Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



Mr Burns

  60. Moving on to general issues to do with the NHS Plan. Some fairly ambitious targets have been set in the Plan, like the waiting list time for someone to see a GP. Could you tell us, briefly, how the targets were chosen, what work was determining whether the targets are feasible, what sticks and carrots there are going to be to seek to achieve those targets, and, finally, how will the achievements be monitored?
  (Mr McCarthy) Shall I pick that one up. I think it is probably worth reminding ourselves of the process for putting together the NHS Plan, which I think was if not unique certainly a large step forward for the way we try to identify priorities in the NHS. We had a number of Modernisation Action Teams, all with representation from clinicians, patients, managers, other staff in the NHS; their tasks were to point out to us what they saw as important for the service, the sorts of changes they would like to see come about in the service, and how ambitious they felt we ought to be. Now during that process, naturally, there was not a single message, a single point of view, which came from everybody involved; indeed, as you might expect, some of the patient representatives, for example, were looking for more ambitious changes than some of the managers felt was deliverable, in the short run. So there was a whole process of balancing the views, most of which went in the same direction, but a very important task which we had then of underpinning this with as much analysis as we could, to try to make recommendations about what was achievable. So that, if you like, was a process for trying to identify, from patients, clinicians, what the service priorities should be. We have for many years undertaken as much detailed analysis as we can, within the Department, of capacity right around the system, so we try to follow through demand that is coming through the front door, we try to follow through the responses that the primary care sector, the acute care sector, community services, need to make, in order to respond to demand and achieve changes to both standards of care and to waiting times, which I think we specifically mentioned. So that sort of analytical capacity was used throughout this process. Now I cannot pretend that this is an exact science, it is constrained by the data we have, by the understanding that all of us have, both in the academic world and within the Department, of the influences on changing behaviour and changing outcomes in health services. But we brought to bear the best information we had available, and on the basis of that and on the basis, of course, of the three-year settlement, which we knew about, because that had previously been announced in the Budget, we were able to make some judgements about stretching but, in our view, achievable targets in the areas of priority which we had been told about in the Plan. So that is how we arrived at the few targets. And I think I would want to try to concentrate or direct us towards Chapter 16, the Public Service Agreement real output, outcome targets, if you like, around the NSFs, around achieving waiting objectives. And then, certainly, throughout the Plan, we have indications of our view of the extra staff numbers required, the beds required, to support those sorts of service changes.

  61. Can I move you on to the Modernisation Agency, or one of your colleagues, whoever. I was wondering if you could tell us how the Plan will be implemented; again, where does the Modernisation Board fit in within the structure of the NHS, what powers will it have, and the task force have, obviously, and to whom will they be accountable?
  (Mr Reeves) Yes, I could take this one, Chairman. The Modernisation Board actually has met once, on 11 October, indeed is chaired by the Secretary of State, with 33 members, who are broken down into three parts; firstly, those representing patients, those representing national organisations, like the Royal Colleges, the Royal College of Nursing, and also people working within the NHS. It is likely that the group will meet on a quarterly basis to advise the Secretary of State. And, certainly, if I had to say what the two major roles of the Board would be, first it is to advise and monitor, almost, the implementation of the Plan; and then, secondly, also, to produce annual reports on progress of delivering the various PSA targets within the Plan itself. So a very important role, certainly, for the Board, in terms of the Plan, but not solely, there are other structures within the Implementation Framework to ensure that we do implement the Plan successfully over the next decade, and I could go on to talk about the Modernisation Agency, the various task forces that we have, the regional offices, and indeed the Implementation Project Team. Not to mention, of course, the NHS Executive Board as well. So it is quite a complex and matrix set-up, in terms of taking forward this structure, but I would say the Modernisation Board does have an important part to play in this.

