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8.53 pm
Mr. Stephen Timms (Newham, North-East): I begin by apologising to you, Mr. Deputy Speaker, and to the House for not being present at the beginning of the debate, but I was serving on Committees elsewhere in the House.
I support the Opposition amendment which sets out in crystal clear terms the problems with the Bill. The problem with the private finance initiative in the major hospital projects on which Conservative Members have concentrated today is that it does not really bring in any significant new money to those projects, but rather postpones payment of the bills.
In the case of a new toll bridge, for example, where a new source of revenue is created in the form of tolls, the PFI releases new capital from the private sector, which is additional and which can be used for constructing the bridge. But in the end, a hospital is all paid for out of taxation, and the rate of interest on the capital involved, because it comes from the private sector, is greater than it would be for a publicly financed project. Therefore, it is right for my hon. Friends to raise their concerns in the amendment about the use of the PFI in the health service.
That apart, if the only effect of the Bill was to reassure providers of private finance contributing to PFI projects there would be much less objection to it. In reality, however, it is a much wider Bill which appears to give a blank cheque to NHS trusts. It gives them unlimited security for borrowing, which they have never had before. NHS trusts have not been able to take out mortgages in the past, so they have done little borrowing. Under the Bill, the whole of the public sector would stand behind their borrowing but there is no mechanism in it to control the exercise of the immense new powers that it conveys upon them. That is the problem to which the amendment draws attention. As the amendment says, the Bill
I have not yet heard any Conservative Member address that point.
NHS trusts cannot be dissolved through insolvency, only by order of the Secretary of State, and the Bill sets out what will then happen. In the few minutes that I have, I want to suggest some of the circumstances in which a trust might run into financial problems of a kind which could lead to the powers in the Bill being invoked, other
than the circumstances for which we have been told that the Bill is intended--where a trust is dissolved for a non-financial reason and PFI liabilities are outstanding. But there are many other circumstances in which the powers in the Bill might be invoked. I shall illustrate that by describing the immense financial pressures being faced by health providers in my area of east London as the new financial year approaches. I want to concentrate on the possibility of trusts accruing liabilities in a manner other than through the PFI, as the reasoned amendment points out.
The work load borne by the health service in Newham is immense because the demand is immense. The Government's own figures show that Newham has the highest level of urban deprivation in the country with Tower Hamlets and Hackney, the other two areas covered by the East London and the City health authority, only just behind. I take no pleasure in saying it, but it is a fact that in east London there is an immense concentration of urban deprivation which is reflected in the area's health statistics. Whichever statistics one chooses, they all tell the same story: the health service in east London faces an immense task.
In 1988-92, the standardised mortality ratio in Newham was 109 compared with 100 in Britain. In 1992, it was 113. From 1988-92, the number of stillbirths and deaths in the first week of life per 1,000 total births was 9.8 in Newham compared with 8.2 in England and Wales. The percentage of total residents aged 16 and over who were prevented from working by permanent sickness was3.9 per cent. in England and Wales but 4.9 per cent. in Newham. The percentage of limiting, long-standing illness among children aged up to four years was 2.7 per cent. in Newham compared with just 1.9 per cent. in England and Wales. Births per 1,000 women aged 15 to 44--this statistic is good news, but it creates considerable work for the health service--were 87.3 in Newham compared with 63.6 in England and Wales.
Alongside that picture of the health service's considerable work load, the resources available to the service in east London are plainly inadequate. According to the Government's 1993 figures, about three quarters of general practitioner premises in Newham are in poor condition. Since then, nothing has substantially--
Mr. Deputy Speaker:
Order. This debate is about NHS trusts. It is certainly not about GPs' premises. It is not in order to relate detailed statistics on Newham, important though they are. They need to be related to the Bill or to the reasoned amendment.
Mr. Timms:
I am grateful to you, Mr. Deputy Speaker. The possibility of a private finance initiative to raise the standard of GP premises has been considered by one of the trusts in the region, but I take your point. The community health service trust has considered that possibility, but I will endeavour to relate my remarks more closely to the Bill.
As the reasoned amendment sets out, trusts may accrue liabilities in other ways and not simply through the PFI. That is the anxiety to which I want to draw attention.I talked about GPs' premises. The number of dentists and health visitors employed by the community health service trust is small relative to the population.
That is the position today. What worries me is the stress and the despair that I see among some of the people working in those conditions for the health service trusts.
This is where I come to the circumstances in which the Bill will apply. The East London and the City health authority faces a large deficit next year just to keep the existing service level going. Estimates of that deficit vary between £7 million and £20 million for the coming financial year. Whatever the figure is, it is certainly a large sum and no one to whom I have spoken in the trusts has the faintest idea how that gap can be bridged. The mood is dark in the trusts that will be on the receiving of the cuts required to bridge that deficit. I would not rule out the possibility of a trust not being able to meet its financial liabilities and running into the situation in which the Bill will apply.
The position is much worse even than that. This is where people start to become angry. The new capitation formula for district health authorities will remove another large sum--in excess of £11 million--from the East London and the City health authority budget. That will be done under the new formula based on work conducted by York university, but significantly changed from what it recommended. It has not yet been implemented, but I understand that it has been confirmed as a direction in which the Government intend to move.
York university was charged with providing a resource allocations formula that reflected need. It did so, but the Department of Health changed it for reasons that have still not been explained, so that the formula no longer reflects need. In the document entitled "The Resource Allocation Consequences of the New NHS Needs Formula", published in May 1995, York university states:
I am extremely concerned about the fact that that element is not there. Its absence cause serious financial problems for the trusts in east London.
I have corresponded with the Minister about that subject, but, given the problems that are being created, I am still at a loss to understand why the Government are pursuing the use of that formula. I have repeatedly attempted to find out why a formula is being introduced that so dramatically shifts resources away from the trusts, where they are most needed, but I still have not obtained anything like a satisfactory explanation.
The resource allocation formula is wrong. It has the opposite effect to that advertised as the Government's intention. The only explanation for its adoption that I have found is one of partisan advantage, which is disgraceful. The formula needs to be changed radically in line with York university's original proposals, so that it has the effect that the Government claimed to want.
"gives an open-ended commitment on the part of the taxpayer to honour the liabilities of NHS Trusts irrespective of the manner in which they have accrued".
"In implementing the work, the Department of Health had to make a judgment about which needs index to use for distributing funds not relating to inpatient use. In the event, they have chosen to allocate 64 per cent. of the total budget according to the acute index, 12 per cent. according to the psychiatric index, and 24 per cent. according to no needs index. The report notes that the use of no needs weighting for such a large block of services, which includes community and mental handicap services, can be challenged. It illustrates the importance of the issue by comparing the Department's preferred formula with an alternative, in which the24 per cent. is allocated using the York acute index. It is found that this option would redirect amounts of up to 5 per cent. away from the home counties towards the inner cities."
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