CENTRE FOR HEALTH ECONOMICS YORK HEALTH ECONOMICS CONSORTIUM NHS CENTRE FOR REVIEWS & DISSEMINATION THE YORK SERIES ON THE NHS WHITE PAPER - A RESEARCH AGENDA Towards Locally Based Resource Allocation in the NHS

The Discussion Paper (DP) Series was established in 1984 to make research available quickly to a broad readership drawn from the academic community, professional health care staff and policy makers, both within the UK and internationally. Material published in DP form ranges from work in progress, to edited versions of completed project reports, from papers intended ultimately for journal publication, to those which seek to stimulate immediate debate. Hence the variation in length and complexity of DPs. In the past, DPs have been subject to a minimum of editorial revision, it being principally seen as the responsibility of individual authors to ensure that appropriate standards were met. Since June 1996, a more formal system of internal peer-review has been introduced to consolidate the high levels of quality that have been achieved in the past. That system involves the refereeing of DPs in draft form, with any recommended revisions being verified independently by a senior member of staff. DPs are not a substitute for publication in peer-reviewed journals. It is to be hoped that journal editors will recognise the nature of the DP series, and accept that this does not compromise the status of those papers published by the Centre which may later be submitted for consideration in more formal publications. Comments and suggestions on DPs encouraged and should be sent directly to the authors. Please make cheques payable to the University of York. Details of other papers can be obtained from the same address or telephone York (01904) 433648 or 433718. ABSTRACT In a health care system where resources are scarce and the principle of equity is of central concern, mechanisms for the appropriate allocation of resources based on the notion of relating resource use to some concept of need are essential. Two key issues raised in the UK government's White Paper The New NHS: modern, dependable are the ability first to define health care budgets at a local level and second to integrate budgets to encompass all relevant aspects of health care delivery. This paper considers the theoretical and practical implications of devolving NHS budgets to primary care groups. The paper advocates the development of a patient-based survey of all NHS health care utilization, which could serve as the basis for integrated global budgets for use at a local level.