  62. And accountability?
  (Mr Reeves) Accountability, again, is manifold, in the sense, obviously, the Secretary of State himself is accountable, and, of course, we have had Accountability Frameworks within the NHS, whereby, of course, every single manager in every single health authority and trust is, indeed, an accountable officer, through to Nigel Crisp, who is the Accounting Officer, who, in turn, is accountable to the Secretary of State and to Parliament. And there is no reason why that relationship of accountability, which has existed very effectively, I think, over the last five or six years, should not come into play in terms of the implementation of the Plan. So the existing accountability range will certainly exist, but, of course, obviously, the various groups I talked about will have a major role in terms of taking forward specific components within the Plan.

  Mr Burns: Thank you. Can we now move on to the funding of the NHS. This Committee has been supplied with a paper by an outside adviser suggesting that NHS spending would need to increase in real terms by 9.7 per cent over the next five years, to meet the European average, which has featured quite frequently in the last few months, from the Government. I was wondering if you could tell us, is there a firm commitment by the Government to match the average European spend on health care?


  63. Could I ask, before you answer that, Mr Reeves, or whoever is going to answer it, do you accept the sort of common definition of the sort of comparative data here, are we comparing like with like, because I have always had some reservations about whether, in our calculations of proportions of GDP, we are comparing the same provisions? So do you accept the arena for debate in this respect, are we comparing like with like, or are we not?
  (Mr Reeves) I am going to start with a caveat, Chairman, to say the one thing that you must take account of is variations in terms of definition between countries, and the OECD has worked very hard in terms of trying to get some degree of commonality around there. And I think particularly in terms of the differentiation between public and private, that is where there is quite an issue and a variation in terms of international difference. But, certainly, we are keen, and I think the Prime Minister made this clear initially, on the David Frost programme, to ensure that we can at least compare ourselves in the future with the type of expenditure on health care in European countries and using the criterion of health care expenditure as a proportion of GDP. And, I think, in terms of the current position, and by that I mean 1997, we do compare unfavourably with Europe. Our own health care expenditure as a proportion of GDP was 6.7 per cent in 1998, and that compared with the overall, simple, European average of 8 per cent, which is the latest information available.

Mr Burns

  64. Sorry, can I just interrupt you there, just so we do not get confused from the start. With the figures you have just quoted for this country, does that include the private sector as well or just the NHS?
  (Mr Reeves) No, it is the overall position of total health care. Private health care in the UK is approximately 1 per cent, and has been for some period of time, so it is an inclusive calculation.


  65. It might be increasing after this week, Mr Reeves, presumably?
  (Mr Reeves) Yes, in light of the first and possibly later questions as well, in this Committee, Chair, and there might be some implications in terms of the relative difference between the two. But, certainly, what I am quoting at the moment is the aggregated figures, both in terms of private and public. And what we are trying to do, as I said, is to move towards the European average of 8 per cent. And, I think, in many ways, what has happened in terms of the additional allocation resource is, this year, what is also intended for the three spending review years, our view is that on the basis of those figures, and we are talking about an increase in growth, in real terms, in health, of 6.1 per cent in the UK, that compares with 6.3 per cent in England, we believe that figure of 6.7 per cent will rise to a figure of 7.6 per cent, as compared with the European average of 8 per cent. So the injection of monies we are having through this year and the spending review is certainly going to be a tremendous assist in moving us towards European averages, at least as regards this particular calculation.

Mr Burns

  66. Sorry, I missed on that, because I assumed you were answering the Chairman's question. I did not get, unless I have missed it, a firm commitment that the Government was going to match the average European spend on health care?
  (Mr Reeves) I think it is fair to say that the Government is very keen to ensure that, as we start developing health care throughout the UK, over time we do compare favourably with European averages; and what I was saying was, and I was trying to answer both questions, that over the next four years I do believe we are well on the way to achieving that.

John Austin

  67. But would you accept that a system which is very much based on the private sector is bound to be a much more expensive way of providing service than one which is basically free at the point of delivery, financed out of taxation?
  (Mr Reeves) Again, in terms of the calculation, I am combining private and public, and you will see, in terms of the respective contributions of public and private throughout all European countries there is quite a difference, and we tend to be quite low in terms of that proportion of private as opposed to public health care.

