HC 1048-III Health CommitteeWritten evidence from Public Health Manchester (PH 146)

This memorandum relates to the following terms of reference:

Arrangements for funding public health services (including the Health Premium).

How the Government is responding to the Marmot Review on health inequalities.

Summary

(i)The weighting for health inequalities in the PCT allocation formulae for 2011-12 has been reduced from 15%, the value for 2009-10 and 2010-11 allocations, to 10%.

(ii)This results, other things being equal, in a shift in both target and actual allocations from poor health PCTs to good health PCTs. The effect on target allocations ranges from a 4.1% reduction for Tower Hamlets PCT to a 4.2% increase for Surrey PCT.

(iii)The very slow pace of change greatly reduces the effect on actual allocations for 2011-12. However the change implies a long term shift of resources from deprived areas to prosperous areas, compared with retention of the 15% weighting.

(iv)The reduction of the health inequalities weighting is a ministerial judgment rather than an evidence based recommendation from the Advisory Committee on Resource Allocation. In fact the decision seems to contradict evidence from the recent DH-commissioned research on the subject.

(v)This change could be interpreted as a reduction in the priority of tackling health inequalities and could be seen as contradicting the aspirations described in the recent White Papers, particularly in view of currently worsening health inequalities.

(vi)This change in allocation policy will be of concern to future GP consortia in areas of poor health, and to all who work in the field of health inequalities.

(vii)Currently PCT spend on public health comes out of general allocations; this change in health inequalities weight will therefore reduce the ability of poorer health PCTs to spend on public health and conversely improve that for better health PCTs. The implications for future public health budgets are unclear.

(viii)It would be helpful to know the reasoning behind this reduction in health inequalities weight in view of the stated commitment to tackle health inequalities.

(ix)It is important to clarify whether or not this change is a signal of an intention to move resources from poor health areas to better health areas.

1. The health inequalities formula is part of the set of formulae used to calculate theoretical target allocations for PCTs which themselves are used to inform actual allocations via a damping process named “pace of change”. It is a very simple formula consisting of the disability-free life expectancy (DFLE) of a PCT subtracted from 70 which acts as a sort of ideal upper limit not quite achieved by the PCT with the best health. It is a very strongly discriminating formula with a very wide range – from Liverpool with 70-55.8 = 14.2 to Surrey with 70-68.5 = 1.5 giving a range ratio of 9.5. When it first came out the Advisory Committee on Resource Allocation (ACRA) recommended that it be given a weight in the range 10% to 20%, and for 2009-10 and 2010-11 allocations the central figure of 15% was chosen by the previous administration.

2. The PCT allocations for 2011-12, announced on 15 December 2010, include a reduced weighting of 10% for the health inequalities formula (also known as the Disability Free Life Expectancy or DFLE adjustment), down from 15%.

3. A reduction in the weighting of the DFLE adjustment entails a commensurate increase in the weighting of the other formulae. The DFLE adjustment distributes to poor health areas in a stronger way than the average of the other formulae. Consequently any reduction in its weight entails a reduced distribution to poor health areas.

4. A quantitative assessment of this reduced target distribution to poor health areas can be made from a sensitivity analysis of the 2011-12 formulae using the Dept of Health exposition book released on 8 March 2011. For 2011–12 the reduction in DFLE weighting from 15% to 10% gives a range of changes in target allocation from −4.1% (Tower Hamlets PCT) and −4.0% (Manchester) to +4.2% (Surrey PCT) and +3.9% (Kensington & Chelsea). The negative changes are generally for poorer health areas and vice versa. Poor health PCTs (the half of PCTs with worst DFLE) lose on average 1.7% (£8.3 million) of target allocation while better health PCTs (the half of PCTs with the best DFLE) gain 1.7%, a 3.4% relative movement. 94% of Spearhead PCTs lose out. The north to south relative movement (five northernmost SHAs vs. five southernmost SHAs) is 2.2%. Manchester’s reduction translates into a reduction of £41.7 million. The effect on Greater Manchester PCTs is given in table 1 showing a reduction of 2.0% or £98.4 million for Greater Manchester. Results for all 151 PCTs and ten SHAs are in Appendix 1.

