Website of the Department of Health

About NHS allocations

The Department of Health allocates funding to primary care trusts (PCTs) on the basis of the relative needs of their populations.  A weighted capitation formula determines each PCTs’ target share of available resources, to enable them to commission similar levels of health services for populations in similar need.

PCT revenue allocations are made after each Spending Review.  The Department has allocated £74 billion in 2008-09, giving PCTs control of over 80 per cent of the NHS revenue budget, a significant proportion of public expenditure.

There are four elements in the allocations process:

(a) weighted capitation targets - set according to the national weighted capitation formula which calculates PCTs' target shares of available resources based on the age distribution of the population, additional need and unavoidable geographical variations in the cost of providing services

(b) recurrent baselines – which represent the actual current allocation which PCTs receive.  For each allocation year the recurrent baseline is the previous year's actual allocation, plus any adjustments made within the financial year

(c) distance from target (DFT) - this is the difference between (a) and (b) above.  If (a) is greater than (b), a PCT is said to be under target.  If (a) is smaller than (b), a PCT is said to be over target

(d) pace of change policy - this determines the level of increase which all PCTs get to deliver on national and local priorities and the level of extra resources to under target PCTs to move them closer to their weighted capitation targets.  The pace of change policy is decided by Ministers for each allocations round.