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1.48 pm

Dr. Evan Harris (Oxford, West and Abingdon): I am grateful to the hon. Member for Banbury (Mr. Baldry) for allowing me time to speak. I am pleased to meet the Minister; I am sure that we will meet again on many occasions, given my interest in health.

As a former employee of the NHS and, indeed, the health authority in Oxfordshire, I have seen some of the problems described by the hon. Gentleman at first hand. I am also a product of the Oxford medical school, to which the hon. Gentleman paid tribute. I think that it is a testament to the ability of its teachers that, despite other interests that I pursued during my medical studies, I was able to graduate and pursue an NHS career.

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It is clear that Oxfordshire health authority has a funding crisis, which means that it has a service crisis. My postbag is full of complaints about the time that is taken for people to be seen and about the lack of service provision. The Minister will be pleased to know that I do not blame the current Administration for that, but I add the word "yet".

In its election campaign, Labour committed itself to "saving the NHS". In the light of advice to ask quick questions, I have a one-word question--when? The slogan "14 days to save the NHS" which was used in April is probably optimistic, as is 14 weeks. In the meantime, Oxfordshire may see the precipitate closure of the unit that cares for the young disabled, a tripling of the number of people who have to wait more than 12 months for operations, terrible cuts in the community hospital trust with which Horton hospital is mooted to be merged, and a squeeze on county council and social services spending.

All that causes short-termism. That was alluded to in remarks about threatened cuts at the Chilton clinic, which looks after drug and alcohol abusers in the county. We must also bear it in mind that, when people have to wait for operations, they may enter hospital later as emergencies, which are far more expensive to deal with.

This year, the health authority's crisis was so deep that it almost ran out of cash last month. I did my best to help by taking unpaid leave in April for another purpose, which the House may be able to guess. However, the authority is still £4 million in debt, and it faces increasing pressures and growing waiting lists. As we have heard, Oxfordshire health authority is below its target, and such authorities rely on differential allocation of growth money to move towards targets.

It is important that authorities that have carried out strategic reviews base their future allocation of funding on a presumed rate of growth which is similar to that in earlier years. As Andrew Dilnot of the Institute of Fiscal Studies has explained, we now face cuts in some years, and effectively no growth for the next three years. It will be impossible to develop or preserve services while authorities are under target and there is no growth.

I have three quick questions for the Minister. First, does he accept that, even after the £100 million efficiency savings that have been announced, more funding will be required in the NHS generally to avoid a winter crisis? I disagree with the hon. Member for Banbury on that issue, because I think that more money is needed.

Secondly, in the review of NHS spending and means of resourcing that the Secretary of State is currently undertaking, as new or increased charges are not ruled out, will higher general taxation or perhaps a new top rate of tax for those on very high incomes be considered? Perhaps that is the one measure which has been ruled out.

Thirdly, given the credit card pledge that was made during the election campaign to reduce waiting lists by 100,000, how long must we wait to see that commitment, which we support, being implemented?

1.52 pm

The Minister of State, Department of Health (Mr. Alan Milburn): I congratulate the hon. Member for Banbury (Mr. Baldry) on securing the debate, and on the

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terms in which he has addressed important issues about the funding of Oxfordshire health authority. I pay tribute to the hon. Member for Oxford, West and Abingdon (Dr. Harris), not least for making some financial sacrifice to ensure that the health authority was better able to put more money into front-line patient services. I shall return to that theme. As the hon. Gentleman rightly said, the Government inherited extreme financial difficulties, which we do not expect to solve at a stroke.

Our legacy is extremely challenging. For example, waiting lists are rising not just in Oxfordshire but in many parts of the country. That makes our desire to honour our manifesto commitment to ensure that more money is applied to front-line patient services even more imperative.

As the hon. Gentleman is aware, we have already made rapid progress by cutting management costs by £100 million in this financial year. That is just the start, and we expect to continue to bear down on unnecessary bureaucratic costs in the NHS. The Government's priority and that of all hon. Members is to ensure that cash goes to where it is most needed in the NHS--to patient services. We shall certainly honour our commitment to treat an extra 100,000 patients as soon as we are able to do so.

