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This note provides information on the resource allocation formula for distributing funding for health services in England to local commissioning groups: clinical commissioning groups (CCGs). It includes the historical use of allocation formulas; the formula that was proposed and rejected for the 2013-14 funding round; and information on the new CCG allocations for 2014-15 and 2015/16.

Following a fundamental review, NHS England announced on 18 December 2013 individual funding allocations for CCGs for 2014-15. For informatin on the new funding formula see section 3 of this note; for a full allocation list please see the annex at the end of this note.

Funding allocation formulas use information about local populations, such as age, gender, levels of deprivation and the size of a population, in order to predict the level of funding needed in each area to meet existing need. Funding formulas have been developed independently of ministers, most recently, by the Advisory Committee of Resource Allocation (ACRA). Many areas do not receive the full amount of funding allocated to them because increasing funding to one area within a limited budget would require reductions for another and significant funding reductions could destabilise health provision or provoke local opposition. The overall aim of allocations policy has been to—over time— secure ‘equal opportunity of access for people with equal need across the country’.

The formula used for the 2013-14 allocations to CCGs is the same as was used to allocate funding to primary care trusts (PCTs). Library Standard Note, Primary Care Trusts: Funding and expenditure (SN05719), provides a description of the allocation process as it was for PCTs in England.

Responsibility for health services is devolved to the Scottish, Welsh and Northern Irish administrations.

Headline expenditure figures are updated quarterly on the Library Social Indicators page.

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