§ Mr. Wigley
To ask the Secretary of State for Wales if he will list the criteria used for determining his distribution to district health authorities in Wales of(a) revenue grants and (b) capital allocation; and if he will indicate for each such criterion the weighting which is attached to it.
§ Mr. David Hunt
Revenue allocations to health authorities are historically based on the levels of expenditure on services taken over in 1974. Each year, these allocations are enhanced in respect of recurrent development funds and allowance for inflation. Those recurrent development funds which are earmarked for centrally directed developments are allocated in accordance with criteria that are specific to each category of centrally financed development eg treatment centres, regional services developments, mental health developments, information technology developments etc.
Other recurrent growth funding is distributed for the discretionary use of authorities and its distribution is weighted in favour of those authorities which are shown by the revenue formula assessment to be below their target shares of available resources. The formula is based on weighted population shares because it is recognised that the demographic factors are the prime determinants of relative need. Target shares are accordingly calculated on 194W the basis of the latest estimates of crude population adjusted to reflect age, sex, morbidity, sparsity and seasonal variation as a result of tourism.
The formula consists of five components for non-psychiatric in-patients, non-psychiatric out-patients, community health services, the ambulance service and accident and emergency services. These components are combined in proportion to the all-Wales expenditure on the five categories of service and the resultant adjusted population shares are compared with the distribution of recurrent revenue resources (net of expenditure on regional and psychiatric services, various other supra-district services and the service costs of medical and dental teaching) to indicate relative under or over-provision.
The weighting attached to each category of service in the most recent (1990–91) formula assessment is non-psychiatric in-patients 64.48: non-psychiatric outpatients 12.01: community health services 15.70: ambulance services 4.42: accident and emergency services 3.39. These weightings, which derive from the 1988–89 annual accounts, can vary from year to year as they are dependant on annual variations in the level of all-Wales expenditure on these categories of service.
The allocation of capital resources for centrally funded schemes reflects the same sort of criteria as are applied to the respective categories of centrally financed revenue developments. However, health authorities' discretionary capital provision is distributed in accordance with a capital formula. The capital formula is population-based but it also takes into account the distribution of existing NHS capital stock across Wales. It consists of three component: a population based components which takes projected population figures for the next decade and weights them for age/sex, anticipated cross-boundary flow and standardised mortality ratios; a replacement component which takes recurrent revenue allocations as a proxy indicator for capital maintenance and upgrading needs and an equalisation component which reflects the relative capital assets of the respective authorities on the basis of an index of capital stock per capita. These components are combined in the ratio of 25:25:50 to provide the overall capital formula share.
The objective of both the revenue and capital formulae is to ensure that funds are distributed in a way which leads to a progressive equalisation of resources between authorities. Those authorities shown by the formulae to be relatively less well resourced receive a greater proportional share of discretionary revenue growth and capital funding than those which are relatively better resourced, thereby enabling them to catch up steadily and thus reduce the range of disparity.