Examination of Witnesses (Questions 300
- 319)
WEDNESDAY 8 NOVEMBER 2000
RT HON
ALAN MILBURN,
MR JOHN
HUTTON, AND
MR COLIN
REEVES CBE
300. You have mentioned Norfolk and Norwich,
the figures I have are for 1995/96 bed availability was 1,120,
pre-PFI it was 1,008, with PFI 809. If you look across all the
PFI schemes the figures suggest that there has been a 30 per cent
reduction in bed availability.
(Mr Milburn) Let me give you the figures that I have
got for Norfolk and Norwich and then see if we can reach agreement.
The total number of beds at present for Norfolk and Norwich is
955, that is what I have at present. The total number of beds
provided by the PFI solution will be 953 so yes it is true there
will be two fewer beds in the new hospital. What that does not
take account of—and I can probably provide you with the
figures for Norfolk and Norwich, although you seem to be getting
new advice—is the number of intermediate care beds that
have been provided in that area. As I was indicating to Dr Brand,
I believe we have not got enough acute and general beds in hospitals.
I have been absolutely clear about that and I have said over the
course of the next few years we are going to reverse a 30 or 40
year trend and we are going to increase the number. I also believe,
equally profoundly, that what we cannot go on doing is just looking
at the number of hospital beds in isolation. What we need to be
doing is planning the number of beds in the whole care system,
intermediate care, private residential and nursing home, the support
that is offered in people's homes, etc. Unless you do that you
will not get the sort of seamless care and the continuity of care
that people need. Now in the case of other PFI projects, they
have increased the number of beds in hospitals. In my own area—and
I do not think it is just a coincidence that it is my area in
Bishop Auckland—the number of beds at present in the hospital
I understand they give at 308[1].
Under the PFI scheme they will be increased to 347. In the case
of UCLH there are 660 beds at present. They are going to increase
to 664. So this rather fallacious argument that is sometimes made—not
by you, Mr Austin, but sometimes by people who are quite sloppy
in their thinking about this issue—is this idea that somehow
PFI has been a destroyer of beds. What has been happening over
the course of the last 20 or 30 years in the National Health Service
is that the number of hospital beds, particularly general and
acute beds, has been declining and has been declining quite markedly.
Within the last Government, within the last ten years, I think
they got rid of 40,000 general and acute beds. Now my own view
and the Government's view is that this state of decline cannot
go on. Certainly what I can say to you today is that in the next
tranche of new hospitals, whether built through PFI or not, overall
I would be expecting to see not a decrease in the number of hospital
beds but an increase in the number of hospital beds. Now that
has to be the situation because otherwise frankly we are not going
to be able to do what we promised in the NHS Plan, which to grow
the number of general and acute beds in hospitals and realise
what we need to have realised which is more capacity in the NHS,
precisely so we can treat more patients and get waiting times
down in the way we envisage.
301. Could I ask you on the Norfolk and Norwich
case, which maybe you would like to deal with in correspondence
with the Committee, because I do not expect you to have the figures
at your disposal, can you tell us how much it costs to vary the
contract to create the additional 144 beds in Norfolk and Norwich.
What was the impact on that?
(Mr Milburn) You are right about that. I do not know
the figures. We will endeavour to get them, perhaps even during
the course of hearing. If not, I will have to provide you with
the information. You know, I think there is a great mythology
around PFI. Frankly, there is a great industry around PFI too.
There is a very critical industry around PFI and, of course, we
have a list of what people say. But some of the analysis is just
fallacious, frankly. The idea, for example, that we would sign
off a deal for a PFI hospital and that we would do that in the
face of an argument that it did not represent value for money,
I wold be the first person before the Public Accounts Committee.
302. Is it not true that various cases have
been approved which are based upon shifting costs out of the NHS
into continuing care or whatever, without the sources having been
secured for the expansion of those facilities?