The Government and everyone involved in the NHS know that this year will be particularly difficult and that it will not be possible to do all we would wish to do in an ideal world. That is one reason why I am pleased to have the opportunity to debate one health authority and the issues confronting it in some detail.

As the hon. Member for Banbury rightly said, Oxfordshire health authority has some financial difficulties. For the current year, it has an integrated revenue allocation of about £236 million. In real terms, that is a growth in income from the previous year of about £5.9 million.

As the hon. Gentleman said, despite that increase, under the current formula that is used for allocating the finite pot of available funds, Oxfordshire health authority remains some way short of its target. Last year, it was short by about 5.24 per cent., and this year, following changes to the resource allocation formula and the increase in funding, the authority is about 4 per cent. short of target. As he said, in percentage terms, Oxfordshire is the third most under-target authority in England.

Much has been said about the effect of the resource allocation formula on the health authority, and I know that it is concerned about the possible effects of any future changes. However, I make it clear that much of that concern is based on pure speculation. I should be grateful if the hon. Gentleman would communicate that in clear and forceful terms to those in the health authority. The Government are committed to looking at how resources are distributed to primary and secondary care to ensure that they fully reflect local population needs, and that they operate as fairly as possible.

We intend to allocate resources on the basis of objective measures of need, so as to provide equitable access to care and therefore to reduce inequalities. Therefore, there may be changes to the formula which is used for allocations for the next financial year--1998-99, but at this stage neither I nor Oxfordshire health authority, despite its speculation, know what these changes amount to. As the authority has indulged in some speculation

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about possible refinements to the formula and about how that could affect local residents, I shall deal rapidly with some of those points.

Oxfordshire health authority is concerned that insufficient weight is allocated to the problems associated with providing a service in a largely rural area. The hon. Member for Banbury spoke about his constituency in that regard. Research has already been commissioned to investigate the possible extra costs that are associated with the provision of accident and emergency services and ambulance services in these areas. A report is expected in the autumn and the results will be carefully considered.

Oxfordshire has a major teaching hospital, the Radcliffe, and there are certainly higher costs in such hospitals than in those that do not teach medical students. Those additional costs are met from the service increment for teaching levy, which is paid directly to the hospitals concerned. Of all the health authorities that host major teaching hospitals, Oxfordshire has received the highest growth in its general revenue allocation.

In the context of the current formula and allocation, I shall now look at how Oxfordshire health authority is coping with the pressures that face it. As I have said, the Government inherited some financial difficulties from the previous Administration, and Oxfordshire health authority is not exempt from that pain. For the financial year that has just ended, the authority has a net forecast outturn deficit of some £2.9 million. Those are the latest figures and they may be subject to revision. The health authority is planning to rectify that financial imbalance during the current year. Consequently, it will have to face some painful decisions.

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I understand that the chief executive of the authority has chosen to set the scene for those difficult choices in some colourful language, which was repeated by the hon. Member for Banbury, about the authority potentially "running out of pound notes". That colourful language is unhelpful, not least because it detracts from the serious efforts that are being made by the health authority to achieve financial balance. For example, I was struck by its establishment of a priorities forum, which is a good principle and a good idea. It has already started to reduce costs through the latest round of contracting with local hospitals.

I shall now deal with the issue that the hon. Member for Banbury raised about his local hospital, the Horton. A thorough review of the provision of health services for the people of Banbury and the surrounding areas has resulted in some interesting recommendations and a steering group of wide membership has been established to oversee their implementation. That is a good example of health authorities, trusts and local people working together to find solutions to problems rather than simply calling for more money or jumping to quick and easy solutions.

I hope that the hon. Gentleman and local people will support the review and will participate fully when preferred options are put before them for consultation later in the year. I shall bear in mind the hon. Gentleman's points. He has established firm stakes in the ground and we shall bear that in mind. It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put. Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half past Two o'clock.

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