Poor areas to get NHS spending boost

A review of National Health Service funding is expected to channel cash into underprivileged areas of the UK in a departure from the existing targets-based formula.

Ministers had made it clear that from next year funding would be allocated according to hospitals' performance in relation to key targets.

But money is now to be diverted to poorer areas where people are getting a worse hospital service than in wealthier neighbouring areas.

The NHS is to get a £40bn injection, funded by a 1 per cent rise in National Insurance contributions from next April, but ministers are concerned that the money is not going to reach the inner cities and other struggling districts.

At a meeting at the Labour Party conference, Lord Hunt, a Health minister, said: "One of the problems with the health service is that the poorest areas are often provided with the poorest services, and we have got to try and change that round.

"We do want to shift the resources to the places where they are most needed."

That would mean that "failing" hospitals, two out of three of which did not record improvements last year despite a £5bn boost, could get more funds to help to drag them up the league tables.

Lord Hunt also signalled the Government's intention to move away from a reliance on targets. He said the biggest complaint from public sector staff was pressure caused by performance targets, and the Government's aim was to keep targets to a minimum.

The funding review is certain to cause political controversy when it concludes at the end of the year, especially if the bulk of NHS funding rises appear to be earmarked for Labour's heartland areas.

And that would come in the wake of the current dispute in the Cabinet over other health service reforms. Alan Milburn, the Secretary of State for Health, is keen to leave open the possibility of "foundation" hospitals – successful hospitals allowed to borrow extra cash – being exempt from state control. But Gordon Brown, the Chancellor, insists that borrowing will have to stay within the constraints set for the public sector.