Memorandum by the Northern Ireland Confederation
for Health and Social Services
WRITTEN EVIDENCE
1. Introduction
1.1 The Northern Ireland Confederation for
Health and Social Services is the voice of management in the integrated
Health and Social Care system (HSC). Part of the UK-wide NHS Confederation,
it is the only membership body for HSC organisations. At present,
the membership includes all HSS Boards and HSC Trusts, the Central
Services Agency and five of the smaller HSC bodies.
1.2 The Confederation welcomes the opportunity
to comment on the House of Lords Select Committee Inquiry on the
Barnett Formula. In developing this response, the Confederation
has taken the views of its members and has drawn largely on secondary
sources of information.
1.3 The Northern Ireland Confederation currently
does not have the resources or capacity to respond in full or
deal with all the questions outlined in the Select Committee's
paper but we still felt it was important to respond and make our
views on this important issue known. The evidence submitted remains
within the Committee's terms of reference.
1.4 The Confederation would be happy to
provide further clarification or expansion on any of the issues
covered in this submission.
2. The Barnett Formula
2.1 Despite its apparent temporary use,
the Barnett Formula is a mechanism that has been used by the UK
government to apportion public expenditure changes to Northern
Ireland, Scotland and Wales since 1979. The increase (or decrease)
each year in public expenditure is distributed across the three
countries according to their population at the time.
2.2 The Northern Ireland Confederation welcomes
this Select Committee inquiry and is in favour of moving away
from the Barnett Formula towards a system that reflects needs
rather than simply population.
2.3 The case for change has gathered momentum
across the UK. In particular, there are the Calman Commission
in Scotland, which will produce its final report some time during
this year, and the Hothman Commission in Wales. The Northern
Ireland Confederation will closely follow developments and the
outcome of the work of these Commissions as well the outcome of
the Northern Ireland Executive's considerations of the implications
of the potential reform of Barnett.
2.4 The alternative, reportedly favoured
by both Commissions and the report Fair Shares? Barnett and
the politics of public expenditure produced by the Institute
for Public Policy research in July 2008, is to adopt a hybrid
approach combining greater fiscal autonomy with the equity of
a needs based grant.[1]
2.5 At this stage, the Confederation is
not in a position to lend its support to any of the alternatives
to Barnett as we have not had the opportunity to consider the
options in detail. We however are clear in our support for a review
of the Barnett Formula and have consistently recommended this.[2]
The Barnett Formula takes no account of the higher levels of deprivation
in Northern Ireland and hence is inequitable and outdated. It
is purely a population based formula and therefore places Northern
Ireland at a disadvantage trapping the region within an ongoing
cycle of underinvestment. It is our opinion that deprivation levels
in Northern Ireland are such that for the foreseeable future,
investment here needs to exceed the levels of investment that
applies to the rest of the UK.
2.6 The Northern Ireland Confederation is
pleased that the debate on Barnett has been started. We recognise
that finding an alternative will not be easy but we do believe
that a major review of the Formula is essential to ensure equity
of provision throughout the UK.
3. Application of the Formula in practice
3.1 Ultimately the Barnett Formula was designed
to bring about equal spending per head in the four countries of
the UK by slowly reducing differentials in spending between the
four nations otherwise known as the "Barnett Squeeze".
3.2 One of the main outcomes of the Formula
that has attracted criticism is the higher spending per head.
The distribution of a per capita amount to Scotland, Wales and
Northern Ireland higher than that allocated to England has led
to calls for the formula to be reviewed. The relative differences
are illustrated in the table below.
3.3 In 2007-08 identifiable public
spending per head minus social protection and agriculture across
the nations and regions was as follows
|
| Nation/Region | £ per head
| % deviation from UK average
|
|
| Scotland | 5676
| +21 |
| Wales | 5050
| +8 |
| Northern Ireland | 5684
| +21 |
| England | 4523
| -3 |
| UK | 4679
| 0 |
| London | 5985
| +28 |
| North East | 4960
| +6 |
| North West | 4927
| +5 |
| Yorks and Humber | 4477
| -4 |
| West Midlands | 4430
| -5 |
| East Midlands | 4086
| -13 |
| South West | 3947
| -16 |
| South East | 3874
| -17 |
| East of England | 3820
| -18 |
|
Source: IPPR July 2008.
