As a result of the budget top-up for the NHS in March, health authorities received an average 8.9% cash increase in their allocations.
But residents expecting to see those increases locally may be surprised to find that allocations vary widely. Increases this year ranged from 10.8% for Kensington, Chelsea and Westminster health authority to a more modest 8.2% for the Isle of Wight.
The reason for these unequal increases, paradoxically, is the search for equity - the cornerstone on which the NHS is built. In short, NHS allocation policy seeks to ensure the neediest areas get a bigger share of resources.
When the NHS was created, funding was allocated according to the location of the hospitals the service inherited. Since 1971 the health service has introduced a succession of resource allocation formulae to divide funds between regions, and more recently health authorities, based on the size and age of their populations. Over the years "capitation" formulae were refined to take account of the relative health needs of different populations and the different costs of providing health care around the country.
The existing formula in England was introduced in 1996-97, although a wide-ranging review was launched in 1998. A new formula, likely to be introduced in 2003-04, aims to produce a fair distribution of resources between health authorities and primary care groups and trusts, which are taking over the commissioning of acute and community care.
So-called 'needs-weighted' capitation formulae provide target allocations, towards which health authorities are gradually moved. This means that over time, money flows away fom above-target health authorities (for example, in the relatively wealthy shire counties in the south-east) to below-target authorities (inner-city areas, deprived areas in the north of England).
Scotland has just completed a national review of resource allocation and plans to replace its 20-year old formula with one devised under the guidance of the review chairman, Sir John Arbuthnott. This will allocate over £4bn between 15 health boards. As in England, no board will face cuts: each will receive growth money, some more than others. But there will be winners and losers.
Although in percentage terms the Western Isles will receive the biggest increase, Greater Glasgow will get the biggest cash rise as the new formula takes more account of inner-city deprivation. The allocations for 2001-02 have taken a major leap towards "parity", with Glasgow receiving a 7.7% cash increase compared to an average 6.5% for Scotland.
Wales and Northern Ireland also use weighted capitation formulae and both are under review.
