Health spending reforms risk creating complexity for local commissioners

Government reforms to resource allocation risk creating a more complex process with increasingly fragmented decision-making, according to a new report, Improving the allocation of health resources in England, by The King's Fund.

The resource allocation process determines how much public money clinical commissioning groups and local authorities receive from the Department of Health, and on what basis. Recent reforms introduce major changes to resource allocation, such as the split between public health and NHS allocations, and the new role for NHS England in making decisions on NHS allocations.

The report considers these policies in detail, finding that the new system is strikingly more fragmented than the one it replaces. In particular, it argues that the new approach risks undermining other government policies that emphasise the importance of providing integrated care.

The report suggests practical improvements to the current resource allocation system but also explores the ways in which different models of resource allocation can be used to support alternative visions of the NHS: more clinically led; driven by outcomes; more integrated and provider led; or more integrated with other services through a ‘single budget’.

The Fund calls for a more strategic long-term reassessment of the aims and methods of resource allocation in England. The report welcomes NHS England’s fundamental review of the allocation formula, announced in December 2012. It argues that the review should address critical questions about how resource allocation is suited to future priorities, and generate an informed debate about the purpose and methods of resource allocation.

David Buck, Senior Fellow at The King’s Fund, said: ‘Recent reforms bring major changes to resource allocation, risking confusion and complexity. As the funding squeeze bites, it is crucial that we think carefully about how and why health spending is allocated. NHS England’s fundamental review is an opportunity for much-needed debate about what we hope to achieve through that funding in future.’

• Read the paper: Improving the allocation of health resources in England
• Listen to David Buck talk through the key findings in his audio slideshow