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NHS Review

3.31 pm

The Secretary of State for Health (Mr. Kenneth Clarke) : I would, with permission, like to make a statement about the National Health Service review. [Interruption.]

Mr. Speaker : Order. This is a statement for which the House has been waiting.

Mr. Clarke : Britain enjoys high and rising levels of health care and, at its best, our Health Service is as good as any in the world. I believe that the principles underlying the National Health Service still hold good today and will continue to guide it into the next century. The NHS is--and must remain--open to all, regardless of income, and financed mainly out of general taxation. If those principles remain unchanged, the Health Service itself, and the society in which it operates, are changing for the better.

We need constantly to improve and strengthen the NHS so that it can provide ever better care to those who rely on it. At the moment there are wide variations in performance across the country. We want to maintain the best of the Health Service, and bring the rest of it up to that very high standard. That is why the Government set out upon a fundamental review of the NHS last year. We have today published our conclusions in the White Paper entitled "Working for Patients". They build on and evolve from the improvements that the Government have already made to the service in the last 10 years. They reflect a change of pace rather than any fundamental change of direction. All our proposals share a common purpose--to make the Health Service a place where patients come first and where decisions are increasingly taken at a local level by those most directly involved in delivering and managing care.

The main proposals apply to all the United Kingdom, but there are separate chapters in the White Paper devoted to Wales, Scotland and Northern Ireland explaining how they will be applied in those countries. Implementation of the proposals will have to follow a process of discussion with many people in the service. We will be issuing in the course of the next week or two eight detailed-- [Interruption.]

Mr. Dennis Skinner (Bolsover) rose--

Mr. Speaker : Order. The hon. Member for Bolsover (Mr. Skinner) must resume his seat. [Interruption.]

Mr. Doug Hoyle (Warrington, North) : On a point of order, Mr. Speaker. Are you able to tell us what documents are being distributed to Conservative Members and why they are not being made available to Members on this side of the House?

Mr. Speaker : I know nothing of documents, other than the one which has just been handed to me.

Mr. Clarke : If I may help the House, I think that my right hon. and hon. Friends are reading documents that were placed in the Vote Office as I rose to make my statement. My right hon. and hon. Friends prefer to look at those sources for their information, not at information that comes to them in plain brown sealed envelopes. [Interruption.]

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Mr. Allan Roberts (Bootle) : On a point of order, Mr. Speaker. No documents are available in the Vote Office. If Conservative Members have such documents, they have been given to them by Government sources. We have not got them. [Interruption.]

Mr. Speaker : Order. I think that I can now help the hon. Member for Bootle (Mr. Roberts). It appears that those documents are available in the Vote Office, because some hon. Members are now coming into the Chamber with them.

Mr. Roberts : Further to that point of order, Mr. Speaker. They are not the documents that Conservative Members have.

Mr. Clarke : I hope that the House will allow me to return to the proposals, instead of being obsessed with documents that accompany what we say.

In order to help the process of discussion with the many interested parties whom I have just described, we shall be issuing in the course of the next week or two eight further detailed working papers as the basis for those discussions.

Before I turn to the key proposals on management and the use of resources contained in the White Paper, I want to describe the kind of hospital service that I believe every patient has a right to expect. All hospitals should provide individual appointment times that can be relied upon. They should offer attractive waiting areas, with proper facilities for patients and children. They should be able to provide proper counselling to those who need it and give clear and sensitive explanations of what is going on. In addition, patients should be able to pay for a number of optional extras, such as wider choice of meals, a bedside telephone, a television, or a single room. The best hospitals already provide this, and I want to see the whole service treating patients properly as people.

We will also ensure that patients are freer to choose and change their GP ; and we shall give more encouragement to those GPs who, by offering the kind of service that people want, succeed in attracting more patients. To achieve that, we are proposing to increase the proportion of GPs' pay which comes from the number of patients on their lists, from 46 per cent. to at least 60 per cent.

