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11.36 pm

The Minister of State, Department of Health (Mr. John Denham): I congratulate my hon. Friend on securing an important debate on the funding of the Battersea primary care group. PCGs and primary care trusts are at the forefront of modernising the national health service, and we see them playing a key role in leading the way towards better patient services. I am aware from the debate and from recent correspondence of my hon. Friend's concerns about funding for Battersea PCG.

Before I address my hon. Friend's specific concerns, I want to clarify how PCGs and trusts receive funding, and to set out the background to my hon. Friend's points. Health authorities in partnership with primary care trusts, primary care groups and other local stakeholders should determine how best to use their funds to meet national and local priorities for improving health, tackling health inequalities and modernising services.

Prior to the establishment of primary care groups in April 1999, health authorities established contracts with NHS trusts and other bodies to provide health care services to meet the needs of their populations. Since then, health authorities have been responsible for allocating resources direct to their primary care trusts or primary care groups within national guidelines.

The formula used to set targets for PCTs and PCGs is essentially that used for health authorities. Health authority PCT and PCG allocations are based on a weighted capitation formula that combines the population number for the area with the levels and types of problems historically found in that area. The aim is to distribute NHS funds fairly on the basis of health care needs in the local population. Although the weighted capitation formula is largely based on utilisation, it includes a wide range of socioeconomic variables associated with the need for health care. It takes full account of the age profile of local populations.

A review of the existing funding formula used to distribute resources is under way. The NHS plan has made the direction of travel clear. We want reducing inequalities to be a key criterion for allocating NHS resources, as the NHS plan specifically says. The review is being carried out under the auspices of the Advisory Committee on Resource Allocation, which has NHS management, GP and academic members. We are adopting an incremental approach to the review of resource allocation. ACRA will make regular reports to Ministers as the review proceeds, and will move towards fairer resource allocation as improvements become possible.

When my hon. Friend described the situation in Battersea, he made no acknowledgement of the substantial increase in resources invested in the NHS in his area--as has occurred throughout the country. Although I understand his concerns, to talk solely about distance from target may be inadvertently to give the impression that substantial investment is not going into the NHS in his area. An increase of about 24.9 per cent. in resources in

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the area covered by the Battersea primary care group in three years is, by any measure, a more substantial investment in the health service of that part of London than was experienced in most previous years. Of course, we are only at the beginning of the unprecedented expansion of resources announced in the second spending review, which underpins the NHS plan. That is important in setting the context for the remainder of my remarks.

Overall, health authorities are receiving an increase of about £3 billion for 2001-02. That represents an average cash increase of 8.9 per cent.--a real-terms rise of 6.2 per cent. Merton, Sutton and Wandsworth health authority received an increase of £42.4 million--a 9.3 per cent. increase. That health authority received the ninth largest increase of any health authority in England.

Within national guidelines, health authorities determine the pace of change at which individual PCTs and PCGs in their area move towards their fair share. For 2001-02, the national guidelines state that all PCTs or PCGs should be given a 2.5 per cent. uplift on their unified baselines. All health authorities should distribute the funding for implementing the NHS plan to PCTs or PCGs on the same basis as allocations have been made to health authorities.

Within those parameters, health authorities are encouraged to make progress towards fair shares, especially for those PCTs or PCGs that are most under target. That should take into consideration the service investment that all PCTs or PCGs will need to make this year. In addition, health authorities will continue to follow the principles of pace of change guidelines that we set out in 1998, including moving towards equity, maintaining continuity and stability.

It is true--and, I think, right--that we do not want to take funds away from PCGs even when they are over target, although that is allowed in exceptional circumstances with their agreement. We want PCGs instead to move towards target through levelling up--by allocating bigger shares of the extra money that we are giving the NHS to those PCGs that are furthest under target.

Battersea PCG is one of the five PCGs and one PCT within Merton, Sutton and Wandsworth health authority, covering the three local authority areas. Battersea PCG consists of 51 GPs working in 17 practices, six of which are single handed. The PCG covers a very mobile and multicultural population of 99,000, which has a wide variety of health needs.

In terms of funding, Battersea PCG and Balham, Tooting and Wandsworth PCGs are under target. The Nelson and East Merton PCT and PCG are close to target, while Putney and Roehampton and Sutton PCGs are above target. We do recognise, however, that Battersea PCG is still about £3 million, or 4 per cent., below the figure suggested under the allocation formula.

Nothing in national policy prevents under-target PCGs from moving towards their ultimate target. Although national policy has stipulated a minimum increase in allocations for all PCGs and PCTs during the past three years, there is still scope for all health authorities to allocate extra funds to under-target PCGs and PCTs, provided that does not destabilise services.

