The Resource Allocation Working Party: Origins, Implementation and Development, 1974- 1990 Edited by Martin Gorsky and Virginia Preston Centre for History in Public Health, London School of Hygiene and Tropical Medicine ICBH Witness Seminar Programme ii The Resource Allocation Working Party: Origins, Implementation and Development, 1974-1990 Seminar held Thursday 21 November 2013, 2-6 pm, Harry M.Weinrebe Suite, Somerset House East Wing, King’s College London Published by the Institute of Contemporary British History and London School of Hygiene and Tropical Medicine, 2014. We are grateful to the Wellcome Trust for a grant made to the Centre for History in Public Health at LSHTM, which provided financial support for this meeting. We thank Jenny Walke and Gareth Millward for research assistance. ISBN: 978-1-910049-06-8 © Institute of Contemporary British History and London School of Hygiene and Tropical Medicine, 2014. Images by Virginia Preston/King’s College London. All rights reserved. Not to be reproduced without permission. Contact [email protected] for more information. iii Contents Contributors 1 Chronology 4 Introduction 6 Seminar Transcript: The Resource Allocation Working Party: Origins, Implementation and Development, 1974-1990 7 Appendix: The role of the Economic Adviser’s Office in RAWP 73 iv Contributors Chair: Mr Nicholas Timmins – Senior Fellow Institute for Government and the King’s Fund. Visiting professor King’s College, London. Public Policy Editor, Financial Times, 1996-2012. Witnesses: Mr Michael Fairey – Regional Administrator, NE Thames RHA, 1973; Director Planning and Information, NHS Management Board, 1984–89; member of RAWP; member of AGRA, Steering Group RAWP Review, 1986. Dr Malcolm Forsythe – Area Medical Officer, Kent AHA, 1974–78; Regional Medical Officer, 1978–92; Director of Planning,SE Thames Regional Health Authority, 1985– 89; member of RAWP, member of AGRA. Sir Graham Hart: DHSS – Assistant Secretary, 1974, Under Secretary, 1979; Deputy Chief Executive NHS Management Board, 1984–89; Steering Group RAWP Review, 1986. Professor Walter Holland – Professor of Social Medicine (1968), Director Social Medicine and Health Services Research Unit, St Thomas’s Hospital Medical School; member RAWP. Mr Jeremy Hurst – DHSS: Senior Economic Adviser, Economic Adviser’s Office; member RAWP Teaching and Research Sub-Group. Mr John James – DHSS: Principal 1971-4, HM Treasury 1974-6; DHSS: 1976-8, Assistant Secretary 1976-86, Under Secretary 1986-91; Director Health Authority Finance NHS Management Board, 1986-9. Lord Owen (David Owen) – MP Plymouth Sutton 1966-74, Plymouth Devonport 1974-92; Minister of State, Department of Health and Social Security, 1974-76. Dr Peter West – Health Economist, University of York (1971), Institute for Social and Economic Research; St Thomas’s Hospital Medical School; conducted research on Hospital Revenue Allocation Formula and RAWP. Mrs Elisabeth Woods – DHSS: Principal, 1969–76; Assistant Secretary, 1976–88; seconded to HM Treasury, 1980–82; Head of Finance, DSS, 1988–91; Secretary to RAWP. 1 Introductory Speaker: Dr Martin Gorsky – Reader in History, London School of Hygiene and Tropical Medicine In Attendance: Dr Pauline Allen – Reader in Health Services Organisation, LSHTM Professor Sheena Asthana – Professor of Health Policy, University of Plymouth School of Government Ms Bella Bai: PhD candidate University of Nanjing, Kings College London Mrs Terri Banks – DHSS: Assistant Secretary, 1972; Under Secretary 1981; Director, Health Authority Finance, 1985; Steering Group RAWP Review, 1986. Professor Virginia Berridge – Professor of History, LSHTM. Professor Gwyn Bevan – Professor of Policy Analysis, LSE Mr Stephen Davies – Chief Executive, Addenbrooke's Charitable Trust and PhD candidate LSHTM. Mr Mike Gerrard – Director, Association of Community Health Councils for England and Wales, 1977-83. Professor Howard Glennester – Professor Emeritus of Social Administration. LSE Professor Rod Griffiths – Chair, Association of Community Health Councils for England and Wales, 1979-81; Director of Public Health, Central Birmingham Health Authority 1982-93. Dr Matthew Isom – Chief Executive, Dispensing Doctors' Association, ex-BMA Primary Care Division and a member of the team which negotiated the GP contract. Professor Rudolf Klein – Senior Fellow, Centre for Studies in Social Policy, 1973–78; Professor of Social Policy, University of Bath, 1978–98. Mr David Lawrence – Honorary Senior Lecturer in Health Services Research, LSHTM. Juyeon Lee – Masters candidate, LSHTM. Professor Martin Powell – Professor of Health and Social Policy, University of Birmingham. 