People look to their general practitioners to prescribe the medicines they need, and GPs must have the necessary flexibility to do so. But at present, drug costs in some places are nearly twice as high per head of population as in others, even where the incidence of illness is much the same. The drugs bill is the largest single element of all spending on the family practitioner services. At £1.9 billion in 1987-88, it was more than the cost of the doctors who wrote the prescriptions. In each of the last five years, spending has risen by an average of 4 per cent. over and above the rate of inflation.

Unnecessarily expensive prescribing is wasteful and takes up resources that should be used in other ways. Over-prescribing is not in the best interests of patients. We shall therefore introduce a new budgeting scheme whereby GP practices will receive indicative budgets for their prescribing costs. The scheme will be operated in a way that ensures downward pressure on the cost of prescribing without inhibiting the ability of doctors to provide necessary medicines for their patients.

At present, because of the way that hospitals are funded, GPs are not always able to offer their patients a full choice as to where they will be treated. We want to

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change this by giving GPs in large practices the opportunity to hold their own NHS budgets. They will be able to use these to purchase as they judge best certain types of hospital services for their patients. They will, in other words, be able to provide the hospitals they choose for their patients with the NHS funds required to finance the services the hospitals perform. These GP practice budgets will cover in- patients, out-patients and day care treatments, such as hip replacements and cataract removals. They will also cover prescribing costs and diagnostic tests, such as X-rays and pathology tests.

Large practices will be free to decide whether to join the scheme. It will, at first, only be open to practices with at least 11,000 patients--that is, twice the national average. Over 1,000 United Kingdom practices could join, covering about one in four of the population. All those practices could have their own NHS budgets of about £500,000 a year. Giving GPs the resources to finance services for their own patients will provide a real incentive to hospitals to improve the service they offer to those GPs. It will also enable GPs to provide a better service to patients by referring them, for example, to where waiting lists are shortest. I am quite sure that GPs will want to judge the quality of service at least as much as the cost of service when they decide where to refer their patients. We have important proposals on the quality of medical service to which I shall turn in due course.

But it will not just be through GP practice budgets that money will follow the patient to where work is done best. The principle will in future apply throughout the Health Service as a whole. As part of this new way of getting resources to hospitals, the present elaborate system which we all know as the RAWP system will come to an end. Over the past 12 years it has made an important contribution by helping to equalise the resources available to each region, but that task has now very largely been achieved. [ Hon. Members :-- "No."] Oh yes.

Mr. Graham Allen (Nottingham, North) : Not in the right hon. and learned Gentleman's district. It is losing £8 million this year. The Secretary of State is changing the rules.

Mr. Speaker : Order. May I say to hon. Gentlemen who are making comments from a sedentary position that they do not improve their chances of being called to ask questions later.

Mr. Clarke : Over the past 12 years, the RAWP system has made the contribution that I have described, but we are now in a position to replace it with an altogether more simple and fair system based on population numbers weighted for age and health, and the relative costs of providing services. The new method will be much quicker to compensate those regions which treat large numbers of patients from elsewhere in the country. We will move to a system that finances regions and districts on exactly the same system, with a 3 per cent. addition for the Thames regions because of the inescapable extra problems of providing health care in the capital.

In future, the money required to treat patients will be able to cross administrative boundaries much more freely, so that those hospitals that best meet patients' needs get the funds to do so. All NHS hospitals will be able to offer their services to different health authorities and the private sector. All district health authorities will be able to provide finance for health services to whatever hospitals they

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choose, in other districts or in their own. As a result, we shall not in future have the frustrating situation that occasionally arises now, whereby a good, efficient hospital that attracts more patients runs out of money and has to slow down its work or close wards. This new system will start in 1990 for regional health authorities and 1991 for districts.

But improving the hospital service is not just a matter of changing the way in which hospitals receive their funds. We also want to change the way in which they are run and managed. We want all hospitals to have more responsibility for their own affairs, so that they can make the most of local commitment, energy and skills, and can get on with what they are best at, which is providing care. Management can be strengthened throughout the whole Health Service. The better the management the better the care it can deliver. Financial accountability and value for money will be improved by transferring audit of the health authorities and other NHS bodies to the independent Audit Commission. The role of the National Audit Office will not be affected by this change. On management matters, it is nonsense that the Ministers of any Government should be directly involved in the detail of the day-to-day running of the whole NHS. We shall therefore set up a new NHS management executive, chaired by the new chief executive, Mr. Duncan Nichol, and responsible for all its operational decisions. It will be accountable to an NHS policy board chaired by the Secretary of State for Health who will determine policy and strategy for the Service.