Merton, Sutton and Wandsworth and all its stakeholders--including the primary care groups and trusts--agreed how the additional 9.3 per cent. funding should be allocated. They agreed to focus on maintaining stability within the local health economy by levelling up

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under-target PCGs and PCTs. A sum of £500,000 was made available for pace of change for Battersea and Balham, Tooting and Wandsworth PCGs within the borough of Wandsworth. That has moved the two under-target PCGs in Wandsworth 0.6 per cent. closer to target. This is the third year the health authority has set aside funding for the pace of change initiative. Battersea PCG has received the largest increase of any of Merton, Sutton and Wandsworth health authority's PCGs this year.

It is worth noting that all PCGs in the health authority, including Battersea, have confirmed in their 2001-02 service and financial framework that they will deliver the main NHS plan targets this year. One of the aims of the guidance issued nationally was to ensure that the targets set out in the NHS plan would be met in every area of the country.

My hon. Friend has mentioned that although Battersea has poor health indicators, that has not been reflected in the use of services. The health authority's public health department and the two under-target PCGs are working together better to understand the relationship between health needs and utilisation and the range of actions that may be most appropriate better to address health needs.

My hon. Friend mentioned many of the borough's specific problems, which relate to high teenage pregnancy rates, lung cancer and respiratory disease, coronary heart disease and diabetes. I understand the points that my hon. Friend made about funding, but it is also worth acknowledging the many initiatives that are currently in place in Battersea PCG to tackle those problems. The PCG is piloting a "young person friendly" GP practice in Battersea. There is the smart heart campaign, with the London ambulance service and the British Heart Foundation. Work is being done with Battersea research group, through the conduit project, to create active coronary heart disease registers in all practices. A multidisciplinary diabetes taskforce is being established, and there is a relatively new walk-in centre at Tooting.

Those initiatives reinforce what my hon. Friend says about the PCG's ambition and vision. Although I have absolutely no doubt that the PCG would like to make faster progress towards the target than has so far been possible, I am sure that it will recognise that the rate of increase in resources is far greater than practices in the area might have expected under the previous Government.

Of course, health needs are not always met just by increased funding; existing resources need to be matched to health needs. Currently, a health impact assessment is being undertaken in Clapham, which is expected to be completed in the autumn. Such reviews should enable the health community to develop appropriate pathways of care between primary and secondary care, ensuring that the right person delivers the right treatment at the right time in the right environment.

The concerns that my hon. Friend has raised about funding and health inequalities are those that drive the Government's policy to modernise primary care services. They are the very reasons why the NHS plan sets out the

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vision and the ambition that all PCGs will be in PCTs by 2004. The PCTs will have control of much larger budgets. They will have greater flexibility and influence over local health care decisions, as PCTs, rather than health authorities, will be responsible for commissioning services in the future.

I am aware that the PCGs in Wandsworth are considering applying for PCT status as one PCT for the whole borough next year. As I might well have to take a decision on that proposal in the future, my hon. Friend will understand that I should not comment further, but it is legitimate for me to say that, as part of any consultation on any PCT proposal in any part of the country, the question of how the trust intends to deal with health equality issues, patterns of under-provision and unequal access to services are perfectly legitimate issues to be raised by the public, local authorities, patients or others as part of the consultation process. Indeed, such issues are included among those that should be addressed in any application for a PCT. So there will be opportunities for such issues to be addressed as part of any PCT proposal in any part of London.

As part of the allocation to health authorities, more than £54 million was made available last year to improve access to primary care in the United Kingdom, of which London received £8 million. In Battersea, that has enabled an enhancement of the intermediate care team and packages of care; the extension of the falls prevention project; a reduction in waiting times for community-based physiotherapy; and the employment of a PCG-wide phlebotomist. It is good to see that, in that part of London, the additional funds allocated to primary care are being put to good use.

PCGs and, increasingly, PCTs play a central role in the development of primary care itself and in the future shape and direction of the health service. Merton, Sutton and Wandsworth health authority has followed national policy in its funding allocation for 2001-02 and it is inevitable that, as with the national allocation in which there are over-and under-target health authorities, there may at any one time be over-and under-target PCGs and PCTs. The speed at which we can move health authorities towards their targets and the speed at which health authorities can move PCTs and PCGs towards their targets has to balance two issues: the desire to move health authorities progressively towards equity as represented by weighted capitation targets, and the need for across-the-board increases to maintain continuity and stability in the service and to make progress nationally in priority areas.

I hope that I have indicated to my hon. Friend that we are making progress nationally and in the health authority. Substantial additional funds are available to the national health service and, in the longer term, a review of the national funding formula that is under way will seek more explicitly to tackle the issues of health inequality that he raised in his speech.

Question put and agreed to.

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