Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 300 - 319)



  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.


  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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