Fairer funding for general practice in England: what’s the problem, why is it so hard to fix, and what should the government do? (2025)

Summary points

Health and social need is greater in poorer areas, but GP surgeries serving deprived parts of England receive on average 9.8% less funding per needs-adjusted patient than practices in more affluent areas. Practices in poorer areas also employ fewer GPs and perform less well on all major markers of quality, including CQC inspections and patient satisfaction surveys.
General practice is well placed to play a central part in the government’s ambition to close the gap in healthy life expectancy. But expanding its role in prevention, earlier diagnosis and better long-term condition management will require more money (for example for additional staff) to strengthen general practice in areas furthest behind on healthy life expectancy.
The Carr-Hill formula determines the distribution of funding between GP surgeries and is the largest single income stream for most practices. The formula is methodologically outdated, and fails to adjust funding for health need linked to socioeconomic deprivation.
Other funding streams for general practice, including the Quality and Outcomes Framework, primary care network payments, and most payments for additional services all skew funding towards more affluent areas, as does the distribution of dispensing practices.
Replacing the Carr-Hill formula with a needs-based formula is the best and most sustainable way to make general practice funding more equitable. A new formula should include adjustment for unmet need, to include younger populations living in deprived areas, maximising the lifelong benefits of prevention and early intervention and investing in reducing inequalities over the long term.
These reforms would be facilitated by adding funding to the core GP contract to ensure that no practices lose income, and by broader changes to the GP contract aimed at better tying funding to desired outcomes.

General practice funding is inequitable and inefficient

There is a19.7-year gap in healthy life expectancy between women living in the richest and poorest areas of England. People living in more deprived areas haveshorter lives, spend more time living with long-term illness and are more likely to have multiple health conditions. GP consultation rates – the number of GP appointments per person per year – arehigher in poorer areas. But despitegreater health and social needs in poorer areas, general practices in poorer areas of England receive less funding than richer areas: in 2022/23, GP surgeries in England’s most deprived quintile received on average9.8% less funding per needs-adjusted patient across all income streams than those in the most affluent quintile (Figure 1).

Practices in poorer areasemploy fewer GPs, and averageworse patient experience,poorer Care Quality Commission ratings and lower performance on the Quality and Outcomes Framework (QoF). This inequality in provision of general practicenarrowed in the noughties, but has since widened again.

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Figure 1: Total payments per patient to general practices across socioeconomic quintiles from 2015-23

Chart

10/12/2024

Health Equity Evidence Centre analysis of NHS England, NHS Payments to General Practice 2015-2023

Why is general practice funding inequitable?

General practices receive funding via a variety of routes, including fee-for-service payments (for example for immunisations), pay-for-performance (QoF), and a mix of smaller funding pots including for premises, and locally determined additional services. The biggest single funding stream for most practices is the global sumpayment - determined by the Global Sum Allocation Formula, commonly known as ‘Carr-Hill’.¹This formula – which does not include adjustment for deprivation – contributes to inequitable funding in general practice.

Figure 2: How adjustments to the Carr-Hill formula affect its ability to predict differences

Chart

10/12/2024

'IMD' stands for Index of Multiple Deprivation.

Holdroyd I, Appel C, Massou E, Ford J. Adjusting primary-care funding by deprivation: a cross-sectional study of lower-super- output-areas in England. BJGP Open 2024

Carr-Hill is not the only contributor to inequitable funding in general practice. ‘Dispensing practices’ are a sub-group of GP surgeries licenced to dispense the medicines they prescribe for their patients (rather than sending prescriptions to local pharmacies). Dispensing practices are usually found in rural areas, which tend to have lower levels of deprivation. As a result, income from dispensingis disproportionately higher in richer areas.

Payments for QoFare also higher in more affluent areas (practices in the most deprived quintiles received 15% less funding per needs-adjusted patient in 2023), as arepayments for many additional services (these are services such as minor surgery that practices can opt in to providing). Because several funding streams for primary care networks (PCNs) – including the largest stream for additional staff – are calculated using Carr-Hill,payments for PCNs also skew towards richer areas. Inequalities in core general practice funding resulting from Carr-Hill are therefore compounded by other funding streams.

Why does this matter?