(Mr Milburn) I would love to see the examples. I will
say this to you, Mr Austin. Every time we have—and there
have been, as I have said, a number of pretty ropey and rudimentary
analyses of the problems in PFI, including individual PFI deals—but
let me tell you, every time we have one of these, whether at North
Durham or elsewhere, when we have examined the situation the analysis
has turned out to be wrong. Just bear in mind an important point
of comparison. In Dr Brand's area the National Health Service
right now is paying through the nose for the failings in public
sector procurement where we built a new hospital there, St Mary's
on the Isle of Wight. It massively ran over cost. I think it probably
ran over time. It doubled in cost. Then when it had been built
we found that they had the cladding of the hospital wrong and
we had to invest a further £26 million putting right what
public procurement had got wrong. I do not say that the PFI initiative
is perfect. It will evolve. But the idea that somehow or other
this represents bad value for money for the taxpayer and a poor
deal for local communities and that somehow the answer is precisely
the form of traditional public procurement which is delivered
cost over-run and time over-run, time after time, is simply wrong.
303. But you are saying that the reduction in
beds, that is implicit in all of the PFI schemes, are not as a
result of PFI?
(Mr Milburn) No. I think the Committee was provided
with the figures. I asked officials in the Department, after we
had published the National Beds Inquiry, to analyse the compatibility
of the various hospital schemes that we have on stocks with the
National Beds Inquiry findings. In particular, to do an assessment
of the number of beds. It is true that under PFI deals—Colin
may well have the figures under this—there were 34 schemes
at over £10 million in value, which are currently in procurement.
25 were PFI projects. Nine were publicly funded. In the 25 schemes,
the ones provided under the PFI initiative, there were 326 general
and acute beds lost. That is true. My arithmetic suggests that
is an average loss of approximately 13 beds in each PFI deal.
By contrast, in the nine publicly funded schemes—the publicly
funded schemes—there were 208 general and acute beds lost.
Now, I have not done the arithmetic properly, but I guess that
this is a loss of 23 beds on average. So the idea that it is PFI
that is the destroyer of general and acute beds is proven wrong
by this analysis; and, in addition to that, that overall whilst
there has been a loss of 536 general and acute beds in these 34
schemes, that was more than counterbalanced by the provision of
756 other beds, giving a net gain of 222 beds. What is happening
in the health care system and the drivers of change is that they
have precisely nothing to do with PFI or the way we procure or
buy or run new hospitals. They have everything to do with the
long running trends that we have seen in this health care system
and every other health care system where there is more through-put,
there are more day places, there are more short stays in hospital.
My own view—just to repeat this for the benefit of the Committee—is
that this trend has to come to an end because what we now want
to do is to dramatically increase the number of patients that
we are treating and dramatically improve the waiting times that
they have to have for treatment and, as a consequence of that,
for its first time in 30 years, over the course of these next
few years, whether it comes through PFI or whether it comes from
Exchequer capital, we have to see an expansion in the number of
general and acute beds and a expansion of the number of beds in
the whole care system in total.
304. I might be more reassured by your answer
if I knew what the base line was for your calculation of gains
and losses.
(Mr Milburn) I will quite happily provide that to
you in writing. I hope that the Committee will take seriously
the figures that I did not specifically commission for the Committee
but certainly were commissioned for the National Beds Inquiry
and which proved categorically once and for all that some of the
sloppy thinking around this is simply wrong. It is not the way
that you procure that hospital that counts but the results that
change it all.
305. Can I get points on the record which you
may not answer because I know the Chair wants to move on but which
I think are important. One was in relation to the question of
transfer of clinical services as part of the PFI deal. On whether
you encourage or discourage it or whether the Department has actually
commissioned any work on transfer of clinical services.
(Mr Milburn) As you will be aware only too well, the
Government has a manifesto commitment about clinical services.
That is the manifesto commitment and since we were elected on
it—not transferring clinical services- that is what we will
stick by and that is what we are doing.
306. There is no research on that?
(Mr Reeves) We have not.
(Mr Milburn) Believe it or not, the Department has
all sorts of bits of research which I am not aware of sometimes.
I will gladly check for you if that is helpful.
307. May I put a question about table 4, 8.11.
Pages 156, 157 on our document. The question is in the figures
you quote there, you provide figures for trust income and capital
charges. What I would like to know is whether you can explain
the statement counting the costs which make up the PDC and the
depreciation of pre- and post-FPI. This is because there seems
to be under PDC dividends a substantial increase post-PFI. I am
looking at in particular Calderdale, Dartford, Gravesham and St
George's. I would like to know why trusts with PFI schemes are
paying both PFI charges and PDC dividends and why there has been
such a hike in the PDC post PFI?
