Controversial plans to change the way NHS spends its £100bn budget being considered

Senior health service managers are considering controversial plans to change the way the NHS spends its £100bn annual budget across different parts of England.

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The move would result in vast amounts of NHS money being shifted from some of the poorer parts of England, with young populations, to richer areas with older populations.

Currently the poorest areas of the country receive significantly more money per head of population than richer areas as part of efforts to reduce long-term health inequalities.

But under the new plan, supported by Health Secretary Andrew Lansley, NHS managers are considering changing the formula so that the age of the local population rather than deprivation would be the main factor in determining funding.

Critics say the shift is being backed by the Government because the areas which would benefit are primarily Conservative strongholds while those which would lose out vote Labour.

However, senior health economists argue that deprivation is a poor indicator of the health needs of an area and that Britain’s growing elderly population makes it imperative to rethink the health funding formula.

Currently NHS funding is weighted by looking at a range of factors including age, a range of deprivation indicators and the standardised mortality rate – the number of deaths each year by age above or below what might be expected nationally.

Thus Tower Hamlets – one of the most deprived areas of the country – has an NHS spend per head of £2,084, while Dorset,  with a large number of elderly residents, has a spend per head of £1,560.

This reflects the amount of money local health authorities have available to spend on their patients. Last year Dorset spent £4,075 on each of its cancer patients compared to Tower Hamlet which spent £13,087.

Answering questions from health professionals recently, Mr Lansley suggested it was time to change the formula to reflect the higher burden on the NHS of elderly populations with bigger health needs.

“Wherever you are in the country you should broadly have resources equivalent with access to NHS services,” he said.

“They (commissioners) should be looking at what it is that is likely to give rise to a demand for NHS services. What is likely to make the biggest difference? Actually it’s elderly populations who are not in substantial deprivation.”

But his comments have outraged the Labour Party and a number of health economists who argue the new policy will result in a massive redistribution of NHS “wealth” from the poorest parts of England to the richest.

Clare Bambra, Professor of public health policy and acting director of the Wolfson Research Institute at Durham University, said focusing on age and severing the current link with deprivation and health needs would shift funding from “the neediest, poorer areas of the north and the inner cities towards the least needy, most affluent, and most elderly areas of the south”.

In a letter to the British Medical Journal, which included a chart showing her projections for which areas of the country would lose out, she added: “It means more money for areas voting Conservative and less for those voting Labour.”

Critics also point out that areas with large elderly populations may be that way because they have better standards of living in the first place.

Labour’s Shadow Health Secretary, Andy Burnham, said age must not be a dominant factor in determining health spending. “Proceeding with a system of that kind would siphon resources out of the areas where life expectancy is shortest and the health challenges greatest. It would be immoral and indefensible.”

But Sheena Asthana, Professor of Health Policy at the University of Plymouth, described the current system of allocating money to different parts of the NHS as a “mess” which was unfair on those people who needed the service most.

“What we know is that current health funding formula does not give sufficient weight to the age of the population and the demands they put on local NHS services,” she said. “It has been mess for many years and it is not a party political point to say that it needs to be reformed.”

A Department of Health spokesman said: “We are making sure that funding is given to areas that need it most. The Secretary of State has asked an independent body of experts for advice on how best to achieve this. No decisions have been made.”