National health service resource allocation is based on the principle of weighted-capitation, whereby resources are distributed between areas on the basis of the relative needs of their populations.
The weighted-capitation formula is continuously overseen by the Advisory Committee on Resource Allocation (ACRA). ACRA’s role is to ensure equity in resource allocation. ACRA is an independent body which has NHS management, general practitioner, and academic members. Prior to each allocations round, ACRA agrees a work programme to support the revenue allocations to primary care trusts (PCTs). On completion of the work programme, ACRA makes recommendations to Ministers on possible changes to the weighted-capitation formula. Decisions on changes to the weighted-capitation formula are made prior to each allocations round.
Since 1997 the following changes have been made to the weighted capitation formula:
1997-98 changes to the weighted capitation formula
In 1997-98 two changes were made to hospital and community health services allocations:
community health services were weighted for additional need;
the staff market forces factor (MFF) was revised.
1998-99 changes to the weighted capitation formula
In 1998-99 two changes were made to hospital and community health services allocations:
all services were weighted for additional need; and
the emergency ambulance cost adjustment (EACA) was introduced.
One change was made to prescribing allocations, with the introduction of new age/sex weights.
1999-2000 changes to the weighted-capitation formula
Prior to 1999-2000, there were separate funding streams for HCHS, prescribing and general practice infrastructure (GMSCL). In 1999-2000 these became a single unified allocation.
In addition, an English language difficulties adjustment (ELDA) was introduced as a supplement to the formula, for the extra costs of interpretation, advocacy and translation services.
2001-02 changes to the weighted-capitation formula
In 2001-02 an interim health inequalities adjustment (HIA) was introduced.
2002-03 changes to the weighted-capitation formula
Four main changes were made to the weighted-capitation formula in 2002-03:
a new general medical services non-cash limited (GMSNCL) component was introduced;
the additional need adjustment in the new GMSNCL component replaced the existing additional need adjustment in the general medical services cash limited (GMSCL) component;
the staff MFF was revised; and
the HIV/AIDS special allocations became part of the unified allocation.
2003-04 changes to the weighted-capitation formula
In November 1998, Ministers announced a wide- ranging review of the weighted-capitation formula. The main objective for this review was “to contribute to the reduction in avoidable health inequalities”. The review was carried out under the auspices of ACRA. The new formula replaced both the existing formula and the HIA, and has been used for the 2003-04 to 2005-06 and the 2006-07 and 2007-08 allocations rounds.
Three main changes were made to the weighted-capitation formula for the 2003-04 to the 2005-06 allocations round:
populations were based on the 2001 census;
new need adjustments were introduced in the HCHS and prescribing components; and
the staff MFF was revised.
In 2003-04 revenue allocations were made to primary care trusts for the first time, covering three years. Prior to 2003-04 revenue allocations were made to health authorities on an annual basis.
2006-07 changes to the weighted-capitation formula
The following changes were made to the weighted-capitation formula for the 2006-07 and 2007-08 revenue allocations:
Office for National Statistics (ONS) population projections provided the population base;
a primary medical services component was introduced into the formula following the devolution of this funding to PCTs in 2004-05, replacing the GMSCL and GMSNCL components;
the HCHS MFF was reviewed to support the implementation of Payment by Results.
The main resulting change was an increase in the number of zones in the staff MFF from 119 to 303 to match the geography of PCTs:
the rough sleepers adjustment was dropped; and
a growth area adjustment was introduced in support of the Department for Communities and Local Government sustainable communities initiative.