(Mr Milburn) Very good question, Mr Austin. Mr Reeves
will provide you with a very good answer.
308. I think he tried to answer it last week.
(Mr Reeves) I did indeed. In terms of table 4.8.11
you have an analysis in terms of first of all the unitary charges
in respect of the PFI scheme and the remaining payments in terms
of the public Exchequer capital utilised in the past so you will
have a combination of both, the new PFI scheme and the unitary
payment associated with that, but also in terms of the existing
capital charges in terms of Exchequer capital. I should make one
point, you will get one difference in the sense that we have changed
the trust's financial regime so in actual fact the analysis—I
think I explained this last week—in terms of public dividend
capital as opposed to interest bearing debt has changed because
the Government took the view that two years ago interest bearing
debt was a quasi commercial manifestation so we felt it would
be more important in the future to focus on PDC.
309. At the end of the day what does it cost
the trust? You may have changed the method of accounting but what
will it be to the budget of the trust?
(Mr Reeves) Can we give an example. Calderdale is
one where what we are suggesting here is the income from the trust
in actual fact once the PFI deal has been signed has actually
increased from 80 million to 100 million. Of that additional 20
million, 15 million relates to the unitary payment in terms of
the PFI scheme and because some of the existing Exchequer capital
will have been replaced by the PFI capital you would expect a
diminution in terms of both depreciation and PDC dividends. That
is shown again in terms of Calderdale with figures falling from
£1.6 to 1.2 in terms of depreciation. In actual fact there
is an increase in terms of PDC dividend but that is mainly a reflection
of the fact we changed the trust's financial regime in terms of
repayment of debt.
310. In Dartford it is a drastic change from
1.4 million to 4.3 million.
(Mr Reeves) I do not have information, I am afraid.
311. It is on page 157, table 4.8.11.
(Mr Reeves) Using the same logic in terms of Dartford,
what we are suggesting there is the income of the trust has marginally
reduced, although I have to say the vast majority of the figures
in this table indicate an increase in income. What we are suggesting
here, in terms of this one, there is no indication about what
the additional unitary payment is as a result of the PFI scheme.
Chairman
312. Would you like to get back to us on this
point?
(Mr Reeves) Yes.
John Austin: I think we would all like an idiot's
guide.
Chairman: A few idiots would welcome that.
Mr Gunnell
313. If I can make an observation on an earlier
discussion first. It seemed to me the Royal Commission was only
keen on the integration of nursing care and personal care if personal
care was free at the point of delivery. It seems to me that also
ties up with the question which I want to come on to which is
the question of Care Trusts. As I understand it, your proposals
for the new Care Trusts and the Commission's role do seem to me
to be very much in line with the suggestions we made to you and
in our report on Health and Social Services. It seems to be moving
forward in that direction. Therefore, one is an observation which
I think ties in with it. How do you imagine the future for social
services departments in local authorities when we have moved forward
and we have the brand new Care Trusts in place? How will the accountability
of the trusts to local authorities be put into practice? Will
local authorities have a role, say, in what happens in the trust?
(Mr Milburn) First of all—I will bring John
in in a moment—I think the introduction of the Care Trusts
is pretty much in line with what Members of the Committee, and
I think the Committee, have been arguing for some time.
314. A long time.
(Mr Milburn) Actually for the benefit of planning
purposes within both services, health and social care, but most
importantly of all the benefit of patients receiving the service,
it will be helpful to have one organisation dealing with both
planning and provision in the form of a Care Trust.
