Abstract
British government policy has long aimed at substituting local government community services for centrally-funded long-stay hospital services. Thus, the health service has depended on the willingness of locally administered and financed services to accept a shift in the balance of care. A special financial programme--joint finance--was introduced in 1976 to provide local authorities with an incentive to implement this shift. The programme apparently provided health authorities with the power to ensure that joint finance spending met their own priorities for service development. In practice, a number of influences combined to ensure that local authority interests and priorities prevailed. The principal lesson of this initiative, and its successor, is the importance of devising balanced incentives which prevent either party from exercising a veto over inter-agency transactions.
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