PCTs are almost completely reliant on financial allocations from the national government to fund their activities.
All citizens register with a general practitioner (GP) of their choice.
The NHS England paper on allocations indicates that consideration was given as to whether pace-of-change should be adjusted for the "potential differential nature of growth in social care spend over the next five years as a result of the CSR".
Ultimately this was not pursued as data was inadequate and to avoid the risk of "wrongly signalling that the local NHS has in some way been funded to offset reductions in social care, which is not the case".
However, although place-based allocations assist the understanding of financial flows in an area, the NHS continues to consist of a large number of legally separate bodies for day to day management and accounting purposes.
Even at national level, despite bringing together the regulators of NHS providers to form NHS Improvement in March, there remains a structural divide between commissioners (who report to NHS England) and providers who report to NHS Improvement.
The costs of all local health care are met from within the local PCT’s fixed budget, as set by the national ministry.
If hospital referrals or other aspects of local clinical practice imply expenditure in excess of the local budget, then some sort of rationing takes place.
If decentralization is to be effective, national governments need to be seen to be treating different localities even-handedly.Most health services are geographically specific and so a central policy issue in many countries is how national (often tax-based) funds should be allocated to localities.Rather than relying on arbitrary methods of solving this “resource allocation” problem, such as historical precedent or political patronage, many health systems are seeking to place greater emphasis on the use of systematic funding formulae.The national government allocates the overall Department of Health budget in its annual public expenditure negotiations.The Department of Health sets the cash-limited budget available for allocation to PCTs.These were in turn adjusted by a series of standardized mortality ratios (SMR).