The prime responsibility of health authorities will be to ensure that the population for which they are answerable has access to a full range of high quality, good value services. Their job will be to judge the quality of services, to choose the best mix of services for their resident population and to finance those services. They will no longer provide and run all their local services, which will be increasingly the role of the hospital and unit managers themselves. Authorities will need to be organised as more effective decision making and managerial bodies. We shall therefore be changing their composition to make them smaller and to include executive as well as non-executive members. The non-executive members will be appointed on the basis of the personal skills and expertise they can bring to the authority and not as representatives of interest groups.

Although there will no doubt continue to be people who will combine being members of local health authorities with being local councillors, local authorities will lose their present right to appoint direct their own members to health authorities. At the same time, we shall also be strengthening the management of family practitioner committees along similar lines. We shall also make the FPCs accountable for the first time to regional health authorities to improve the links between planning for the hospital, community and family practitioner services.

We must devolve responsibility across the whole Health Service, but I believe that we can also go one stage further. The next logical step in the process of extending local responsibility is to allow individual hospitals to become self-governing. Let me make it absolutely clear that they will still be as much within the NHS as they are now. They will be no freer to leave the NHS than they are now. They will be no freer to leave the NHS than any unit has been throughout its 40-year history. They will, however, have

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far more freedom to take their own decisions on the matters that affect them most, without detailed supervision by district, region and my Department. To be known as NHS hospital trusts, they will be free to negotiate with their own staff on rates of pay and, within limits, to borrow money. They will be able to offer agreed services for agreed resources throughout the NHS and, indeed, in the private sector, too. There will of course be safeguards to ensure that essential local services continue to be delivered locally. I believe that this new development will give patients more choice, produce a better quality service, build on the sense of pride in local hospitals, and encourage other hospitals to do even better in order to compete. I expect the first NHS hospital trusts to be set up in April 1991.

In all these reforms we intend to concentrate on the quality of care just as much as the quantity and cost. I admire the progress that the medical profession is making in devising systems that doctors call "medical audit" to assess clinical performance and outcomes. We intend to work with the profession to ensure that good systems of medical audit are put in place in every hospital and GP practice as soon as is practicable. What matters for all patients is that high standards of medical performance are maintained, and where possible improved, and such systems should secure that.

I turn finally to the matter of perhaps greatest public concern--waiting times. All the measures that I have so far outlined by making resources flow more directly to those parts of the service that deliver the best care, will help to cut the length of time that people sometimes have to wait for elective surgery. The waiting list initiative will continue, but we shall also introduce a number of other initiatives designed to have a more direct and immediate impact. First, we intend all GP practices to have the basic information systems they need to know where treatment is available quickest. Secondly, we shall introduce a new tax relief to make it easier for people aged 60 and over to make private provision for their health care. This will reduce the pressure on the NHS from the very age group most likely to require elective surgery, freeing resources for those who need it most.

Thirdly, we shall manage consultants' contracts more effectively so that the very best use is made of their time and expertise. We shall also reform the consultants' distinction award system to ensure that commitment to the service and involvement with the management of the NHS are included among the criteria for distinction awards. Fourthly, we shall increase the number of consultants by 100 over the next three years, over and above the increase in the number of consultants already planned. These additional consultants will be appointed in those specialties and in those districts in which waiting times are most worrying. Finance will be made available to cover the costs of the new appointments, and the supporting services for their work load. This will help us keep up the attack not only on waiting times, but on long hours worked by junior doctors.

Taken together, these proposals add up to the most formidable programme of reform in the history of the NHS. They are the latest step in our drive to build a stronger, more modern, more efficient Health Service. An NHS that is run better will be an NHS that can care better.