315. Yes.
(Mr Milburn) Interestingly, although there is still
further work to do on, for example, fleshing out the Government's
arrangements, we are getting quite a high level of interest in
the Department from both the NHS side of the fence and the Social
Services side of the fence about voluntarily forming Care Trusts,
and that is very, very welcome. I think that indicates that there
is an appetite, if I may say so, not just in the Committee and
not just amongst those who take a strategic oversight of the care
system but on the front line too. I think people are very, very
frustrated indeed at the way the system works, the obstacles that
they have to encounter day in and day out, and I mean both staff
and patients because that must be the most frustrating thing in
the world to have to try to navigate yourself and the people you
have responsibility for caring for around this rather byzantine
maze which is health and social care. Anything we can do to simplify
that and make it clearer from the patient's point of view, let
alone from the staff's point of view, seems to me to be a good
thing. I think that is why the Care Trusts idea has received such
a warm welcome in many parts of the care system. Now, sure, it
raises all sorts of questions and certainly it raises questions
about the Government's arrangements for example and we are currently
consulting upon that and we need to do further thinking about
it. As far as accountability arrangements are concerned, broadly,
the way that we envisage this working, with one important caveat
that I will come to in a moment if I can, is that this will be
a voluntary arrangement on the part of the local health service
and a PCT and the local social services department housed in a
local authority. In effect what the local authority will do is
delegate its functions to the Care Trusts but retain accountability
for them. That is how it will work. It will be on a delegated
basis. We have some embryonic examples of this in some parts of
the country which the Committee have seen and they work incredibly
well, just in streamlining the whole care planning process. That
is roughly how it will work. The one important caveat is where
we, the Department of Health, and I suppose Ministers at the end
of the day, regard either the social services in the locality
or the health service in the locality as not delivering the goods.
In that situation, for standards reasons or because there are
continual problems in the health service or local social services
department, we will establish Care Trusts not as a matter of voluntary
endeavour but I am afraid they will be imposed in those areas
where there is failure. I think that is the right thing to do.
If the health service and social services cannot demonstrate that
they can work together for the benefit of patients then we should
intervene and we should do something about that rather than having
the sort of laissez-faire attitude that was perhaps contained
in the past and just letting the thing happen. That is not good
enough for the elderly people and so on and so forth who are receiving
the care. In most situations there will be a slightly different
arrangement. Again, we have to work through that with the Local
Government Association, the NHS Confederation and other interested
parties. That is roughly how it will work. As far as the future
of social services are concerned, I think there is quite a lot
happening in social services already. I spoke recently at the
Edinburgh Conference of the Local Government Association and the
Association of Directors of Social Services and what struck me
very forcibly was that there is a huge amount of momentum and
change going on in social services. It varies enormously and that
is the great frustrating thing about it, that some places are
getting on with it, they are changing their relationships with
the health service. In many places old style monolithic social
services departments are giving way to, I think, rather better
arrangements where there are children's services and elderly services,
better integrated services, not just with health but with education
too within the local government and I suspect you will see a lot
more of that in the future. Providing that that improves care,
social care and health care for the people that social services
intend to serve, then we should welcome it. I think over these
next few years the flexibilities that the Government have provided
through the Health Act, lead commissioner, integrated provider
and pooled budgets, and now the care trusts, we will get to the
situation that a lot of us have been trying to encourage over
the course of very many years indeed.
(Mr Hutton) You did raise a question on the Royal
Commission. May I carry on briefly from what Alan has been saying
about the social services reorganisation. We have never made any
secret of the fact that we think this will be a time of radical
change in social services and the way they are delivered. That
is absolutely right. We should also be clear too that this is
not just a game of organisational musical chairs; that we are
just moving the organisational structure around. We are doing
this, and social services are doing it themselves, in order to
improve the delivery of the front line care services. I think
this is absolutely at the bottom line here. This is why this work
is under way. Why we are attempting to support and develop those
changes. Your comments originally at the beginning about the Royal
Commission. It is absolutely true—of course, it is—that
the Royal Commission would have liked the free nursing care recommendation
to be subsumed as part of their recommendation on personal care.
It is very interesting and very important for the Committee to
appreciate, particularly around chapter 6 of the Royal Commission's
report, and paragraph 6.26 in particular, if you have a chance
to go back and look at the details of it, it is quite clear from
what the Royal Commission were saying. They were saying that if
we wanted to proceed with free nursing care that was a stand-alone
option that could be delivered. So I think there is no argument
about whether as a concept it is capable of being delivered in
a sensible way apart from embracing the recommendation on personal
care. It is quite clear what the Royal Commission wanted. They
wanted free personal care and that is absolutely clear. We should
not be in any confusion or doubt about whether if we did not do
that, as we have not, started to introduce free personal care.
The recommendation that they did make about free nursing care
as a potentially stand-alone option for us to consider was still
on the table. We have obviously accepted that recommendation,
as indeed we were encouraged to do so by the Minority Report as
well.
