The Welsh Assembly has brought forward a review of the funding allocation system for the NHS in Wales, and appointed an independent review group chair.

Health and social services secretary Jane Hutt announced that Peter Townsend, professor of social policy at Bristol University, will chair a steering group to oversee the review.

The group - to be made up of NHS representatives and Assembly members - will draw up plans to make the system more equitable and allow fair distribution of resources to local health groups.

An Assembly spokesperson said the move had been prompted by the NHS 'stocktake' carried out under then Welsh secretary Alun Michael last July, although the stock take suggested 'the 2001 census provides an opportunity for reviewing the allocation system'.

Professor Townsend's group is to submit a preliminary report to the health and social services committee at the end of the year, with a final report in March 2001.

Robert Skinner, public affairs manager for the NHS Confederation in Wales, said: 'We welcome Professor Townsend's appointment and the priority the assembly is giving to creating a better basis for allocations.

'The system has to take account of urban areas, like the South Wales Valleys, but also rural areas. Both have different needs.'

A joint Welsh Office and HA resource allocation working group had considered allocation before the stock take, but ministers decided not to pursue it.

Alan Brace, chair of the Healthcare Financial Management Association's Wales branch, also said distribution between rural and urban areas had been 'a bone of contention'.