Abstract
An extended discussion of the geographical impacts of resource allocation policies might seem marginal to the concerns of this book. However I argue that it is crucial to a consideration of the NHS reforms. Firstly, having decided to restrict growth in the HCHS from 1983, it was inevitable that severe pressure would be imposed on individual DHAs. Not only did this produce a chorus of complaints from inner city areas, it also provoked protests from constituencies denied growth. It was also clear that problems being experienced by health authorities (notably, running out of funds before the end of the financial year) would not be resolved by minor adjustments to resource allocation formulae. The internal market potentially offered the government a chance to kill two political birds with one policy stone: (alleged) overprovision (relative to need) and concentration of hospital services in London, and the difficulties of developing services in the growth areas (and Conservative heartlands) of South East England. So whatever the technical merits of the internal market solution, these are inseparable from the political difficulties facing the government at the time of the reforms. To appreciate this it is necessary to consider the historical background to geographical inequalities in health service provision under the NHS.
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Notes and References
Since the NHS’s inception health authorities had largely been funded in relation to historic budgets, so there was considerable inertia built in to the system. As the populations of major urban centres began to decline, it was clear that such areas (notably London) appeared to have excessive concentrations of hospitals in relation to their populations. RAWP attempted to redistribute funds slowly, partly in relation to needs, partly having regard to the feasibility of bringing the most overfunded authorities closer to their ‘target’ levels of revenue.
Patrick Jenkin, HC Deb., v. 967, c. 1796.
HC Deb., v. 89, c. 742, 20 December 1985.
Allocations for 1989–90 were superseded in late 1988 by a decision to allocate to each region a minimum of 2.5 per cent revenue growth (after allowing for inflation), though four regions (Trent, West Midlands, East Anglia and Oxford) received slightly more than this. In announcing this Kenneth Clarke dismissed the need for further redistribution, which was somewhat surprising given that the large cash increase for the NHS announced in late 1988 would surely have permitted a greater degree of redistribution (BMJ, vol. 298, 28 January 1989, pp. 211-12.
Part of the problem was that health authorities in London and the South East were simply unable to recruit staff at the wages offered by the health service, in a context in which rising house prices and tight labour markets, themselves partly a product of the government’s neoliberal economic policies, rendered NHS employment unattractive (see Chapter 6; Mohan and Lee, 1989). When this was combined with underfunding of pay awards and intra regional transfers of funds, the pressure on many authorities became unsustainable.
Barney Hayhoe (a former health minister), HC Deb., v. 123, c. 418, 26 November 1987.
The Social Services Committee (1988a, pp. v-vi) reported that within six months of the 1987 Election, 26 early day motions were tabled in Parliament drawing attention to service reductions and financial difficulties; there were nine debates on the subject (six adjournment debates and three full-scale debates); and prime minister’s question time was regularly dominated by angry exchanges about the NHS.
HC Deb., v. 63, c. 481, 5 July 1984.
Social Services Committee, 1988b, vol. II, Evidence, Q419 — emphasis added.
These years are illustrative of the pressures on health authorities in the two years surrounding the NHS ‘crisis’ of 1987–8, and the announcement of the reforms. Previous surveys did not obtain the data in quite the same form so the comparison is not extended to years prior to 1987–8. However, note that in the 1985–6 financial year, of the 148 respondents to the NAHA survey, 48 (32.3 per cent) had deferred or deleted planned developments, 17 (11.4 per cent) were reducing service provision, 25 (16.9 per cent) froze recruitment, and 20 (13.5 per cent) reduced staff numbers (NAHA, 1985).
There was no specific question on this point but it was frequently mentioned in answers to a request to indicate any other measures taken by the authority.
HC Deb., v. 89, c. 739-44, 20 December 1985.
For example D. Evennett (Erith and Cray ford) complained that his health authority was closing facilities that, had they adhered to their plans, would have remained open until the provision of replacement services — HC Deb., v. 106, c. 591-6, 28 November 1986.
HC Deb., v. 93, c. 769, 16 June 1986; see also HC Deb., v. 106, c. 591 on Bexley DHA.
HC Deb., v. 120, c. 623.
HC Deb., v. 39, c. 1248, 1250 — emphasis added. For similar complaints, HC Deb., v. 93, c. 421-6, on Essex or v. 90, c. 770-6, on Bexley. Part of the problem was that revenue budgets and targets were always based on population estimates that were (generally) about two years out of date. In situations where populations were growing rapidly, as was the case in the outer South East during the 1980s, this imposed severe pressure on health authorities.
HC Deb., v. 967, c. 339, 16 May 1979.