Health systems are more efficient when funding matches clinical need–in other words when the money given to general practice aligns with the level of patient need in an area. This is not currently the case.This inefficiency – explained in further detail below – is partly driven by the lack of consideration of health differences in more and less affluent areas, and use of a formula calculated using out-of-date information. A funding formula that allocates resources more proportionately to need would not only tackle health and care inequalities, but would also improve the efficiency of funding distribution.

Inequitable supply and availability of general practice is also a major threat to efforts to reduce health inequalities. Demand for general practice is rising, and people living in poorer areas havehigher levels of multimorbidity, and accumulate health conditions younger. Although we would therefore expect demand to be rising fast in poorer areas, consultation rates in general practice are actuallyrising fastest in more affluent areas.Given thatGP shortages are most acute in deprived areas, this suggests that practices in these areas are simply unable to offer more appointments – leading to a growing gap between demand and capacity, and potentially widening inequalities.

Failing to address inequalities in general practice funding also fails to future-proof the NHS. The number of people living with major illness isexpected to rise significantly by 2040, and to rise fastest in working-age adults in deprived areas. Preventing this – and treating those affected – will fall disproportionately on general practice, which must be appropriately equipped for the task. If it isn’t, patients with unmet need may be pushed into the urgent and emergency care system, exacerbating the alreadyhigher rates of A&E attendances and hospital admissions in poorer areas. And enabling general practice in deprived areas to better meet patient need should be important to a government determined to reduce economic inactivity resulting from ill-health – the majority of which occurs in poorer areas.

Key policy considerations in making general practice funding fairer

The Carr-Hill formula is outdated and does not allocate resources proportionate to need. Major national policy documents – including theGeneral Practice Forward View, and the Health and Social Care Select Committee’s2022 report on the future of general practice – have recommended reform. One integrated care system – Leicester, Leicestershire and Rutland – developed and implementedtheir own local fairer funding model for general practice (see Box 1). So why hasn’t it happened nationally, and what challenges do policymakers considering reform face?

Reforming Carr-Hill requires policymakers to engage with fundamental questions about what the distribution of health funding seeks to achieve. For example, is the aim to use funding to reimburse the health services currently being delivered, or to try and change future patterns of need? Since 2004, the number ofolder people with chronic health problems has increased significantly. Simply updating Carr-Hill data would result in increased funding for more affluent areas, as older people tend to live in rural, affluent regions. Similarly, using current GP and hospital records to estimate ‘need’ for different population groups would skew funding towards more affluent areas where supply and availability of general practice is greater (service use being a function of availability as well as ‘need’). Helping people age well is important – and GPs serving these areas need adequate resources. But formulae like Carr-Hill, which aims to reimburse practices for services provided rather than allocating resources based on population need, do little to enable GPs to alter future patterns of disease, or tackle inequality.

Another purpose of health funding is to try and reduce health inequality. The NHS’s main‘general andacute’ hospital funding formula is also based on service use. Crucially, though, ICB allocations derived from it are subject to a further adjustment for health inequalities andunmet need (the latter by definitioncan’t be picked up through the utilisation method). The general and acute formula also contains adjustments to control for ‘supply-induced demand’ to ensure that areas with historically higher levels of provision don’t automatically score as having higher needs, simply because it is easier for patients to access and receive care in those areas.Carr-Hill does not include these adjustments.

Reducing gaps in healthy life expectancy will require a greater share of money for general practice in deprived areas. This would need a formula to include adjustment for health and social need associated with deprivation, and for factors like communication difficulties, and lower health literacy associated with serving poorer communities. The impact of an ageing population is so substantial that adding a weighting for deprivation would need to go beyond a statistical adjustment based on the link between deprivation and health outcomes. Instead, it would require a deliberate additional deprivation payment or an artificial increase in the deprivation weighting. Including these adjustments in a needs-based approach would support investment for early prevention in areas of high premature mortality and early-onset multimorbidity, and would likely be more effective in reducing health inequalities.

Balancing these considerations and reforming Carr-Hill isn’t straightforward. The government will want to protect healthy ageing, reduce health inequalities and shift more care into communities. Achieving all three requires a nuanced approach to funding, and to any redistribution of funds across practices.

