three-quarters of the local authorities and nearly two-fifths of CCGs are more than five percentage points above or below their fair share of funding per person. As an example, funding for CCGs ranges from £137 per person below target to £361 per person above target.

The report says that whilst the approach to resource allocation is ‘generally sound’ the challenging financial environment has made it difficult for the DH and NHSE to achieve a balance of fairness and financial stability in allocating funding.

Commenting on the report Amyas Morse, head of the National Audit Office says:

“Funding allocations have reflected, among other factors, a desire not to upset local health economies by taking funding away or even by increasing it by less than inflation. This has significantly slowed progress towards a fair distribution where funding fully reflects need across the country. The Department and NHS England need to consider carefully whether this approach is fast-moving enough to sustain hard-pressed local areas in the next few years.”