3.2 Over time, the use of Barnett will continue to reduce
the percentage share of the overall public expenditure allocated
to Northern Ireland. However, this population based formula is
too simplistic as it does not take account of actual need. This
may become a problem particularly when the convergence in the
level of per capita public expenditure occurs. Issues may arise
about differential expenditure needs throughout the UK eg the
number of persons in the area requiring medical treatment, the
number of elderly people requiring care, etc.[3]
Such potential high public service demands could cause particular
concern especially if combined with low incomes as is the case
particularly in Northern Ireland, which has the lowest average
earnings in the UK. We also have the lowest economic activity
rate—71 per cent in work as compared with the UK average
of 80 per cent.
3.3 Barnett does not give Northern Ireland the extra
resources it needs to match the health and social care services
that can be afforded in England. The Northern Ireland Confederation
believes that the general standard of such services should be
kept broadly in line throughout the UK. Accordingly, we need a
system that makes proper allowance for the different needs of
the four countries.
4. Northern Ireland has greater need
4.1 In August 2005, the Independent Review of Health
and Social Care Services in Northern Ireland was published.
The author, Professor John Appleby, concluded that it was necessary
for Northern Ireland to spend approximately 7 per cent more
than England in order for it to provide the same standard of care.
The Appleby Report recommended an additional real-term investment
of 4.3 per cent overall during the 2008-12 Comprehensive
Spending Review period.
4.2 He described the Barnett Formula as a "simplistic
mechanism" that did not take into account the differences
in the need or health and social care expenditure between Northern
Ireland and England.[4]
4.3 Updated figures from Department of Health, Social
Services and Public Safety (DHSSPS) officials and Department of
Finance (DFP) officials who considered the need identified by
Appleby taking account of differences in age profile and deprivation
levels and market force factors, show that the differential now
stands at an estimated 14 to 15 per cent greater need
in Northern Ireland compared to England.
4.4 The latest assessment of relative need is 10 per
cent higher for National Health Service-type services, and up
to 36 per cent higher for social services functions. To tackle
that gap and match the 3.7 per cent growth rate in England,
would mean that an additional £600 million to spend
would be required by 2010-11. This is nothing to do with inefficiencies
and waste as no matter how efficient we become in Northern Ireland,
patients and clients here will not get the same standard of care
as in England.
4.5 Consequently, there is a 25 per cent greater
mental health need and funding is 25 per cent less than that
in England—a clear differential. Northern Ireland spend
on children is the lowest in the UK—we are 35 per cent
behind England, and 44 per cent behind Scotland. The proportion
of our population that is aged over 65 is growing at the
fastest rate in the UK, and that means that need is growing quicker
here than it is in other parts of the UK. Significant health and
social care challenges remain to be addressed—much of which
is a legacy of the "Troubles".
4.6 There are many examples of the gap in services here
and the rest of the UK and this is not acceptable—waiting
times are longer; if we had the same adoption rates as England
another 50-60 children in care each year would be adopted;
if we had the same rates of death 300 fewer people would
die each year; and death rates from bowel cancer are 16 per
cent higher than the average in the rest of the UK. We also are
faced with considerable diseconomies of scale for a discrete region
in health and social care—a typical Strategic Health Authority
in England has a population of 7-10 million whereas Northern
Ireland has had to provide the regional services for a population
of about 1.7 million.
5. Conclusion
5.1 The Northern Ireland Confederation considers that
as the Barnett Formula takes no account of the higher levels of
deprivation in Northern Ireland, it is inequitable and outdated.
The Barnett Formula never claimed to address issues around need
and was a basic calculation on the basis of population. A new
fairer way of funding taking account of Northern Ireland's actual
needs is required.
5.2 Barnett places Northern Ireland at a disadvantage
by trapping it within an ongoing cycle of underinvestment. Deprivation
levels in Northern Ireland are such that investment here needs
to exceed the levels of investment that applies to the rest of
the UK for the foreseeable future.
5.3 Because Scotland, Wales and Northern Ireland have
little influence over the size of their bloc grants, the Northern
Ireland Executive is constrained in its ability to shape the policy
agenda and this undermines devolution. For example, it is difficult
for a devolved administration to increase public spending at a
time when the UK government is cutting spending.
5.4 The Northern Ireland Confederation believes that
the Barnett Formula has serious deficiencies and that an alternative
should be found based on a more objective measure of relative
need and a formula designed to produce equity in health and social
care provision across the UK.
2 March 2009
1
Public Finance 21-27 November 2008 page 21. Back
2
The Northern Ireland Confederation for Health and Social services:
"A Research Paper on Funding for Health and Personal Social
Services in Northern Ireland" (January 2002) Back
3
Northern Ireland Assembly Research and Library services Research
Paper 12/01 A background paper on the Barnett Formula (September
2001) Back
4
Independent Review of Health and Social care Services in Northern
Ireland Professor John Appleby (August 2005) Back
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