  68. Would you agree that some of those countries which rely on the private sector and insurance are actually providing a much more expensive service and a less efficiently financed one?
  (Mr Reeves) Yes, that is absolutely right. If you go beyond Europe as well and we go into countries like the United States and Canada,—

  69. Where you get less for your money.
  (Mr Reeves) Exactly; where you are getting up to, what, 14 or 15 per cent, in terms of the United States,—

  70. And no health care for a vast proportion of the population.
  (Mr Reeves) Predominantly focused on private health care. And my own personal view, for what it is worth, is, not as efficient as our own system of health care.


  71. In respect of the calculation again, you referred to the fact that within our calculation of our percentage of GDP we include private health care, and you mentioned 1 per cent, or whatever; does that include private nursing home care and residential care, do you know?
  (Mr Reeves) Yes. I will check back and come back with a note, but I think the answer is yes.
  (Mr Walden) Presumably, insofar as it is NHS expenditure, and there are relatively few people supported in nursing homes wholly by the NHS, but that proportion, I am sure, is in the figures.

  72. So do we have an in-built incentive to get the Prime Minister off the hook of Mr Frost, to shove people into the private nursing home sector via intermediate care who are, effectively, NHS patients?
  (Mr Reeves) No.

  73. If we expand that usage, does not that increase the sort of proportion?
  (Mr Walden) No, because those patients are still going to have to be NHS paying for them, regardless of their location.

  74. So it makes no difference?
  (Mr Walden) No.
  (Mr McCarthy) I think, Chairman, it is in the figures that Mr Reeves has quoted, getting up to 7.6 per cent by the end of the spending review period. The assumption within that is that the private care contribution does not expand beyond 1 per cent of GDP, but we have not relied in achieving that 7.6 figure with any expansion beyond the GDP growth in the private health care's contribution.

  75. But if we have got people who are currently occupying acute beds in the NHS, and we are being given this figure, and they would normally go out somewhere else, and they go out as NHS patients occupying non-acute beds in the independent sector, that does expand the amount of . . .
  (Mr McCarthy) (It depends?) who is paying for the place.

  76. You are using more beds, otherwise they would have gone out into the community, or somewhere?
  (Mr McCarthy) I think it is sources of funding, Chair. Any care, as long as it is funded by the NHS, when we are doing the sums, if you like, the full spending review settlement is included in the NHS contribution to proportion of GDP. Now already some part of NHS spending is used to secure care in the private sector, some residential care, in particular, for example; that still counts as NHS care because it is funded and is the responsibility of the NHS.

  77. But if a person is self-financing, in such a setting, it would not count; clearly, it would not count?
  (Mr Walden) It would not count, that is private expenditure.
  (Mr McCarthy) That is private expenditure.

  Dr Brand: But, Chairman, we surely are transferring the social services funded people in nursing homes to NHS funding, and the majority of people in nursing homes are paid for by the state when their resources have run out, so the nursing element of that is going to be transferred directly from a non-NHS budget into an NHS budget.

  John Austin: That is my point, as far as the European statistics are concerned. If there are countries which do not make a distinction between health and social service budgets, it is possible that in some of those European countries social care is being included in the figures, whereas social care would not be included in the figures in the UK.

Dr Brand

  78. The Danes do not include it, and that is why they look, actually, paradoxically, low in their percentage expenditure on GDP.
  (Mr Reeves) And The Netherlands is the reverse, because they do include it, yes.

Mr Burns

  79. But it is not national social services funding because it comes out of the Department of Health budget, surely it must be part of the NHS figure?
  (Mr Walden) It is part of DETR's allocation to local government. We have a policy responsibility but the funding comes under the local government finance settlement, it is part of the local government finance settlement overall.

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