316. Let me say that it seems to me that the
question of social services charges is very much still the problem.
That could be solved as well by the application of this principle
as the Royal Commission stated. Let me say that social services
allocates its finance by client group. It does so in the new mandatory
outback partnerships. They have got pooled budgets, joint commissioning
and lead commissioning. They make it relatively straightforward
to calculate the budgets. They make the budgets transparent. Can
you maintain that transparency when you have got the new care
trusts? Could this matter not really be solved in a much more
straightforward manner when it is agreed that there will be no
personal charges for services by social services?
(Mr Hutton) We do not believe that continuing a set
of arrangements about charging for social care services on the
means-tested basis makes it impossible to operate, to pool budgets
effectively or efficiently, or to make the other changes that
we think are necessary. We should be clear that if a care trust
is set up and provides social care services, the responsibility
for determining any charging policies in relation to social services
by the care trusts will remain the responsibility of the local
authority. It will not be, as it were, the care trust itself or
the primary care group to determine, operate and fix a charging
policy. That will be the responsibility of the local authority.
We are not interfering with that. I think it is possible, John,
for the arrangements to work effectively and for us to maintain
the existing arrangements around the social services. I would
also add one thing because I know that this is a concern which
has been expressed. I want to nail this if I can. There will be
no set of circumstances where a care trust, once it is established,
will start to operate a charging regime in relation to the NHS
care services. There is no question about that whatsoever. So
for those who are saying that this is somehow a back door route
into charging for NHS services in future, I simply say they are
wrong. That is not what we intend. We have made that position
very, very clear indeed. That is very clear the about the new
growth in intermediate care. It is provided by the NHS intermediate
services. They will remain free at the point of use. It is the
law. It is our policy. It is our intent and so it remains so.
Mrs Gordon
317. Chapter 10. I am very concerned about your
proposals for the community health councils as are many people.
I was quite astonished when this came up because although you
saw fit to consult community health councils and obviously valued
their opinions on much of the National Plan proposals, you obviously
did not feel that it was fit to consult them about their own future
or the likelihood or even the possibility that they could be abolished.
Now I am speaking as an ex-member of a community health council
and I would admit they are not perfect, we know that. Community
health councils would, nevertheless, say that they have not got
the resources or the staffing to carry out all the work that is
needed in monitoring advocacy services. But it is seems to me
that what you have done is to just throw everything into confusion.
You are replacing community health councils by some four different
groups, the liaison services, which I am not sure will be independent.
Perhaps you can tell me if they will be. Given they will be employed
by a trust, they will be placed within the trust, there is a danger
that they absorb the corporate identity of the trust and that
they will only deal with that trust. I am concerned about (a)
are they independent? (b) will they have an overview of the area
rather than just their own trust? I am also very concerned about
the fora which, if they are meant to be increasing democratic
accountability, I cannot see how they are going to work. I said
last week that the fact that half of them will be chosen at random,
it just seems to me incredibly haphazard. It is a bit like me
assuming that if I pick out letters from my constituents that
arrive during one year, they will be representative of all my
constituents. I do not see there is any way that choosing at random
is a democratic option. The other two issues which I think are
important are the right of access. At the moment, if a community
health council receives a complaint about a particular ward, I
know with my own community health council that they will go and
visit that afternoon. They will just have an on-spot visit unannounced.
What happens to that access? The statutory rights of the consultation,
it seems to me, are being watered down in the proposals. At the
moment, CHCs are consulted about significant changes. That will
be changed to the local authority scrutiny panel who may refer
major changes. That seems to me a diminution of democratic accountability.
I would like your views on that, please.
(Mr Milburn) If I can deal with that. Let me deal
with it in detail if I can. You have raised some important issues.
