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10.18 pm
The Parliamentary Under-Secretary of State for Health (Mr. John Horam): I congratulate the hon. Member for Southwark and Bermondsey (Mr. Hughes) on his success in securing the debate, and I am pleased to have the opportunity to respond to him. As always, he has spoken knowledgably and eloquently about health services for his constituents. The Government are equally concerned to ensure that the best possible health services are available to the people of south London, as the hon. Gentleman was no doubt assured by my right hon. Friend the Secretary of State for Health when they met two weeks ago.
I also have a copy of the letter to which the hon. Gentleman referred, from the chief executive of the health authority, about the sad case of Mrs. Burkhard, and that case being examined closely. I hope that something positive can come of that examination.
As the hon. Gentleman says, Lambeth, Southwark and Lewisham health authority is his local health authority, although his debate tonight covers five other health authorities as well. Like every health authority, it is responsible for studying the health needs of the local population and for ensuring the availability and provision of appropriate care and treatment for local residents. In that, it is extremely effective, as is abundantly clear from the ever-improving services that are available to the hon. Gentleman's constituents.
Lambeth, Southwark and Lewisham health authority is the largest in London, with a population of 732,000. This year, it received £390 million to spend on hospital and community health care for its residents, and each year it spends more than £45 million on general medical services. As well as these substantial sums, it is receiving additional funding this year--as the hon. Gentleman is aware--£3 million of which is to assist with the provision of services for mentally disordered offenders, who would otherwise be in the criminal justice system with their mental health needs ignored.
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In addition, £1.4 million of mental health challenge fund money has been made available, and London initiative zone funding to the tune of £15 million has been provided this year to assist with the development of primary care services. It will get more next year, in line with our commitment to year-on-year increases in health service funding. In his Budget speech yesterday, the Chancellor said that the NHS will receive substantially more next year.
The hon. Gentleman commented on the percentage increase and the real increase, taking into account NHS service inflation as opposed to general inflation. He is wrong. As he knows, the overall increase in the health service budget is £1.6 billion, an increase of 2.9 per cent. in real terms--that is, taking off the standard retail prices index deflator, which is approximately 2 per cent. The amount available for the hospital and community health service part of the total budget is £1.2 billion--the amount, roughly, that goes to help authorities, as the hon. Gentleman is aware. That is an increase of 3 per cent. in real terms.
The hon. Gentleman seemed to be arguing--perhaps I misunderstood--that, as inflation in the health service is rather greater than the general rate, those sums will be taken away by national health service inflation. That cannot be so. Although inflation in the health service may be a bit greater than it is generally, it is not 150 per cent. greater, which it would need to be to take away all the extra money--for example, the 2.9 per cent. or 3 per cent. real increase as opposed to the 2 per cent. general inflation rate. I am surprised that he made that charge, but perhaps I misunderstood him. In my view, the increase is substantial.
This debate is taking place the day before my right hon. Friend the Secretary of State for Health is due to announce the individual totals for each health authority. I remind hon. Members that not only is more money going to Lambeth, Southwark and Lewisham health authority, and others, this year than ever before, but, with the merger of district health authorities and family health service authorities from the beginning of last April, and with ever-increasing efficiency, more money is now available for health services and direct patient care. One should not forget that we also expect efficiency gains of several hundred million pounds.
Lambeth, Southwark and Lewisham's population is characteristic of London's densely populated inner-city areas. Hospital and community health services funding is largely based on a national formula worked out on the size of the local population, weighted for factors such as the number of very young or very old people and the degree of social deprivation that exists. It also takes account of market forces, such as the higher costs of staff, buildings and land in the south-east.
The new allocations formula includes two powerful and sensitive measures of need: one for general and acute services; the other for psychiatric services. These two measures take account of a wide variety of health and socio-economic factors associated with the need for health care, such as unemployment, permanent sickness, elderly people living alone, and single-parent households.
I must correct the hon. Gentleman on one point that he made about the 1991 census, on which he thought that the existing capitation formula relied over-heavily. Of course it takes it into account, but nonetheless the formula has
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Lambeth, Southwark and Lewisham health authority's funding this year is only slightly below the funding that it should receive according to the formula. The funding therefore well reflects the local social and economic situation. The same can be said for all six south London health authorities. As a whole, their combined allocations are slightly above their total capitation share.
We must await tomorrow's announcement to learn how close the authority will be to its weighted capitation position next year. However, with the increasing resources that are being made available to the NHS and our commitment to bring all health authorities to their capitation position as rapidly as possible, hon. Members might draw their own conclusions.
Before I say any more about funding or service planning for next year, I should say something about the financial position of the health authority this year, and the ability of the service to cope for the remainder of the year.
On current estimates, Lambeth, Southwark and Lewisham health authority is forecasting that it will overshoot the budget that it set at the beginning of the year by about £1 million, or about one quarter of1 per cent. of its allocation. It considers the position to be manageable. The situation certainly does not suggest that local people should in any way be concerned about the continued availability of good-quality services; nor does it suggest a service close to collapse, as some commentators have implied.
Plans have been laid over recent months by the health authority, working closely with local trusts so that the surges in emergency demand that occur at times during the winter can be dealt with as effectively as possible.
I shall deal now with the position next year. First, I should say that the health authority has been extremely open with the local community about its hopes and fears for next year. I am glad that the hon. Gentleman acknowledges that. It is right that this openness should be commended, for it is right that health authorities should be frank and honest in their discussions.
The health authority has adopted a very cautious approach that has led to the prediction that its budget deficit next year will be about £18 million. I stress that that is not the actual position that it is likely to find itself in next year, and does not imply that it must find £18 million-worth of savings within the budget. I repeat that the figure is £18 million, not £80 million. The hon. Gentleman will know what I am talking about. I repeat the figure in the light of a mishearing that occurred the other night.
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The initial purchasing plans produced by health authorities this September are a starting point for the development of local purchasing strategies for the next business year. They are, in effect, cock-shies to get the discussion going. As there are a number of unknowns at this stage, assumptions will certainly change with time. For example, I believe that one assumption that the authority is making now is that there will be certain capital charges arising from phase 3 at Guy's hospital, which is not necessarily correct. I give that as one example of the sort of assumptions that have been built into the figure of £18 million which are unlikely to be realised.
It is only right, given that health care resources can never be infinite, and that health authorities have to prioritise competing demands, that they should outline some of the difficult choices that they as purchasers must make, and involve the local community in making those choices. I know that the hon. Gentleman attaches great importance to that involvement. It appears to be happening in Lambeth, Southwark and Lewisham.
The health authority will be refining its plans as information about next year's resources becomes available and in the light of the comments elicited by the draft plan--including, of course, those of hon. Members. Final plans will be published in the spring of next year.
Health authority purchasing plans are developed and agreed in partnership with general practitioners, who are closest to the patient and uniquely placed to ensure that their needs and wishes are reflected in local strategies. Indeed, about 90 per cent. of all contact that patients have with the NHS takes place in GPs' practices, with patients' needs varying considerably between one practice and another.
Taking this diversity into account, Lambeth, Southwark and Lewisham health authority has been working closely with individual practices to obtain accurate information about local problems and requirements, so that the most appropriate services can be developed in every practice, and commissioned from local hospitals and specialist services, to enable the most effective use to be made of the very substantial resources available to the health authority.
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