Distributing the public health grant

How does distribution of the public health grant relate to measures of deprivation?

The Index of Multiple Deprivation measures relative deprivation of small local areas in England (almost 33,000 areas, each with an average population of 1,500 people) by weighting a range of indicators. It considers income, employment, education and skills, crime, health and disability, barriers to accessing housing and services, and the environment.

There is a close correlation between the extent of deprivation in small local areas and how long people in those areas can be expected to live in good health. This association reflects the social determinants of health: health is predominantly determined by the circumstances in which people live, the work they do, the food they eat, and the quality of their housing and transport links. Therefore, it might be expected that local authorities with the greatest concentrations of the most-deprived areas would receive more funding.

A broad relationship does exist between the level of funding in a local area and the extent of deprivation within that area (Figure 3). Local authorities with higher levels of deprivation have higher allocations of per-person spend. However, this pattern does not hold true in all circumstances and the variation tends to widen as the extent of deprivation increases. Funding generally remains within a band of £30–60 per person in the least-deprived areas, but the funding range widens to £50–120 per person in more-deprived areas. These differences partly relate to historical levels of spending inherited by local authorities when these services were still managed by the NHS.

Figure 3: Public health grant allocations compared with extent of deprivation by local authority (spend per person)

Note: Axes cross at average values. Extent of deprivation is a weighted measure of the population in a larger area from the 30% most-deprived areas in England.

Source: Health Foundation analysis of published data.,

The Advisory Committee on Resource Allocation (ACRA) formula

Public health provision is not only related to an area’s level of deprivation. A large share of provision relates to children’s services, so the composition of the population is important, as is the extent to which an area is rural or urban, given the implications for service delivery.

ACRA provides advice to the government on how health spending should be distributed to support ‘equal opportunity of access for equal need’ and reduce avoidable health inequalities. ACRA has been developing a formula to distribute the public health grant that seeks to take into account local need for services as well as the level of deprivation. The ACRA formula takes into account variation in mortality rates between local areas and also estimates demand for services covering children 0–5 years of age, sexual health and substance misuse.

Initially, ACRA recommended that distribution should gradually move to meet the formula-based allocation, with faster growth in spend for areas where current allocations were furthest behind, of up to 10%, but minimum growth of 2.8% in any area. That was possible between 2013/14 and 2014/15 because the grant increased in real terms. However, the core grant has been diminishing in cash terms since 2014/15, meaning that any change in distribution would lead to some areas receiving a greater cut to funding than others. Progress in meeting ACRA's recommended distribution has stalled. The final allocations for 2018/19 and 2019/20 proposed by the Department of Health simply followed the pattern of 2017/18.

Concerns regarding such a redistribution tend not to lie with how the formula is calculated but with how it will be applied, particularly given the large real-terms cuts to the grant. The reduced spending has left room to re-allocate funds without making some areas bear a far greater share of the overall burden of the cuts.

How does distribution of the public health grant relate to the ACRA formula?

Figure 4 shows the current distribution of the public health grant against that calculated using the ACRA formula, given the 2018/19 grant of £3.3bn. Local areas are ranked by their level of per-person funding according to the ACRA formula (red dots) and contrasted with (dotted lines) the current per-person funding for the same year (blue dots). (This figure is not intended to indicate that any under- or over-funding is allocated to specific areas.)

Figure 4: Current public health grant distribution compared with ACRA-formulated distribution by local authority (spend per person, 2018/19)

Note: Advisory Committee on the Resource Allocation (ACRA)-recommended allocation applies the relative allocation based on the latest provisonal formula applied to pubished total allocations of spend in 2018/19.

Source: Health Foundation analysis of published data.,

The extent to which the ACRA-formulated funding distribution would differ from the current distribution is mixed. Broadly, the areas with least need would receive slightly less funding than at present, and some areas with the most need would also receive less than they do at present. There are some outliers with signficantly higher levels of current spend than other areas with a similar level of need (notably, Kensington and Chelsea, Knowsley and Blackpool). These differences relate to historical spending patterns.

How have changes in the public health grant reflected the ACRA formula?

Figure 5 compares the real-terms percentage change in the core public health grant since 2014/15 for each local area with the gap between the current and ACRA-formulated distributions.

Figure 5: Real-terms reduction in core public health grant spend compared with the gap between the current and ACRA-formulated distributions (per-person spend, 2014/15 to 2019/20)

Note: Advisory Committee on the Resource Allocation (ACRA)-recommended allocation applies the relative allocation based on the latest provisional formula applied to published total allocations of spend in 2018/19.

Source: Health Foundation analysis of published data.,

If the changes to grant funding had reflected ACRA's recommended distribution of funds, we would expect the largest falls in spend to be shown towards the bottom left-hand corner of Figure 5, and the smallest reductions (or any increases) in funding in the top right-hand corner. If anything, the opposite seems to be true: the largest reductions in spend are among areas that have lower spend than if the grant were allocated in line with the ACRA formula. However, it must be remembered that some areas indicated as most deprived by the ACRA formula might see funding fall, as their current allocations are above the recommendations derived from the ACRA formula.

How have reductions in the public health grant affected different areas of spending?

The extent of grant reductions vary at the local level, as does the relative prioritisation of different services within the grant. Figure 6 ranks local authorities according to the size of the reductions in their core grant since 2014/15. Each dot reflects the change made to three key parts of public health spending.

Overall, children’s services and sexual health services are prioritised above drug and alcohol services, although the precise pattern varies. The number of children in England is expected to grow by 7% between 2014 and 2019, so we can expect the demand for children’s services to increase. It is more difficult to interpret changes in demand for sexual health or drug and alcohol services. Service usage is the most readily available indicator, but this is tied to the extent of provision and funding. In the case of sexual health services, diagnosis rates have been broadly flat over the last decade, while drug-related deaths have risen by two-fifths.,

It may be that public health directors are prioritising services they consider to be either most needed or most cost-effective. It may also be that some services are easier to restrict than others – for example, by tightening eligibility criteria or reducing staffing costs. Alternatively, prioritisation might relate to local political concerns.

Figure 6: Percentage change in local authority spending by service type since 2014/15

Note: Change in funding for services in between 2014/15 and 2018/19 apart from 0-5 years children's services, which is shown for 2016/17 to 2018/19.

Source: Health Foundation analysis of published data.,,

As estimates rely on how councils complete their financial returns, some caution should be used in interpreting them. They show spend on provision at a relatively detailed level and accounting practices may vary slightly between councils.

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