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The proposals will, of course, mean change, but change of the kind we need if we are to have a service that is fit for the future. I trust that all those who--like me--truly believe in a Health Service that offers high quality care to all our people will lend their support to these reforms, and I commend them to the House.

Mr. Robin Cook (Livingston) : The Government set out on their review last winter, not, as the Secretary of State claimed, because they wanted to maintain the best in the NHS, but because the NHS was in a cash crisis. The rest of us thought that the crisis was that the NHS had too little cash. It is now evident that the authors of the White Paper always thought that the cash crisis was that the NHS cost too much. It is the prescription for a Health Service run by accountants for civil servants, written by people who will always put a healthy balance sheet before healthy patients.

Will the Secretary of State tell the House how many more bureaucrats the NHS will need to make this package work? Will he tell us how much time doctors will have to take off patient care to file their financial returns? Will he tell us how much more the monitoring, the pricing and the bargaining over every treatment will add to the cost of administration, and whether a single closed ward will reopen as a result of the White Paper?

The Secretary of State assures us that it has never entered his head to privatise the NHS. Will he confirm that his White Paper proposes that medical services will now go the way of ancillary services and be put out to competitive tendering? If he wants to reassure the House, will he tell us which medical lines he is not prepared to privatise?

The Secretary of State assures us that those hospitals that opt out of their local health authorities somehow will not have opted out of the Health Service. Will he confirm that they will trade on their own account, that they will charge for every treatment, that they will retain their profits and that in every important respect they will be identical to the private hospitals with which they are to compete. Is he aware that the nation will not be taken in again by the Government's trick of sizing up public assets for private sale under the pretence of greater economic efficiency?

The White Paper's only feeble pretence at consultation is that a proposal to opt out will be given "adequate publicity locally". I assure the Secretary of State that we will save him that trouble. We will ensure that every proposal to opt out is fully exposed for what it is--a staging post to opt in to the private sector. To enable us to get started now, does the Secretary of State have the courage to name those hospitals that he expects to opt out first in two years' time? The Secretary of State claimed that his proposals for private practice give GPs more freedom. Is not the truth that they limit the freedom of GPs to decide what treatment their patients need and replace it with the freedom to decide what treatment they can afford? Under his scheme, every patient has a price tag. Does not the Secretary of State realise that, for the first time, GPs will have an incentive to turn away those patients with a high price tag? The elderly, the disabled and the chronically sick will now be told, "Sorry, but you do not fit the business logic of this practice." The Secretary of State was good enough to tell us that he believed that some GPs prescribe too much. Will he be good enough to tell the House which patients, in his medical opinion, get too many prescriptions and which

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patients will get fewer prescriptions under his scheme? He had the brass neck to claim that the White Paper will increase patients' choice. Why does he not admit that his scheme means that patients will go not to the hospitals that they want to go to, but to the hospitals where their GP has the cheapest bargain? That is not money following the patients ; it is patients following the money. The Secretary of State has confirmed that the Prime Minister has had her way, and there is to be a subsidy out of taxation for private medicine. Will he confirm that in the whole White Paper that fatuous irrelevance is the only proposal for help for the medical care of the elderly? Does that not speak volumes for the Government's priorities? There is to be no relief for hard-pressed geriatric wards, but a new subsidy for private hospitals.

Why did not the Secretary of State take this opportunity to respond to the Griffiths report on community care which he has had for almost a year? Is it to be ignored again because the private sector cannot turn a fast buck out of the community care of the handicapped and the elderly?

The White Paper is the product of a review behind closed doors by closed minds. Junior ministers, we read, were consulted over dinner at No. 10. Junior doctors were not consulted. Nurses were not consulted. Patients were not consulted. The result is a series of proposals that will be as unworkable as they will be unpopular. Now the nation has a chance to join in the debate. In that debate, we shall take every opportunity to hammer home the fact that the White Paper proves that the change that the NHS needs more than any other is a change of Government.

Mr. Clarke : The hon. Gentleman started with some extraordinary comments about the amount of cash that was accompanying the review and seemed to imply that there was none. He talked about the time that has elapsed since the review was first announced. During that time, over £2,000 million has been added to NHS budgets in the public spending round and nearly £1,000 million has been added to finance the nurses' regrading exercise. Next year we are contemplating spending a total of £20,000 million.