First of all, in terms of the consultation on this, well, we consulted
on the future of the NHS. As you remember, we consulted very widely:
members of the public and NHS staff and other organisations. There
were responses about many things. We got around a quarter of a
million responses dealing with a whole gamut from how you bed
pan patients to how you improve the standards of cleanliness on
the wards, to how you ensure that patients get faster waiting
times for care. There was an opportunity for all sorts of organisations,
including community health councils, to give their views, and
many did. You will also remember that we establish six Modernisation
Action Teams drawn from the health service at the national level
and the local level to look at specific issues. I established
a specific modernisation team to look at this issue of patient
empowerment because I am convinced about one thing above all else,
that if the National Health Service is to survive, let alone prosper,
then it has to become a more patient friendly service. I am afraid
that we have to change the way the care is provided so that the
only vested interest that counts is the vested interest of the
patient. That will include giving the patient a bigger and a louder
voice within the NHS which is what patients as consumers have
in many other walks of life and that helps to produce a lot of
change. Now the Modernisation Action Team's report, together with
the other five reports, helped to form some of the foundations
for the NHS plan, it did put to us a whole series of proposals
about how we can improve patient power, if you like, within the
National Health Service. I looked at that and it was my decision—that
is what I do for a living, I have to decide what I think is the
best thing for the National Health Service—that some of
these proposals and, indeed, where we wanted to get to on patient
empowerment were frankly incompatible with maintaining Community
Health Councils in existence. Let me tell you why. I think that
when CHCs were formed in the early to mid 1970s they were certainly,
at the time, way ahead of the game when it came to giving patients
and their representatives some say within a health care system.
Indeed, for very many years many companies looked to CHCs as embodying
precisely the sort of patient voice that many have been calling
for in many health care systems. Also I think that over time it
has become increasingly clear that trying to embody within one
organisation three quite separate functions simply has not delivered
the goods, and I think increasingly there have been concerns within
the National Health Service, there have certainly been concerns
within local government, and my understanding is that there have
even been concerns within Community Health Councils about how
well equipped they have been to undertake these three roles of
inspection, first of all of mediation and advocacy secondly, and
then thirdly of undertaking, I suppose, a monitoring role about
what the local health service is about. These are three quite
distinct functions. Now what we have tried to do in the NHS plan
is improve those three mechanisms, to enhance them to give patients
more and not less say and where it is right to do so, to further
enshrine their independence. Let me just run through each in turn.
As far as monitoring is concerned, I think this Committee, and
certainly individual Members of it, and I share some of these
views, have for very many years expressed concern about the so-called
democratic deficit within the National Health Service. Here you
have a public service which of course should be accountable nationally
but in the end operates locally and serves local communities.
Of course it should have a measure of accountability to the local
community that it serves. If we accept that is the case it seems
to me right and proper that the people who should be monitoring
the performance of the local health service and whether or not
it is delivering the goods in terms of the local community's needs
are those who have been elected by the local community, not those
who have been appointed in any way by me or anybody else. Because
I happen to believe that this is the right role for local government,
that is why the monitoring and scrutinising role which many are
concerned about within the National Health Service—To be
clear about this, there will be Chief Executives of Trusts who
will be uncomfortable about the idea of being monitored and scrutinised
by people who have been democratically elected but I say to them
and to the Committee that this is the right thing to do if we
believe in local democracy and if we believe in strengthening
the relationship between local communities and the local health
service. As you know, in future it will be the Scrutiny Committee
drawn from all the parties who will have responsibility for monitoring
the performance of the local health service and, indeed, referring
up concerns about a local service change, for example, a hospital
closure or whatever. I think that will strengthen both independence
and accountability.
318. Even though they are commissioning the
services themselves?
(Mr Milburn) Yes. Well, I am not sure they will be
commissioning local health services, will they?
319. If you have the health Care Trusts, will
there not be a conflict?
(Mr Milburn) No, I do not think there will because
remember it will be the all party Scrutiny Committee that will
be responsible for this. I tell you this: whenever there is a
local service change, I might occasionally get some noise from
a Community Health Council about it but invariably I get noise
from a local council about it. I do not mind that, and I do not
think anybody should mind it because I think in the end the local
health service serves the local community and those who have been
elected by the local community have a perfect right to have a
say about it. Of course in the end it will be a matter for me
to decide, but in terms of scrutiny and monitoring the appropriate
people to do that on behalf of the local community are those who
are accountable to the local community. I am afraid whatever the
virtues are of community health councils, accountability to the
local community is not their strongest card. I want to finish
this. This is a detailed question and I want to give a detailed
answer if I can.
1 Figure excludes elderly care beds at Tindale Crescent
Hospital Back
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