Julian Sturdy: Finding a fairer funding formula for healthcare

Healthcare provision is a measure of the local community’s economic well-being and happiness, and it is in our moral and economic interest to ensure the widest availability of health services, the shortest waiting lists and that the most impressive health outcomes are available to all.

As such, I welcome the £2bn of healthcare spending promised by the Government for this financial year in the Autumn Statement. That injection of cash has led to every area’s budget increasing ahead of inflation in the recently released allocations. It is for such reasons that I believe the Government can stand proudly on their NHS funding record.

I want, however, to address the fair allocation of funding and the impact on healthcare delivery of a funding formula that works to the disadvantage of my clinical commissioning group (CCG).

Vale of York CCG inherited a deficit of some £7m in April 2013 due to the current funding formula. NHS England has acknowledged that the previous York and North Yorkshire PCT received about £17m less than the allocation should have provided for the local population demographic because the funding is phased in over time. Although I am pleased to say that Vale of York CCG has cleared the deficit it inherited, it is still struggling to offer many services constituents have a right to expect. Allocations made for the newly formed CCG in 2013-14 were a straight uplift of the historical allocations, which resulted in a postcode lottery for certain health care services in my area.

Why does Vale of York CCG, in particular, receive such a poor allocation? The Government decide how much money should be allocated to each CCG. Officials begin by dividing the total budget by the number of people living in each respective area. Money is then added or taken away to account for local characteristics, including the proportion of people claiming benefits, the teenage pregnancy rate and the number of people who leave education early. That is where the problem lies.

Of the 10 characteristics, nine reduce the amount of money allocated to our area. That disparity in the allocation is due to the funding formula failing to take account of both the rural nature of the region and, most importantly, age.

Instead, the current formula provides a significant weighting that awards additional funds to areas with high levels of social deprivation. The allocations for 2015-16 have now been announced and, once again, Vale of York CCG has received, by a substantial margin, the lowest per capita funding of all the CCGs in the area. Although I recognise that health needs are generally greater in more deprived areas, the current formula provides far too much weighting for deprivation and insufficient weightings for age and rurality.

York and North Yorkshire have the highest proportion of over-85s in the North, but Vale of York still receives among the lowest funding per head of any northern CCG.

Alongside age, the formula does not account for the additional cost of providing healthcare services in sparsely populated rural areas. Those additional costs are reflected, among other things, in longer average journey times for ambulances and community health staff, such as health visitors. There is also a need for additional smaller hospitals.

The distortion in the funding formula has led to certain areas being awash with money, which in the past has led to well publicised vanity healthcare projects, whereas York and North Yorkshire have consistently struggled to balance the books, resulting in difficult decisions. Those decisions have had a massive impact on the quality of life of many of my constituents, hampering their ability to work and affecting their careers.

To my mind, Vale of York CCG does not provide some procedures because of the funding formula. I have been contacted by many constituents over the past few years regarding their inability to receive pain-relief injections free on the NHS.

Another procedure that has not been available through the Vale of York CCG is IVF treatment. In fact, for a long time the Vale of York was the only health authority in the country not to offer any free IVF treatment. Another area that has really felt the strain is A&E.

It is imperative we move toward a funding formula that gives much greater weight to age and that recognises rurality and its associated higher cost of healthcare provision, while scaling back on the amount given for deprivation.

I accept that it is a difficult decision for the Government, but we have protected the NHS budget during the past five years and now we must ensure we have a funding formula that backs that investment up and can deliver a fair healthcare system for all.

Julian Sturdy is the Conservative MP for York Outer who spoke in a Parliamentary debate. This is an edited version.