The Labour party has no proposals for health at the moment, except some half-baked proposal for an inspectorate put forward in one of its documents. If its policy remains that nothing needs to be changed but that somehow it would add more money to what we put in, I shall regard such an approach to health care as pathetic and quite inadequate to meet the demands facing the service, which needs money and new ideas, both of which it is getting from the Government. The hon. Gentleman treats in a most derisive way what he refers to as the accountancy and financing aspects, about which he asked me various questions. Again, I find that astonishing. If the hon. Gentleman shares my belief that there is no reason why the public service should not be run with the same efficiency and consumer consciousness as the private sector-- [Interruption.] --he cannot dismiss the value of modern management disciplines, financial accountability and consumer consciousness that we are seeking to build into the Health Service. [Interruption.]

Mr. Speaker : Order. The Secretary of State has been asked a series of questions. The hon. Member for

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Bradford, South (Mr. Cryer) stands very little chance of being called to put a question if he continues to behave as he is doing.

Mr. Clarke : The hon. Member for Livingston asked about what he describes as the proposal for hospitals to opt out of district health authority care. I repeat that there is no question, and there never has been, of those hospitals leaving the NHS. The only person who has ever suggested that is the hon. Gentleman, when he purported to be describing documents which at that stage he would not read out to the public to whom he was talking. That ridiculous argument can be set aside.

I have described self-governing hospitals as being free of the constraints of detailed control from district and regional authorities and central Government which hospitals are presently under. The hon. Gentleman obviously prefers a service in which everybody is answerable to a bureaucratic district health authority, and he does not like proposals to give greater freedom to those with responsibility for care nearer to the patient.

The hon. Gentleman talks about practice budgets which we will offer--again a detail that he left out before today--to those large general practices which want to take them because they see their attractions to themselves and their patients.

It is ludicrous to describe this as inhibiting the ability of the GP and the GP's patients to have choice in the service. The reverse will be the case. At present, if a GP tries to send his or her patients to a hospital to which they have not previously been committed, the effect is to pose a financial problem for the hospital because no funds come with the patients. We are providing for NHS money to move with the patients, with the patients' choice, and to be available to those general practices which have the ability to manage it.

Doctors seeking to increase their number of patients will, contrary to the hon. Gentleman's assertion, have just as much, if not more, regard for the quality of care which a hospital might provide to the patients and not just to the costs. Indeed, what we are suggesting gives greater incentives to enhance quality.

On prescription costs, the hon. Gentleman has the temerity to attack what we are proposing to exercise downward pressure on prescription costs. I have read some of the Labour party's published documents, including the party's so-called green paper--[ Hon. Members :-- "Answer."] I am answering the question. I am using the hon. Gentleman's own words to answer his criticism of what we are saying about prescribing costs. The hon. Gentleman said in that green paper :

"It is not immediately apparent that the current high level of drug consumption is a considered measure of the need for medical treatment. Inappropriate prescription does not merely result in ineffective expense but, more seriously, can adversely affect patient care."

I agree with what the hon. Gentleman said. Why does he not make proposals to deal with it and why does he attack the proposals that we have announced today dealing with the self-same problem? The tax relief proposals will assist many elderly patients who pay for private practice throughout their lives and find the costs increase when they reach the stage of their lives when they most need elective surgery. In so far as we support those people who provide for their own elective surgery, it will reduce the pressure on the rest of the service

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and help other elderly patients who will be able to get quicker waiting times and more access to the services of the NHS. We look forward to the debate. We will be consulting. We have a policy which will be followed up by working papers and detailed discussions in the next few months with everybody interested in the subject to work up the implementation of these proposals. I hope that the hon. Gentleman will make a better contribution to that debate than he and his party have made so far -- [Interruption.] The trouble with the hon. Gentleman is that, even when he gets accurate leaks, he does not bother to read them and he does not bother to interpret them correctly or understand them. He now has the real White Paper and will find that we are miles ahead of him and his party in suggesting improvements for a stronger NHS for the future.