HC Deb., v. 980, c. 1184; see also HC Deb., v. 998, c. 1153–6 on the denial of funds to Kent because of overspending in London.
HC Deb., v. 87, c. 1181.
HC Deb., v. 113, c. 548-54; HC Deb., v. 113, c. 1281, 1298. For similar comments from MPs in the Trent RHA, see HC Deb., v. 976, c. 801-12; v. 979, c. 1263–74.
Andrew Rowe (Mid Kent), HC Deb., v. 93, c. 785.
HC Deb., v. 101, c. 1337–8.
HC Deb., v. 70, c. 270-6.
HC Deb., v. 63, c. 501, 5 July 1984.
HC Deb., v. 100, c. 985, 1 July 1986.
Kenneth Clarke, HC Deb., v. 82, c. 214, 2 July 1985.
For accounts of RAWP and criticisms thereof, see Buxton and Klein, 1978; Butts et al., 1980; Mays and Bevan, 1987. Among the criticisms considered in the RAWP review were its use of SMRs as proxies for need for health care; its treatment of crossboundary flows of patients and the ways in which health authorities were recompensed for them, giving rise to perverse incentives to health authorities in terms of who they treated and from where; and its treatment of teaching-hospital costs (DHSS, 1988).
The white paper formula was introduced, it seems, largely on the grounds of simplicity and transparency, which may be one reason for the absence of a deprivation factor. Another possibility may be that, for inter regional resource allocation, relative levels of social deprivation are not as significant as between DHAs. However, if that was what the government had decided it made no mention of it in debates on the white paper.
For example the deprivation index used (the Jarman index, after its originator) was criticised for having an inbuilt London, south-eastern and urban bias, for including census measures that were ambiguous, and for being more relevant to primary care (for which it was originally devised) than to hospital care. Furthermore one commentator suggested that the answer produced by the review was ‘obviously extremely acceptable politically’ since the review of RAWP was very much driven by ‘problems experienced in London teaching hospitals and south eastern constituencies’ (HSJ, vol. 98, no. 5111, 28 July 1988, pp. 846-7).
HC Deb., v. 163, c. 571, 7 December 1989.
Thus Gillian Shepherd (Norfolk SW) stated that the abolition of RAWP would ‘be welcomed in many areas with high population growth... that single measure will help East Anglian residents more than anything else’ (HC Deb., v. 151, c. 237, 18 April 1989).
The potential impacts of the white paper on DHA revenue allocations were estimated using the criteria advanced in the white paper — capitation allowances for different age groups reflecting different consumption of resources, square root of the SMR, and differential allowances for ‘high-cost’ locations (the full analysis is reported in Mohan, 1990b). Substantial reductions (and in some cases increases) in DHA budgets were implied, although the analysis made no assumptions about present patterns of use of services and about cross-boundary flows of patients and resources, nor did it attempt to simulate the process of contracting in the internal market.
Guardian, 19 December 1990, ‘Bed closures force health cash U-turn’, p. 2.
See note 4 above.
Although the Tomlinson Report identified the high levels of social need in the London health authorities, it implied — in part relying on evidence produced by the King’s Fund Institute (1992) — that these needs would be better met by community-based services; the issue of whether London’s needs meant that its above-average provision of hospital services was necessary was not considered. The Tomlinson Report therefore accepted the proposition that reductions in beds were necessary and took the view that managing this in a planned fashion was essential. Jarman (1993) disputed Tomlinson’s claims; he argued that the case for a reduction of hospital provision in London could not be justified in terms of hospital utilisation, the availability of hospital beds, nor considerations of relative efficiency. If areas comparable to inner London were examined, there were no significant differences in hospital provision or use, and London’s acute hospital services were no less efficient than the national average (Jarman, 1993, p. 982).
Health Committee, 1993b, Evidence, Q5 — emphasis added.
Ibid., Q12 — emphasis added.
Such as Virginia Bottomley’s intervention in the case of University College Hospital.
In fact the government’s proposals for replacement community facilities were criticised as being an inadequate response to the needs of inner-London residents.
J. Whittingdale (Colchester South and Maldon, HC Deb., v. 235, c. 1093, 20 January 1994). This MP then demanded a uniform national formula, bypassing the regions and allocating funds direct to districts. However this was not a new complaint: much of the critical evidence submitted to the RAWP review from RH As and DH As focused on the process of allocating funds subregionally.
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Mohan, J. (1995). Spatial Resource Allocation: Local Difficulties, Technical Adjustments and Political Solutions. In: A National Health Service?. Palgrave, London. https://doi.org/10.1007/978-1-349-23897-2_4
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