HFMA urges clarity in system allocations

In evidence to the Commons committee that is scrutinising the Health and Care Bill, the association said there should be no repeat of issues associated with the Health and Social Care Act 2012, which left some local bodies unclear about the distribution of budgets. This restricted commissioners’ ability to support service transformation until financial responsibility was established.

The HFMA said ICS allocations are set to become more complex, with the addition of specialised commissioning and primary care budgets. Finance managers in some specialised providers are concerned this devolution of funds could reduce the certainty of their organisation's income, threatening its viability. The HFMA evidence said a transparent allocation process would ‘ensure a smooth transition with no impact on patient care’.

Transparency was also needed in the distribution of funds locally. The HFMA said there should be guidance to ensure any move away from the national allocation formulae should be based on a clear rationale and evidence. Though local variations may be required, and ICSs can review place-based funding, national formulae have recognised the complexity and number of drivers of expenditure for many years. ‘Due regard must be given to this knowledge base when allocating local resources,’ the HFMA evidence added.

Autonomy in financial decision-making will be enabled by ensuring funding is not ring-fenced for specific purposes, the association said. Though it acknowledged the importance of ring-fencing to address issues of national concern, it added that the desired benefits from joint working would not be realised if too many restrictions are imposed.

ICSs also needed longer-term allocations, allowing them to plan more effectively to meet the needs of their populations.

At a committee hearing last month, NHS chief executive Amanda Pritchard (pictured) was asked how funding would flow to systems and their local areas.  

‘At the moment the proposal is that the funding would go formally through the integrated care board,’ she said. ‘The expectation is that, as part of developing the constitution and the detailed ways of working with each of the integrated care boards, they would describe how the decision-making is made, not just within the ICB but also at place level. The expectation is that subsidiarity would be part of the principle.

‘If you’re looking at the most sensible place for making decisions, the big, strategic investment, the oversight of the overall allocative decision-making may well sit best at ICB level.’

But many of the decisions about local services should be taken much closer to where the services are delivered – for example, in London, decisions could be devolved to a borough level, she added.

The HFMA evidence to the scrutiny committee covers a range of topics, including financial control, workforce and implementation. It can be downloaded here.