Five additional challenges

1. Views of the profession

Early attempts to reform Carr-Hill failed because the alternative formula proposed lacked the support of professional representative bodies, such as the BMA General Practice Committee. This may now have changed – with the BMA recently calling for the replacement of “outdated funding formulae, such as Carr-Hill” and vocal support for reform of Carr-Hillfrom the Royal College of General Practitioners. There is also growing support for Carr-Hill reformparticularly among younger GPs.

2. Cost

Support from GPs might be tested if a new formula were to result in reduced funding for some practices. Additional investment to ensure a ‘no losers’ outcome would make implementing any new formula easier. Without extra investment, formula reform may be feasible, but it would likely necessitate several years of static (or inflation-only) funding for some practices, with only small incremental increases for others.

3. Certainty of patient benefit

Reforming Carr-Hill without a ‘losers effect’ may require investment of several hundred million pounds, and the Treasury is likely to require reassurance that this will enhance services. Additional investment in poorer areas might havea range of benefits, including reducing under-doctoring, enabling practices to provide more andlonger consultations, improving patient satisfaction,reducing pressure on emergency departments andnarrowing health inequalities. But without wider contract reform, there are limited mechanisms to ensure that reforming Carr-Hill would guarantee better patient outcomes.

4. General practice has mixed income streams

While the Global Sum is the biggest income stream for practices, there are multiple others (e.g. dispensing payments, QoF, enhanced services, teaching, premises payments). These funding streams are complex and policymakers would have to ensure that reform doesn’t inadvertently disadvantage practices with specific, unusual characteristics.

5. Funding inequalities accumulate across income streams

Other funding streams, including PCN payments, prescribing payments and QoF payments also skew funding towards affluent areas. Carr-Hill is used as the basis for some PCN funding (so reforming it would have a wider impact), but policymakers will have to define the scope of any review. A comprehensive approach to fairer funding in general practice would include assessment of all income streams to practices, and align total payments behind desired aims. However, Carr-Hill reform is an opportunity to acknowledge that practices in deprived areas struggle to maximise funding from the various other income streams available because of the compounding social circumstances of the communities they serve.

Box 1: A fairer funding model for general practice in Leicester, Leicestershire and Rutland (LLR)
Recognising that inequitable distribution of funding in general practice was limiting their ability to tackle health inequalities, the nascent integrated care system in LLR comprising three clinical commissioning groups developed their own model for primary care funding, aiming to better align funding with population need.

There are big demographic and deprivation differences across LLR, from an affluent older population in rural Rutland, to a more ethnically diverse, younger and more socioeconomically deprived population in inner-city Leicester. LLR considered that by using a less accurate measure of need, the Carr-Hill formula had unintentionally embedded health inequality into GP funding. They started creating their own model in 2020.

The LLR funding formula uses practice-level patient data to create a measure of ‘need’, calculated using the Johns Hopkins Adjusted Clinical Groups System (a data-driven population health tool). They also include other adjustments, including for patient turnover, deprivation, and for the proportion of consultations requiring communications support (for example with an interpreter). Commissioners engaged extensively with GPs across LLR, and refined the formula.

The new model was implemented in 2021, with an initial commitment to using it for a three-year minimum, which was intended to give practices enough stability to plan. In 2023, 64/124 practices in LLR received an increase in funding relative to previous Carr-Hill distributions. The increases averaged at 4.8% (maximum 12.4%). LLR chose to ‘correct’ existing funding, such that where necessary practices get levelled-up to a minimum pre-implementation average-funding-for-need. Choosing to take a ‘no losers’ approach for those already above that average has required them to inject additional funding – largely from the system’s health inequalities budget – approximating £2.8m per year.

LLR are monitoring outcomes of this change, and data from the GP Patient Survey suggests that since the new funding model the rate of longstanding deterioration in patient satisfaction has reduced in proportion to the amount of fairer funding received. Formal, independent evaluation of the LLR model is awaited, and will help us understand if and how observed benefits are linked to changes in funding.

Further description of the model and change process can be foundhere.

Are there alternative ways to make general practice funding fairer?

The challenges of reforming Carr-Hill may lead policymakers to consider whether alternatives might be faster, simpler and equally effective. One option would be returning to a system of ‘deprivation payments’, which were used prior to 2004 to provide top-up funding for practices in deprived areas. While a new distribution formula would still be needed to identify which practices should get payments, and how much they should receive, it’d likely be simpler and faster than developing an alternative to Carr-Hill. Deprivation payments could be given as part of core funding, or could be tied to specific outcomes – potentially enabling the Treasury to feel more certain of value for money.