Dame Jill Knight (Birmingham, Edgbaston) : Anyone who has listened properly to my right hon. and learned Friend's comments this afternoon will be well aware that the National Health Service has a strong future and that the prime objective of the review is to improve patient services. So let us get away from the claptrap of the Opposition and talk about facts.

I invite my right hon. and learned Friend to comment further on the phrase "the money will follow the patients", as some doctors may feel that unless the money precedes the patients, the treatment may not be there to fund it and the effect on waiting lists will not be seen. Will he assure us that the present monumental waste and extravagance of the way in which alleged misdemeanours by hospital consultants are dealt with will be ended by the proposals in the review?

Mr. Clarke : As my hon. Friend says, these proposals look to the future of the NHS, whereas the Labour party is accustomed to looking to the past of the Service. Our proposals are marked, above all else, by our concern to concentrate our efforts on patient care and introduce changes that benefit patients.

I talk about money following the patient, and my hon. Friend's correction is good. One is talking about the time when the right mix of services is being planned by a district health authority for the patients in that district ; then it will make provision in advance for the necessary finance to provide the services, as will the GPs operating their own practice budgets.

What I mean by the phrase is that judgments will first be made about the quality of the service that can be provided in different places, about the satisfaction that patients will get from it, about the waiting times that they may encounter before their treatment, and then the budgets will ensure that the money goes to those parts of the service where the treatment is given best.

That is not the case at present. Some hospitals find that if they work too hard they run out of money. Hospitals that do not work hard or efficiently are quite well provided with finance because the formula gives them all that they require and they appear to be free of problems. That is not in the interests of the patients, and we want to encourage good performance.

As for the disciplining of those few consultants who get into difficulties with their authorities in the management of

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their contracts, we shall be strengthening the management of consultants' contracts and district health authorities will be acting as the agents for the regional health authorities in drawing up new job descriptions for consultants about the work they do.

We have a long-standing problem about the discipline of recalcitrant consultants. I am glad to say that we have reached some agreement with the representatives of the profession and, following a recent working party report, we intend to introduce proposals which will have some simpler local methods of dealing with minor problems and will speed up the present appalling process whereby serious disciplinary matters are handled in the service.

Mr. Frank Field (Birkenhead) : Does the Secretary of State accept that in the long run the most significant statement he has made this afternoon concerns the tax funding of private health care for pensioners? Is he aware that, now that that principle has been established, it will be ever more difficult to prevent the concession being extended to other groups, and that once that stampede is on it will become impossible for him to maintain a line about the necessary funding for a common health service? Is that not why--for all those reasons--he opposed that reform right up to last Thursday's Cabinet meeting?

When considering reactions to his proposals, will the right hon. and learned Gentleman accept that, while it is important to listen to doctors, nurses and ancillary workers, the views of the customers--the patients--are crucial? If he accepts that form of political consumerism, will he monitor his proposed reforms and report to the House on whether the customer services have improved or have been cut as a result of today's package?

Mr. Clarke : The hon. Gentleman makes a curious choice. As I am aware of his interest in the NHS and his openness at least to new ideas and methods which might improve the flow of services to patients, I take it as a welcome sign that he asked not a solitary question about the NHS parts of the proposals and queried only the tax relief to the private sector.

I do not see the analogy between our tax relief proposal and other claims for tax relief with which over the years we have all become familiar. The Government have rejected the case for general tax relief for contributions to private health care. But the situation of those over the age of 60 is plainly different from that of analogous claims that are made elsewhere. People who have been insured throughout their lives find that the premiums rise steadily at the very time when they want to make most demands on the service for which they have been paying. It is also a clear example where the tax relief to those who will continue, out of their own pockets, to contribute towards their care will be of obvious and direct benefit to every patient in the NHS by relieving the pressures on elective surgery.

I do not believe that this proposal, once implemented, will ever be repealed by the Labour party--or I look forward to seeing how it will ever argue for the withdrawal of this help for elderly people paying for their private health care.

