Needs-Based Funding from the Nineteenth Century to the 1980s

Abstract

Abstract This chapter examines the historical development of funding systems for our services (drawing on a more detailed discussion in Hendry 1998). In any historical study used as a precursor to the analysis of current systems it is important not to extrapolate contemporary values backwards into assessing schemes formed in very different conditions to those existing today. Nevertheless, a central question is whether there is any common thread to the evolution of these allocation mechanisms. In recent years a series of quite complicated mathematically based funding formulae has developed, underpinning allocations to health services, housing, education, and local government more generally. They are all based on some concept of need. This is a fundamentally non-market, not to say socialistic concept (Doyal and Gough 1991). How did it even gain prominence during the 1980s period of Conservative, profoundly pro-market, rule? Why should mathematical formulation, beyond most electors’ understanding, gain such sway? We begin by setting out a theory that might answer some of these questions and explain the evolution of formula funding mechanisms.