5. The health inequalities or DFLE formula is a measure of both mortality and morbidity so one would expect those PCTs which lose from the weight reduction to have higher mortality in general. This is borne out in the scattergraph of the change in target allocation versus under 65 SMR – a measure of premature mortality - in Figure 1.

Table 1

EFFECT ON 2011-12 GREATER MANCHESTER PCT CLOSING TARGET ALLOCATIONS OF CHANGING THE HEALTH INEQUALITIES WEIGHT FROM 15% TO 10%

PCT

2011-12 closing target DFLE at 15%

2011-12 closing target DFLE at 10%

change £ 000’s

change %

Spearhead = S

Ashton, Leigh and Wigan PCT

574,171

560,130

−14,040

−2.4

S

Bolton PCT

489,187

480,663

−8,524

−1.7

S

Bury PCT

313,930

311,068

−2,862

−0.9

S

Heywood, Middleton and Rochdale PCT

390,103

382,574

−7,529

−1.9

S

Manchester PCT

1,032,222

990,556

−41,666

−4.0

S

Oldham PCT

409,068

400,865

−8,203

−2.0

S

Salford PCT

470,780

458,809

−11,971

−2.5

S

Stockport PCT

452,132

454,813

2,682

0.6

Tameside and Glossop PCT

420,446

413,495

−6,951

−1.7

S

Trafford PCT

333,460

334,374

914

0.3

Greater Manchester

4,885,498

4,787,348

−98,151

−2.0

Source: Public Health Manchester analysis of DH exposition book

6. All the points above relate to target allocations. The rate at which PCTs move towards these targets is determined by ministers under “pace of change” rules. The current pace of change is very slow leading to a timescale to achievement of target of the order of 20 years. The above comments therefore concern the longer term effect. In the short term the damping is such that the reduction in health inequalities weight has an effect on actual allocations for only a few PCTs and these effects are relatively small. The second of two articles , on the issue in the Health Service Journal attempted to highlight such limited effects.

7. The effect on actual allocations for Greater Manchester is small. The calculation has to make the assumption that the pace of change algorithm remains unchanged in going from 15% to 10% health inequalities weight. Only two PCTs are affected. Ashton, Leigh and Wigan PCT loses £0.9 million (0.17%) and Trafford PCT gains £0.35 million (0.08%), giving a net loss for Greater Manchester of £0.55 million (0.011%). This very modest level of change will be replicated in a small number of other PCTs. Thus it can be seen that the concern is not so much with the effect on 2011–12 allocations, though these will be of concern to a small number of PCTs, but with the longer term and the implications for future policy in both public health and consortia allocations.

Figure 1

8. There are new, improved formulae for prescribing and mental health as recommended by ACRA. The new prescribing formula has little redistributive effect but the new mental health formula distributes more strongly to poor health areas than the formula it replaces. In fact it redistributes by a relative amount of 1.6% which is about half of and in the opposite direction to the effect of the reduction in HI weight, though for Greater Manchester the effect is greater and roughly equal and opposite to the HI weight effect.

However this effect has no relevance to the ministerial judgment to reduce the HI weight. The new mental health formula forms part of normal data and formula improvements commissioned and recommended by ACRA, whereas the HI change is purely a ministerial judgment. It is simply fortuitous that the new formula happens to work to some extent in the opposite direction.

9. The reduction in HI weight seems at odds with the conclusions of recent research on the HI weight commissioned by ACRA. The recommendations of this report included an option as follows: “Allocating 85% of the budget according to the original CARAN models, or variants……..and the remaining 15% using eg distance from best DFLE or some derivative of this. This approach is similar to the current (2009-10 and 2010-11) health inequalities formula.” (p154).

The conclusion of the report also included the following paragraph “We have found some evidence to suggest that the positive effect of funding on health is higher in more deprived PCTs compared with less deprived PCTs . This would suggest that if the same incremental allocation were made to every PCT we would expect Health inequalities to be reduced. It also suggests that if a given amount of resources were redistributed from less deprived to more deprived areas there would be a net health benefit.” (p147)

In view of these quotes the reduction in HI weight seems strange.

