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Fair shares budget

Practical Commissioning's Jargon Buster explains the meaning of the term 'Fair shares budget'.

The current indicative budget-setting process has produced winners and losers among practices because of a failure to take full account of local factors such as ethnic minorities, student populations, people in sheltered housing and asylum seekers.

Using historical expenditure as the basis for setting budgets has also meant practices who have limited referrals and been effective gatekeepers can be losers whereas those practices that have referred lots of patients have been winners.

A fair shares budget is one that addresses such imbalances. The Government's aim is for PCTs to bridge the gap between an indicative budget and a fair shares budget to within a range of 10%. It has published a fair shares budget toolkit to help advise PCTs on how to do this.

The fair shares formula is about addressing the imbalances between those practices that are doing well out of the current historical spend situation and those that are not.

It is vital in negotiating your indicative budget with your PCT that you carry out a review of your practice's use of resources (see below for more on this term) to understand why your budget may have to take account of any variances you may have – practice population, for example – that affect your local needs. A new toolkit for calculating fair shares was released in January 2010.