2 Dr Geoffrey Rivett – Retired medical civil servant, Department of Health,1972-1992; historian of the NHS and the hospitals in London. Professor Colin Sanderson – Professor of Operational Research in Health Care, LSHTM. Dr Stephanie Snow – Senior Research Associate, University of Manchester. Dr Julian Tudor Hart – General Practitioner, Glyncorrwg Health Centre, Port Talbot, Glamorgan, Wales. Mr Daniel (Sekeon) Yu – Masters candidate, LSHTM. Convenors: Dr Martin Gorsky – Reader in History, London School of Hygiene and Tropical Medicine Dr Michael Kandiah – Director, Institute of Contemporary British History Witness Seminar Programme. Dr Virginia Preston – Co-ordinator, Institute of Contemporary British History. 3 Chronology 1956: Guillebaud Report – early discussions of health resource allocation. 1962: NHS Hospital Plan: capital allocations rise; discussion of bed:population norms. 1970: Sir Keith Joseph, Secretary of State for Social Services adopts DHSS formula devised under predecessor Richard Crossman for regional resource allocation, based on indicators of population structure, occupied beds, and caseload. 1970-75: Academic papers discuss territorial justice in the NHS: eg. Tudor Hart (1971), Lancet; Maynard (1972), Cooper and Culyer (1971), Social Science and Medicine, West (1973) Applied Economics; Noyce, Snaith & Trickey (1974) Lancet; Buxton & Klein (1975), BMJ, Gentle & Forsythe (1975), BMJ. 1974: April: NHS structural reform: 14 Regions, 90 Area Health Boards, 206 Districts. October: Labour wins General Election. Harold Wilson: Prime Minister, Barbara Castle: Secretary of State for Social Services, David Owen: Minister of State (Health), Brian Abel-Smith: Special Adviser. 1975: May: Commissioning of Resource Allocation Working Party (RAWP) to improve upon Crossman Formula. August: Publication of First Interim Report of the RAWP. 1976: April: James Callaghan becomes Prime Minister, David Ennals: Secretary of State, September: Roland Moyle: Minister of State. Publication of RAWP Report: Sharing Resources for Health in England. Introduction of Service Increment for Teaching (SIFT) for teaching hospitals. 1976-77: Interim RAWP formula used for distribution; revised formula (final version) used thereafter. 1976-80: Academic papers debate the RAWP formula: eg. Jones and Masterman 1976 BJPSM; Carrier (1978) Year Book of Social Policy ; Snaith (1978) JECH; Knox (1978) JECH; Forster (1979) Jnl Chronic Diseases; Maynard (1980) Jnl of Social Policy. 1978: Appointment of Advisory Group on Resource Allocation (AGRA) 1979: May: Conservatives win General Election; Margaret Thatcher: Prime Minister, Patrick Jenkin: Secretary of State for Social Services. 1980: Health Services Act disbands Area Health Authorities (AHAs); main operational powers to District Health Authorities from April 1982. Publication of the Black Report Inequalities in Health sparks controversy. 1981: Introduction of London Market Forces Factor to RAWP. Norman Fowler: Secretary of State for Social Services. 4 1983: October: Griffiths Report: general management in NHS, proposed creation of NHS Management Board. 1984: Proposed changes to RAWP Target Calculations. 1985: Victor Paige appointed first Chairman of the NHS Management Board. 1986: April: Norman Fowler requests NHS Management Board review of RAWP. Publication of Review of the Resource Allocation Working Party Formula. Research commissioned into morbidity, mortality, deprivation and teaching hospital costs. 1988: July: Coopers and Lybrand Report: Integrated Analysis for the Review of RAWP. Review of the RAWP Formula: Final Report by the NHS Management Committee. SIFT replaced by Service Increment for Teaching and Research (SIFTR). 1989: NHS White Paper Working for Patients proposes to abolish RAWP from April 1990. 1990: NHS and Community Care Act establishes internal market. 1990-91: Implementation of revised RAWP formula. 5 Introduction Writing in 1972, the pioneer health systems scholar Odin Anderson wondered whether equity could ever be attainable in health policy. Was it perhaps just an ‘endless search for the dream’? After all, the track record of Western nations in improving equality of access had not been impressive thus far. Yet the early 1970s was to see a head of steam building in Britain around the question of ‘territorial justice’ in the NHS. From different quarters commentators began to ask what had become of Aneurin Bevan’s initial vision that the NHS would ‘universalise the best’? The founding intention had been to abolish the spatial variations that were the legacy of charity and local government, yet despite nationalisation, hierarchical control and new manpower incentives, evidence was mounting that the goal remained elusive. This was the context for the work of the Resource Allocation Working Party (RAWP), which led in 1976 to the introduction of a new formula for distributing NHS funding