10. The DH paper entitled “Summary of Target Formula Changes for 2011-12 Primary Care Trusts recurrent allocations” makes no reference to the fact that 10% is a reduction from the last two years and therefore makes no justification of such a reduction. The relevant paragraphs are:

The DFLE (Disability free life expectancy) adjustment (Public Health Manchester comment – also known as the health inequalities formula) is retained as part of our commitment to reducing health inequalities. The size of the adjustment determines the weighting of the main formula, which aims to fund equal access for equal need, and funding to support work to reduce health inequalities. The main formula already includes weighting for the additional need for access to healthcare in elderly and/or deprived populations.

As in the last allocation round, ACRA could find no technical basis for the weighting of the DFLE adjustment and left it to ministerial decision. Until further work on allocations to GP consortia and the Public Health Service has been completed, this is being set at 10% (Public Health Manchester comment – reduced from 15% in previous years) to ensure that funding for work on health inequalities, including public health, continues and that funding to support access to healthcare and to respond to need for healthcare is sufficient. This is within the range first discussed by ACRA.

It is not clear what evidence the DH and ministers have to calculate that the reduction of allocations to poor health areas implicit in the DFLE reduction provides them with resources “sufficient to respond to need for healthcare” especially as health inequalities continue to worsen.

11. The Secretary of State attempted to explain the reason for the reduction in DFLE adjustment in the following conversation in the 15 December Health Select Committee meeting:

Q559 Andrew George: The advisory committee has been doing that, and it has been looking at disease prevalence, demographic issues and deprivation.

Mr Lansley: Yes, and we are going to help it to go further in that direction. In the overall allocation today, we are devoting more weight to what is, through age and deprivation, reflective of need for health care services. You have asked what is being derated. At the end of the process, the ACRA told Ministers that they could allocate an amount of money, which might be 10, 15 or 20%, on the basis of inequalities in health outcomes. We are very clear that we are moving in due course towards separate allocations for NHS services and for public health. It is clear that the public health allocation will not exceed 10%, although we have not determined what it will be. So we as Ministers have said to the ACRA that we will set the allocation for relative health outcomes at 10% and allow, consequently, additional weight to be given to the factors, such as age and deprivation, that directly relate to health care need. That will impact on the balance of allocations in 2011-12.

The reason given for the reduction in health inequalities weighting seems to rest on the assumption that most or all of that weighting relates to public health. However when the weighting was developed it was seen as relating to the equal access principle in areas where there is unmet need i.e. to the provision of appropriate health care in deprived areas as a means to tackle health inequalities. It was not seen or developed merely as a weighting to pay for more public health in deprived areas. The body responsible for developing the formulae (the Advisory Committee on Resource Allocation - ACRA) is aware of the issue and its Chair’s letter to the Secretary of State for Health containing their recommendations for the 2011-12 allocation formulae contains the following relevant section:

I would like to draw your attention to ACRA’s position in relation to the health inequalities adjustment. Despite intensive investigation, and because of the lack of previous NHS research on the issue, ACRA has been unable to find sufficient evidence to use to determine the size of the adjustment. We recommend that the current form of the adjustment is retained, however the scale of the adjustment is a matter for your judgment in the context of the persistent gap in health inequalities.

The White paper sets out that your future approach to health inequalities will be based more clearly on public health interventions, funded through a separate allocation. It is worth considering that the current adjustment is intended to allow for unmet health care need as well as health improvement activities. We would be happy to explore estimating the size of any unmet health care need alongside any advice you may seek from us on developing a public health allocation.

It appears that the Secretary of State’s assumption is at odds with ACRA’s implication that there is no evidence yet on the proportion, if any, of the DFLE weighting which covers public health expenditure. Therefore a judgment on the DFLE weighting should be based on criteria other than any assumed reference for the weighting. The decision also cannot be related to the future possibility that the Public Health budget may be more strongly distributed to poor health areas than the main commissioning budget, because both budgets are included in the latest allocation.

ACRA’s recommendation that the decision on the DFLE weighting should be taken “in the context of the persistent gap in health inequalities” taken together with the fact that health inequalities are worsening, make this reduction in DFLE weighting even more puzzling.