To answer the hon. Gentleman's question about the monitoring of the reforms, we shall begin by having detailed discussions on their implementation. There are huge details to discuss--on matters such as GP practice budgets, self-governing hospitals and drug budgets. But in

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all that we do we shall, of course, listen particularly to the views of the public and the patients. In dealing with the big management and financial issues, we shall not forget--the point I made at the outset--the interests of patients who do not want to be kept hanging around waiting, who want to know what is going on and who want a patient and friendly service from the hospital. They and their GPs will have greater ability to choose that between various hospitals as a result of what we are proposing today.

Sir David Price (Eastleigh) : Does my right hon. and learned Friend accept that his proposals to decentralise decision-making within the hospital service will be dependent on two factors? The first is an increase in the quality of medical audit and of real costing, and the second is a major improvement in the quality of middle and senior managers.

Mr. Clarke : My hon. Friend is perceptive, and what he says is undoubtedly the case. This will require a huge improvement in the financial information that is available within the service. It is astonishing that a service that consumes £26 billion is at present so devoid of basic information about the use of resources, about comparative costs and so on. That will be acquired.

It will also need the people necessary to carry it out and have the ability to make proper use of these systems ; and by "people" I mean the consultants and medical staff, who must be just as involved and have just as leading a role in organising all this properly as their management colleagues with whom they will work.

Mr. Archie Kirkwood (Roxburgh and Berwickshire) : Extra resources are of course needed in the NHS, but is the Secretary of State aware that these proposals could inflict potentially great damage on the fundamental principles of the NHS in future? Does he not accept that leaving health care to the vagaries of competition in the free market is a very unsafe way to proceed when delivering health care? In relation to primary health care, how is he going to protect the income of rural general practitioners' services? In particular, what incentives will GPs have to look after the elderly and infirm? With regard to hospitals, is the principle of RAWP being abandoned? Some of the discrepancies between regions have disappeared, but there are still major discrepancies between health districts up and down the country. Can the Secretary of State also say whether the patients' travel costs, which he calls administrative boundaries, will be refunded?

Returning to the question raised by the hon. Member for Birkenhead (Mr. Field) about tax relief for the elderly, is he aware that the Daily Telegraph of 16 January, so far from saying that no precedents are being established, said that the same scheme could apply in logic to the cost of private schooling? What does the Secretary of State say to that?

Mr. Clarke : First, I urge the hon. Gentleman to study closely what I accept is an extremely detailed and complicated document, with a great sweeping reform. I think that then he will see that the principles of the Service are in no way threatened, as he clams, and that there is no prospect of any patient dropping through the system without essential care or essential medicine, or anything else.

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I agree that we shall have to look at the problems that might otherwise be caused for rural general practitioners if we increased the percentage of remuneration that comes from capitation. The document therefore also canvasses our other proposal, to vary the level of the so-called basic practice allowance in different parts of the country. A higher basic practice allowance will, in my opinion, be required in scattered rural areas such as that represented by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), and in the constituencies of many other right hon. and hon. Members. With regard to the treatment of the elderly and infirm, no doubt the hon. Gentleman has in mind the prospect of some large practices going in for a practice budget. It has been suggested, I see, that somehow they will have some incentive not to take on the elderly or infirm patients. Like many other things that I have heard discussed in the past few days, we had thought of that over the past few months, and we have long ago covered the problem.

Mr. Frank Dobson (Holborn and St. Pancras) : Answer the question.

Mr. Clarke : The hon. Member for Holborn and St. Pancras (Mr. Dobson) will have to study this reform, and the working papers that are coming forward. I will answer the question now. In putting together a general practice budget, one must have regard to the number of patients, the age of the patients, their comparative sickness, and any other features that affect the practice. If one has a high proportion of elderly patients, one gets paid more for elderly patients than for younger patients. Any practice that refuses to take elderly patients, for some eccentric reason, will simply find that it is not paid so much per head as if it is taking only younger patients. It is quite easy to put together a budget- negotiating process that makes it clear that there is no financial advantage for any GP to select his patients in that way.

