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Mr. Dorrell: That argument has two fundamental flaws. First, many aspects of health care are not the subject of GP referral. The hon. Lady has not told us who decides where provision is commissioned when there is no GP referral. Secondly, she has said that the health authority is responsible for planning the pattern of health care provision, but if the GP has absolute freedom of referral without any reference to the health authority's planning, there is no connection between the planning and the referral.
The hon. Lady has not made clear the means by which health authorities discharge their obligation to ensure that health provision in a particular district meets the need that they have identified. That is the question that she must answer. Are health authorities free to choose the hospitals from which they commission, or not? The hon. Lady has avoided that question again.
Mr. Touhig:
I am very interested in what the Secretary of State has been saying about commissioning and the market. Would he care to comment on Gwent health commission's decision to market-test the care of the terminally ill? The main provider of that care is a local charity which spent £10,000 on its tender bid, only for the commission to abandon the whole procedure halfway through. Is that a sensible use of resources and planning?
Mr. Dorrell:
Any health commission that is deciding which services best meet the needs of its patients should be free to look at alternative providers, whether, in the case of terminal care, the provider is a charity-funded hospice or part of the NHS. The principle that a health authority should be free to choose where to commission care is a fundamental part of good management, and I do not resile from it.
Mr. Burden:
The Secretary of State said earlier that health purchasers should be free to purchase care for their local populations with resources given to them on the
Mr. Dorrell:
As the hon. Gentleman knows, I am simply saying that there is a formula determining the distribution of resources--a need-based formula, devised for us in the university of York. The hon. Member for York (Mr. Bayley) knows very well how that formula evolved. If the hon. Member for Birmingham, Northfield (Mr. Burden) knows of a better way of channelling resources to different health authorities, reflecting both population and need, we shall be happy to hear from him. As the House knows, we allow the system to evolve every year.
Mr. Hugh Bayley (York):
Will the Secretary of State give way?
Mr. Dorrell:
I will give way to the hon. Gentleman, but I must then make progress.
Mr. Bayley:
The Secretary of State did not acknowledge that the Government refused to implement the independently determined formula. Instead, they amended it in order to shift resources from the north to the south, and from inner cities to shire counties.
As the right hon. Gentleman is having difficulty in understanding the difference between Labour and Conservative policy on the NHS internal market, may I give him a practical example? My constituency contains an extremely large fundholding practice with 20,000 patients. That practice decided to shift its contract for community health services from one trust to another, believing that that would improve services for its patients. Its action greatly weakened the services of the trust that it had formerly used, and the level of community health service support for all the other GPs in York declined as a result.
The difference between Labour and Conservative policy is that the Conservative party's free market approach allows such dog-eat-dog developments, while the Labour approach of commissioning would make one general practice deal with another and reach agreement on the best pattern of local services.
Mr. Dorrell:
Not for the first time, the hon. Gentleman had better clear his line with his hon. Friend the Member for Peckham. Only a few minutes ago, the hon. Lady was saying that, under her system, GPs would have absolute freedom to decide where patients were referred. It is essential to focusing on the delivery of high-quality care for those responsible for fashioning the pattern of provision to do so in the way that is dictated by the interests of the patients for whom they are responsible. That is the merit of the fundholding system.
Let me give the last word on the merits, or otherwise, of the system that we have introduced, which grants health authorities greater freedom to decide where to commission care. That last word should, perhaps, go to Lord Winston, a Labour spokesman in another place. According to him,
Another issue which the hon. Lady is fond of discussing is that of administrative costs. We have heard more from her on that subject today. Both she and the Leader of the Opposition are fond of referring to what The Independent, in that same editorial, described as a "golden stream" of resources available from administrative savings.
The hon. Lady's problem is the same as that of the Leader of the Opposition: no one believes them, for very good reasons. It is the original political mirage. The hon. Lady says that we do not need to provide extra resources; we can secure all the resources through administrative savings.
Mr. Purchase:
The Government have been saying that for years.
Mr. Dorrell:
We have not. We have delivered growing resources to the NHS and a more efficiently managed health service for more than 17 years, because benefits to patients are our driving consideration.
The right hon. Member for Derby, South (Mrs. Beckett), who was the predecessor of the hon. Member for Peckham as Labour's health spokesperson, was clear about NHS management. On 19 February 1995, she said on "The World This Weekend":
Mr. Dorrell:
The hon. Lady denies saying that. I will quote her verbatim from an interview which she gave on 20 June, not long ago:
Ms Harman:
We have said, and we stick by this claim--the Government's figures and independent estimates support this--that it costs an extra £1.5 billion every year in administrative costs to run the market. If one abolishes the annual contracting round, all the people needed to negotiate contracts will no longer be required. If fundholding is replaced with GP commissioning, hundreds of thousands of invoices will not have to be processed by managers. When there is freedom of referral and patient choice instead of the bureaucracy of extra-contractual referral, there will be no need for all that paperwork. Chris Ham said on the "Today" programme:
Mr. Dorrell:
No, that figure is a lot more than M2. It relates to all administrative and clerical salaries in the NHS. The hon. Lady claims that she can save almost exactly 60 per cent. of total spend. I invite the House to test that claim against basic plausibility. Does anyone believe that the hon. Lady, by taking over my job, can release 60 per cent. of the health service's administrative costs? In the interview that I quoted earlier, Nick Ross asked the hon. Member for Peckham to demonstrate how she would set about releasing 60 per cent. of NHS administrative costs. She started with an example involving £20 million. She may have identified one saving of £20 million, and I assume that was not the smallest that the hon. Lady could think of--it was probably one of the largest. The hon. Lady must find another 74 examples to get near her target of savings of £1.5 billion.
"The internal market has resulted in many hospitals improving outpatient facilities, improving comfort for patients, improving waiting times in clinics and in some cases improving waiting lists."--[Official Report, House of Lords, 26 February 1996; Vol. 569, c. 1460.]
There is no doubt that that has happened. That is the case for the internal market, which the hon. Lady is committed to abolishing--or so she says; she cannot substantiate the commitment.
"I don't think it's really in question any more that the NHS has been undermanaged in the past."
What would Labour do about ensuring that the NHS of the future is efficiently managed? The hon. Member for Peckham is fond of talking in general terms of saving £1.5 billion in administrative costs, and she did so again today, but that proposition is absurd.
"As we have said, we think the overall figure is somewhere between £1.4 billion and £1.7 billion."
The hon. Lady says that is the extent of the resources that will be available to expand provision. How would Labour deliver remotely that sum of money?
"They can release hundreds of millions of pounds from the internal market and put it into patient care."
Mr. Dorrell:
The hon. Lady has been more precise than Chris Ham. She claimed that she will release £1.5 billion. The House must assess the plausibility of that claim, remembering that total NHS expenditure on general and senior managers, and on administrative and clerical staff in 1994-95, was £2.4 billion.
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