On the money? NHS England gets serious about allocations

On the money? NHS England gets serious about allocations In times of austerity it's particularly important that money gets to the areas that need it most. And in the health care system, it's the arcane – but vital – process of resource allocation that tries to do that. Amidst the complexity of the reforms, there were some changes announced to allocations; with the biggest ones being the new allocations to local authorities for public health, and NHS England being given responsibility for allocating the NHS budget, something that had previously been the Secretary of State's responsibility.

One of the first things NHS England did was to announce a fundamental review of resource allocation, following concerns that the current formula favoured healthier areas over less healthy ones, and underplayed unmet need. Last week – after a hiatus – it published more details of the terms of reference for that review, and trust me, they make fascinating reading.

The headline grabber is the frank admission that it might have to cut the budgets of some areas or organisations in real terms, to protect against instability in other services. This is a sign of the seriousness of the funding squeeze and a clear example of NHS England asserting its independence – no Secretary of State has ever been willing to tackle these issues so explicitly or so publicly.

But there's much more in this short document. For instance, you'll start to see the impact of the fragmentation of commissioning as a result of the reforms, with allocations to clinical commissioning groups and to NHS England’s local area teams, and the interaction with public health funding, as opposed to the single focus on primary care trusts previously.

You'll also find a determination to be more transparent about decision-making. The review will seek to tackle head on some of the criticisms of the way resources have been allocated in the past; for example, it explicitly states that previous decisions about the rate at which allocations grow (the pace-of-change policy) have been judgement-based rather than evidence-based; and it acknowledges the need to focus on better measurement and allocation for unmet need.

The terms of reference also raise the question of whether NHS England could go beyond its legal duties to reduce health inequalities. The current narrow definition of these duties as relating to access to NHS care and the specific outcomes from it ignores the huge economic, employment and social roles that the NHS plays in every community and therefore its much wider potential influence on people's health. The musing on this in the terms of reference is another indication of independent thinking. It also suggests – albeit in the longer term – that it will reappraise the reliance on utilisation-based approaches to resource allocation and consider the pros and cons of multi-year allocations.

But there are blind spots too. We argued in April that the most important thing for NHS England to define was whether resource allocation was simply a fair way to get money from the centre to where it was needed or whether it was a powerful and active policy tool. A lack of clarity on this has always been the Achilles heel of NHS resource allocation; with much of the work locked up in the dusty corridors of the Department of Health’s finance department, in isolation from wider policy goals. The refreshing focus on inequalities is welcome, but NHS England has the opportunity to transform resource allocation by aligning the money transparently with its wider policy objectives. In our review of the allocations process, we speculated how resource allocation could be designed to promote wider goals such as a clinically led NHS; an outcomes driven one; or an NHS more integrated and aligned with wider public services.

This review is more encompassing than anyone assumed when it was announced last year. Hopefully, given the ambitions on transparency we won't have to wait until its end-date, this time next year, to get the chance to see if it's really on the money. The King's Fund