June 2011

APPENDIX 1

EFFECT ON 2011/12 PCT AND SHA CLOSING TARGET ALLOCATIONS OF CHANGING THE HEALTH INEQUALITIES WEIGHT FROM 15% TO 10% IN ORDER OF SIZE AND DIRECTION OF EFFECT

PCT

2011-12 closing target DFLE at 15%

2011-12 closing target DFLE at 10%

change £ 000's

change %

Spearhead = S

Tower Hamlets PCT

455,390

436,705

−18,686

−4.1

S

Manchester PCT

1,032,222

990,556

−41,666

−4.0

S

Newham PCT

494,707

476,702

−18,005

−3.6

S

Liverpool PCT

964,224

930,913

−33,311

−3.5

S

City and Hackney Teaching PCT

477,582

461,698

−15,884

−3.3

S

Nottingham City PCT

566,335

547,970

−18,365

−3.2

S

Knowsley PCT

326,808

316,621

−10,187

−3.1

S

Barnsley PCT

473,915

459,219

−14,696

−3.1

S

Hartlepool PCT

181,862

176,393

−5,469

−3.0

S

Middlesbrough PCT

283,946

275,970

−7,976

−2.8

S

Sunderland Teaching PCT

550,752

535,753

−14,999

−2.7

S

Islington PCT

391,822

381,239

−10,583

−2.7

S

Stoke On Trent PCT

528,026

513,873

−14,153

−2.7

S

Hull Teaching PCT

511,249

498,006

−13,243

−2.6

S

Blackburn with Darwen Teaching Care Trust Plus

283,680

276,333

−7,347

−2.6

S

County Durham PCT

1,008,739

982,640

−26,100

−2.6

S

Salford PCT

470,780

458,809

−11,971

−2.5

S

Halton and St Helens PCT

596,778

581,645

−15,133

−2.5

S

Newcastle PCT

490,132

477,756

−12,375

−2.5

S

Leicester City PCT

559,216

545,454

−13,762

−2.5

S

Barking and Dagenham PCT

325,038

317,045

−7,993

−2.5

S

Ashton, Leigh and Wigan PCT

574,171

560,130

−14,040

−2.4

S

Heart of Birmingham Teaching PCT

506,630

494,779

−11,850

−2.3

S

Wakefield District PCT

637,533

622,711

−14,822

−2.3

S

Doncaster PCT

559,051

546,522

−12,529

−2.2

S

Rotherham PCT

457,606

447,457

−10,149

−2.2

S

Gateshead PCT

379,262

370,983

−8,279

−2.2

S

Blackpool PCT

289,123

282,861

−6,262

−2.2

S

South Birmingham PCT

624,444

610,953

−13,491

−2.2

S

Sandwell PCT

582,831

570,683

−12,147

−2.1

S

Oldham PCT

409,068

400,865

−8,203

−2.0

S

Birmingham East and North PCT

729,973

715,352

−14,620

−2.0

S

Redcar and Cleveland PCT

248,879

243,936

−4,943

−2.0

S

South Tyneside PCT

297,044

291,253

−5,792

−1.9

S

Heywood, Middleton and Rochdale PCT1

390,103

382,574

−7,529

−1.9

S

Lambeth PCT

578,489

568,128

−10,361

−1.8

S

Bolton PCT

489,187

480,663

−8,524

−1.7

S

Stockton-on-Tees Teaching PCT

324,506

318,915

−5,591

−1.7

S

Tameside and Glossop PCT

420,446

413,495

−6,951

−1.7

S

Wolverhampton City PCT

445,995

438,759

−7,236

−1.6

S

Bassetlaw PCT

196,134

192,986

−3,148

−1.6

S

East Lancashire Teaching PCT

670,273

659,640

−10,633

−1.6

S

Waltham Forest PCT

413,219

406,665

−6,554

−1.6

Sheffield PCT

934,232

919,990

−14,241

−1.5

Bradford and Airedale Teaching PCT

875,399

862,603

−12,796

−1.5

S

Camden PCT

419,825

413,793

−6,033

−1.4

Greenwich Teaching PCT

435,325

429,071

−6,254

−1.4

S

Southwark PCT

531,501

524,054

−7,447

−1.4

S

Haringey Teaching PCT

451,588

445,361

−6,226

−1.4

