NHS England has approved a historic and somewhat controversial shift in the way funds of £100 billion will be allocated to clinical commissioning groups (CCGs) across the country over the next two years, weighting hand-outs towards deprived and elderly communities.

The new funding formula will see all CCGs receive a cash increase matching inflation for the next two years (2014/15 and 2015/16), but, for the first time, those in most need - calculated as per certain criteria - will receive up to 2.8% extra in their total allocations each year.

According to NHS England, current funding for CCGs is three years out of date and therefore fails to recognise the substantial change in population and health needs seen in some areas over that period, leaving commissioners unable to provide required services or within budget. 

To address this, it has approved a new method of distribution that more accurately reflects population changes and so includes a specific measure for deprivation, in the hope that this will redress some of the health inequalities rife throughout the nation. 

"Some local health services need to receive a settlement that is bigger than inflation to start reducing the local underfunding which has arisen, whether this reflects deprivation, ageing or population growth," noted Paul Baumann, Chief Financial Officer for NHS England.

Crucially, the new formula also includes a measure for 'unmet need', to help better predict the needs of the poorest communities, given that patients in the most deprived areas often don't access the services they need at the right time, he said.

But there has been also strong opposition to the move, with fears that inequalities will be magnified as a result. 

Labour opposes move

Shadow health secretary Andy Burnham's office was unable to comment in time, but media reports claim he believes it would actually see money diverted away from the poorer parts of the country, because of the elderly element in the funding equation. 

"They are going to be siphoning almost a billion pounds out of some of the poorest parts of England to give it to areas where healthy life expectancy is already the longest. This would be a kick in the teeth for the poorest parts of the country. How can that be justified?" he told The Guardian.

John Mann, Labour MP for Bassetlaw, Nottinghamshire, also warned NHS England chief executive Sir David Nicholson of the "devastating" potential impact on health services and health outcomes, claiming: "We in the north appear to be paying for an increase in spending in the south" according to the paper.

However, those in favour of the move maintain that because elderly patients represent the lion's share of health service users, regions where there is a higher proportion of them should get extra cash to help them better address local need.