But deprivation payments wouldn’t necessarily be cheaper than reforming Carr-Hill, and – by adding another new deprivation formula – would make funding of general practice even more complex. And any form of top-up payment risks becoming insecure or perceived as unpredictable and short-term, limiting its impact as practices may be reluctant to make long-term investments (such as staff).

Another option is to develop new initiatives targeted specifically at improving provision of general practice in deprived areas. Previous attempts to improve the supply and availability of general practice in poorer areas have included targeted funding for staff (for example, the Targeted Enhanced Recruitment Scheme for GP trainees (TERS)), and targeted funding for new premises (such as the Equitable Access to Primary Medical Care programme (EAPMC), which ran from 2007 to 2011). While smaller initiatives including TERS haven’t been evaluated, there is some evidence that the much larger EAPMC programmereduced inequality in the supply of general practice. Although these might feasibly sit alongside Carr-Hill reform, it’s hard to see them as a viable alternative to it: small initiatives can be fast to implement but are likely to be commensurately small in scope. And initiatives are often scrapped or reduced over time, limiting their impact.

Since Carr-Hill isn’t the only source of inequitable funding in general practice, policymakers could tackle other income streams. These might include the following.

Funding streams for primary care networks: Some funding for PCNs is weighted using Carr-Hill, and other streams use the more progressive ICB primary medical care allocation formula. Swapping all PCN funding to the most progressive available formula would make funding more equitable in the short term. But since PCN funding is a relatively small proportion of practice income, this is not a replacement for fundamental reform of core practice funding.
TheQuality and Outcomes Framework offers potential to make payment more equitable, and better aligned around incentives aiming to reduce health inequalities. Incentives should be reconfigured to reward and incentivise GPs at a level proportionate to the additional effort and expense required to reach marginalised people.
Payments for vaccinations and screeningcould be adjusted to weight for the additional effort required in deprived areas to encourage uptake in underserved communities.

What should the government do?

If the government is seriously committed to tackling health inequalities and to strengthening general practice, it can’t shy away from making general practice funding fairer. This would be best achieved with additional funding to mitigate any redistribution of funds between practices. Constrained NHS finances will make this difficult, but increasing the proportion of NHS spend on general practice is consistent with stated ambitions to move more care into the community. If this proves impossible, alternatives – like requiring integrated care boards to ringfence a proportion of the funding they’re allocated for health inequalities for the purpose of fairer funding general practice – should be considered. Policymakers may also consider linking Carr-Hill reform to wider changes to the GP contract, better tying funding to desired improvements in patient care.

The challenge of reforming Carr-Hill shouldn’t be underestimated, but nor should the can be kicked further down the road. We recommend that:

Replacing the Carr-Hill formula with a needs-based formula is the most effective and most sustainable way to make general practice funding more equitable. A new formula should include adjustment for unmet need, to include younger populations living in deprived areas, maximising the lifelong benefits of early intervention and prevention and investing in reducing inequalities over the long term.
Alternative policy options are interim workarounds. Policies aiming to address under-doctoring and improve premises in deprived areas are needed, but should not be relied on as a total solution.
Policymakers should consider linking reform of Carr-Hill to wider changes in the GP contract. These should aim to assure government of value for money.
Reform of Carr-Hill should be accompanied by review of all GP funding streams, aimed at ensuring equity in each. This should include moving all PCN funding streams to the most progressive available formula.
The government should make a public commitment to change and, for reasons oftechnical expertise and transparency, should consider bringing Carr-Hill review under the remit of the independent Advisory Committee on Resource Allocation (ACRA).

There is widespread recognition that Carr-Hill is not fit for purpose, and a growing appetite for reform. Although not straightforward, the opportunity to design and implement a fairer, more sustainable funding model for general practice is worth every ounce of effort.

The allocation formula is named after Professor Roy Carr-Hill, who led its development.

Suggested citation

Fisher R, Loftus L, Holdroyd I and Ford J (2024) Fairer funding for general practice in England: what’s the problem, why is it so hard to fix, and what should the government do? Briefing, Nuffield Trust and Health Equity Evidence Centre.