S

Plymouth Teaching PCT

445,730

439,716

−6,014

−1.3

Coventry Teaching PCT

557,505

550,240

−7,265

−1.3

S

North Tyneside PCT

368,504

363,754

−4,750

−1.3

S

Walsall Teaching PCT

455,761

450,067

−5,694

−1.2

S

Telford and Wrekin PCT

263,903

260,620

−3,283

−1.2

Wirral PCT

584,865

577,710

−7,156

−1.2

S

Lewisham PCT

485,923

480,240

−5,684

−1.2

S

Darlington PCT

177,558

175,700

−1,858

−1.0

Derby City PCT

463,818

459,056

−4,761

−1.0

Southampton City PCT

402,651

398,917

−3,734

−0.9

Bury PCT

313,930

311,068

−2,862

−0.9

S

Central Lancashire PCT

747,786

741,012

−6,774

−0.9

S

Bristol PCT

734,214

727,571

−6,643

−0.9

Sefton PCT

494,331

490,102

−4,229

−0.9

Leeds PCT

1,268,038

1,257,231

−10,807

−0.9

Wandsworth PCT

475,586

471,694

−3,893

−0.8

Kirklees PCT

654,232

648,880

−5,351

−0.8

Warrington PCT

317,241

314,988

−2,252

−0.7

S

Luton PCT

313,044

310,825

−2,220

−0.7

Hounslow PCT

379,225

376,860

−2,365

−0.6

Derbyshire County PCT

1,180,387

1,173,064

−7,323

−0.6

S

North East Lincolnshire Care Trust Plus

273,456

271,926

−1,530

−0.6

S

North Staffordshire PCT

349,456

347,532

−1,924

−0.6

Portsmouth City Teaching PCT

334,602

332,800

−1,802

−0.5

Northumberland Care Trust

546,206

543,612

−2,594

−0.5

S

Calderdale PCT

328,324

326,858

−1,466

−0.4

Ealing PCT

541,063

538,726

−2,337

−0.4

Hammersmith and Fulham PCT

283,611

282,424

−1,187

−0.4

S

North Lincolnshire PCT

265,585

264,510

−1,075

−0.4

Peterborough PCT

256,304

255,300

−1,005

−0.4

Nottinghamshire County Teaching PCT

1,061,627

1,057,660

−3,967

−0.4

Brighton and Hove City PCT

434,846

433,431

−1,415

−0.3

Dudley PCT

505,092

503,967

−1,125

−0.2

Milton Keynes PCT

356,110

355,396

−714

−0.2

Brent Teaching PCT

461,756

460,931

−824

−0.2

Medway PCT

420,430

419,699

−731

−0.2

North Lancashire Teaching PCT

558,876

558,331

−544

−0.1

Redbridge PCT

403,086

402,814

−272

−0.1

South Staffordshire PCT

937,099

937,972

873

0.1

S

Cumbria Teaching PCT

848,757

849,863

1,106

0.1

S

Eastern and Coastal Kent PCT

1,220,609

1,223,486

2,877

0.2

Trafford PCT

333,460

334,374

914

0.3

Torbay Care Trust

254,069

254,842

773

0.3

Cornwall and Isles of Scilly PCT

890,382

893,157

2,774

0.3

Enfield PCT

465,462

467,119

1,657

0.4

Western Cheshire PCT

383,477

384,935

1,458

0.4

Great Yarmouth and Waveney PCT

395,295

397,056

1,761

0.4

Hastings and Rother PCT

315,054

316,482

1,428

0.5

Lincolnshire Teaching PCT

1,167,262

1,172,760

5,498

0.5

S

South West Essex PCT

651,924

655,234

3,310

0.5

Swindon PCT

306,200

307,790

1,589

0.5

Stockport PCT

452,132

454,813

2,682

0.6

North East Essex PCT

545,308

549,092

3,785

0.7

Croydon PCT

550,110

554,098

3,987

0.7

Isle of Wight NHS PCT

249,794

251,924

2,130

0.9

Hillingdon PCT

387,903

391,328

3,425

0.9

Northamptonshire Teaching PCT

993,778

1,002,588

8,810

0.9

S

Warwickshire PCT

791,591

799,405

7,814

1.0

