The department of health and the national health service in England have been slow to allocate fair shares of funding to local authorities, putting users at risk, the National Audit Office has warned.
In a 52-page report, Funding Healthcare: Making Allocations to Local Areas, the NAO cited “slow progress” in making fair allocations over budgets for care funding, which means that local services have to “tolerate” being hard-pressed and are forced to make cutbacks.
Following the reforms to the health system in 2013, the three sets of commissioners (clinical commissioning groups, NHS England area teams and local authorities) received separate funding allocations to commission services for their local populations.
In the report, it said that a total of £79bn has been allocated to local commissioners in 2014/15, which is equivalent to £1,400 a person.
However, the tighter financial position in recent years has made it difficult for the DofH and NHS England to allocate funding in a way that achieves the twin aims of fairness and financial stability.
The report found there was “wide variation” in the extent to which the funding received by local commissioners differs from their target allocations, which are based on relative need.
Some local authority areas were being allocated £137 less per person than the £1,400 target, while other groups were being awarded £361 above the target.
It warned that of the 20 groups with the tightest financial positions at 31 March 2014, 19 had received less than their target allocation.
The NAO also warned that decisions about funding were “not based on evidence”, but were “essentially a matter of judgement about the changes that local health economies can tolerate without being financially destabilised, and about the effects of organisations not receiving their target allocations”.
Amyas Morse, head of the National Audit Office, said: “The department and NHS England need to carefully consider whether this approach is fast-moving enough to sustain hard-pressed local areas in the next few years.”
Adviser view
Brian Tabor, chartered financial planner at Hertfordshire-based CareMatters, said: “The slough of despond into which local authority funds are allocated is well known.
“With the new tax bills coming in next year, and the fact that each local authority has its own estimate of the market forces in which it operates, there are just so many unknowns in terms of what funding is needed to cover care costs. State care funding is not arbitrary, but it seems to be and clients just do not know what they will have to cover themselves.”