I have described the abolition of the RAWP system, but the hon. Gentleman the Member for Roxburgh and Berwickshire again is quite right in saying that there are still considerable discrepancies, some of them between the English regions and some between the districts. We will therefore be moving towards the system that I have described, over a period of two years for regions and rather longer for districts. There will still be, within an ever-growing total, some further redistribution from the Thames regions to the provinces, before we get to the position that I have described in today's statement.

As between the districts, there will still need to be some movement towards a common, fair and level basis, but we shall phase that in steadily to avoid any sudden movements of funds between districts. We believe that now is the time to get rid of RAWP. We shall certainly ensure that none of the discrepancies of the past that were caused by RAWP, and the gaps between targets and sudden movements of funds are brought back again by our new system.

Mr. Nicholas Winterton (Macclesfield) : I wish to congratulate my right hon. and learned Friend on the dramatic programme of reform that he has outlined to the House this afternoon. I share his objective, as I am sure does the whole House, that we should get a better quality Health Service and better value for money. Will my right hon. and learned Friend give me two assurances this afternoon--first, that the opting-out

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proposals for a number of hospitals will not make it more difficult to plan a comprehensive health care service in areas up and down the country? Secondly--the Secretary of State will be probed fully about this when he comes before the Select Committee--could he go further into detail about how practice budgets will accurately reflect the various breakdowns in the lists of patients, especially the elderly, the mentally ill and the disabled, and where demographic changes occur over time?

Mr. Clarke : I am grateful to my hon. Friend, who is a fair man, that now he is prepared to contemplate and look more closely at the details of the full proposals, in the light of his first comments upon them. I think they are both very valid.

I have certainly heard the points he has been making, and we anticipated them. The opting out of hospitals must not disrupt essential services in the area. One condition of self-governing status must be that the region requires that hospital to continue to provide local emergency and other services that must be provided locally. If there are to be changes in the patterns of service, some notice must be given to the districts and regions so that planning can take account of them. All that will be contained in the working documents available to the Select Committee and others.

Similarly, with practice budgets, I tried in a comparatively potted way, by my standards, to give a brief discription a few moments ago of how we were tackling them. We obviously need to ensure that, in putting together the right budget for a general practitioner or group of GPs, we accurately reflect the likely different needs and demands of patients of different ages and conditions.

I heard what my hon. Friend the Member for Macclesfield (Mr. Winterton) said this morning on the radio. I should have liked to reply to him then, but no doubt in the Select Committee and in discussions afterwards I shall be able to reassure him on that point.

Mr. Michael Foot (Blaenau Gwent) : One of the major weaknesses in the Government's review, as it appears to people from outside, and no doubt one of the major causes of the many defects in the plans put before us today, arises from the absence of any consultation, or what could properly be called by that name, by the Government of the people who work in the Service. Will the right hon. and learned Gentleman now tell us whether he is proposing to have any genuine consultations with people working in the Service : with the nurses, the unions, the British Medical Association, and the presidents of the royal colleges? Are they to be consulted at all, in a way that enables them to make a radical alteration to the proposals that the Secretary of State brings forward, or are the Government proposing to continue with the same method that the Prime Minister used, of slamming the door in the face of the presidents of the royal colleges and not caring what the people who work in the Service have to say?

Mr. Clarke : The National Health Service has a rather poor track record in communicating with its own staff and the people who work in it. For that reason, immediately after this statement we are having an exercise that will communicate with all our staff throughout the Service, and we shall discuss with them the implications for them and their patients of what I am proposing. [Interruption.]

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The reaction to that, as we can hear, is that any attempt to communicate in that way, rather than through the agency of the trade unions, is bitterly attacked by the Opposition, who are consulting before they have a policy. I accept that that is the principle of the listening party.

I have been looking at Labour's consultation documents and I see that it is not putting forward a solitary idea. All it has come up with so far, rather than putting forward new ideas, is a half-baked idea of an inspectorate, which is the kind of thing one would expect the Labour party to come up with.

The Labour party's idea of consultation on health policy, as we all know, is to ring up NUPE, reversing the charges, and ask what they should be expected to say. We propose to run the Health Service in an altogether more constructive fashion.

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