Central and Eastern Cheshire PCT

678,375

686,186

7,811

1.2

Bournemouth and Poole Teaching PCT

540,122

546,382

6,261

1.2

Westminster PCT

401,950

406,690

4,739

1.2

East Riding of Yorkshire PCT

479,118

484,854

5,736

1.2

Havering PCT

399,134

404,239

5,105

1.3

Worcestershire PCT

825,802

836,819

11,017

1.3

Norfolk PCT

1,183,973

1,199,868

15,895

1.3

Shropshire County PCT

448,556

454,695

6,139

1.4

South East Essex PCT

541,503

549,050

7,547

1.4

Sutton and Merton PCT

542,089

550,775

8,687

1.6

Herefordshire PCT

277,961

282,532

4,571

1.6

Bexley Care Trust

337,933

343,694

5,760

1.7

North Yorkshire and York PCT

1,148,405

1,168,061

19,656

1.7

Somerset PCT

808,322

822,363

14,041

1.7

Bedfordshire PCT

599,545

609,973

10,429

1.7

North Somerset PCT

331,603

337,374

5,771

1.7

Harrow PCT

318,404

323,946

5,542

1.7

Devon PCT

1,143,276

1,163,880

20,604

1.8

Leicestershire County and Rutland PCT

909,896

926,923

17,027

1.9

Solihull Care Trust

308,340

314,131

5,791

1.9

Barnet PCT

518,400

528,707

10,308

2.0

Berkshire East PCT

552,695

564,146

11,451

2.1

Gloucestershire PCT

858,348

876,170

17,822

2.1

Cambridgeshire PCT

827,760

845,135

17,376

2.1

West Essex PCT

401,746

410,215

8,469

2.1

South Gloucestershire PCT

337,127

344,447

7,321

2.2

Suffolk PCT

894,754

914,905

20,151

2.3

East Sussex Downs and Weald PCT

523,146

535,373

12,228

2.3

West Kent PCT

979,855

1,003,072

23,217

2.4

Mid Essex PCT

504,893

517,027

12,134

2.4

Hertfordshire PCT

1,580,966

1,620,676

39,710

2.5

Bath and North East Somerset PCT

254,080

260,750

6,670

2.6

Kingston PCT

238,715

244,995

6,280

2.6

Oxfordshire PCT

834,186

856,236

22,050

2.6

West Sussex PCT

1,202,872

1,235,203

32,331

2.7

Dorset PCT

610,886

627,561

16,675

2.7

Wiltshire PCT

641,699

659,332

17,633

2.7

Hampshire PCT

1,811,303

1,863,354

52,050

2.9

Bromley PCT

460,892

474,201

13,309

2.9

Berkshire West PCT

616,447

634,407

17,960

2.9

Buckinghamshire PCT

673,976

698,513

24,537

3.6

Richmond and Twickenham PCT

234,717

243,677

8,960

3.8

Kensington and Chelsea PCT

285,613

296,800

11,187

3.9

Surrey PCT

1,477,334

1,538,711

61,377

4.2

England

84,996,081

84,996,081

0

0.0

SHA

North East SHA

4,857,390

4,756,665

−100,725

−2.1

North West SHA

12,630,092

12,438,489

−191,603

−1.5

Yorkshire and the Humber SHA

8,866,143

8,778,827

−87,315

−1.0

East Midlands SHA

7,098,452

7,078,462

−19,991

−0.3

West Midlands SHA

9,138,964

9,082,381

−56,582

−0.6

East of England SHA

8,697,015

8,834,356

137,342

1.6

London SHA

13,146,060

13,104,418

−41,642

−0.3

South East Coast SHA

6,574,146

6,705,458

131,312

2.0

South Central SHA

5,831,764

5,955,692

123,928

2.1

South West SHA

8,156,058

8,261,334

105,276

1.3

North

42,591,040

42,134,824

−456,216

−1.1

South

42,405,042

42,861,258

456,216

1.1

Source: Public Health Manchester analysis of DH exposition book

Prepared 28th November 2011