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Mr. Hammond: Can the Minister explain why the Government have deemed it necessary to say that 25 per cent. will be graded green but not to make any estimate of the number that will be graded red?
Mr. Denham: In the spirit of rewarding success and best practice and performance, we judged that it would be useful initially to state the number of trusts that we thought would make green-light status. We have been anxious to avoid the idea that first we thought of a number of failing trusts and we are now going to find out which ones they are. It fits with our philosophy of running a system, which encourages success and best performance.
Mr. Hammond: I am sorry to press this point, but if the Committee is considering the way in which these arrangements will work, we have to understand whether we are talking about 20 per cent. or 0.5 per cent. Nothing that the Minister has said yet has indicated whether the red light is to be an exceptional measure for a seriously failing trust or whether it is to be a significant percentage of the total number of trusts and health authorities.
In my view, it is impossible properly to evaluate how the system will work in the absence of that information. Perhaps other members of the Committee feel the same. Can the Minister give us any indication as to the expected order of magnitude? Does the Minister expect red-light organisations to represent 1 per cent. or 20 per cent? Can he at least give an indication of the numbers?
Mr. Denham: No I cannot, for the reasons which I gave earlier. The traffic-light system, which we have been discussing, does not depend on clause 2 of the Bill. The discussion has been a useful platform for that discussion, but clause 2 is not required to implement the traffic-light system. It would be quite wrong to say in Committee, however helpful it might be to the hon. Gentleman, that we think that there will be a particular number of red-light trusts as it would affect the entire process.
Mr. Hammond: The Minister did so for green.
Mr. Denham: I have explained why we have not done it for green and I rest my argument. The hon. Gentleman will have to decide whether or not he agrees with me.
Question put and agreed to.
Clause 2 ordered to stand part of the Bill.
Clause 3
Supplementary payments to NHS trusts and Primary Care Trusts
Mr. Hammond: I beg to move amendment No. 69, in page 3, line 15, at end insert—
`(5B) If the Secretary of State makes any payment under subsection (5A) above he shall publish details of such payment and the reasons he considered it appropriate to make such payment.'.
I jotted down in my notes that I would open by saying that I certainly did not intend to rehearse the same arguments again. In the light of our exchange over the past 90 seconds, I am tempted to revisit that thinking. It is incredible that the Minister is telling us that the Government have no idea at all on this issue, which is equally relevant and valid in the context of clause 3.
Most of the points that have been raised in the debate on clause 2, which deals with health authorities, apply equally to clause 3, which deals with NHS trusts and primary care trusts. The amendment, which requires the Secretary of State to publish details of payments that he makes and the reasons he considers them appropriate, once again seeks to put some transparency into the system. Under clause 2, the Secretary of State has the power to override the formula and give money to health authorities on criteria other than the funding formula, but in clause 3 the Secretary of State is allowed to bypass health authorities altogether and to pay money directly to trusts and primary care trusts. The issues that were raised in relation to health authorities therefore reassert themselves here and for trusts they are probably even greater.
The Secretary of State can make such payments subject to conditions. From reading the explanatory notes, it is clear that there might be specific conditions on how the money was to be used. The conditions might effectively passport the money going to a trust or a primary care trust to a specific purpose—perhaps to fund payments to members of staff.
In clause 3, the Secretary of State is taking powers to bypass the formula, bypass the health authority and even to bypass the trust or primary care trust by giving it money that could be subject to a specific requirement to use it for a single, designated purpose.
Mr. Michael Jabez Foster (Hastings and Rye): What is the difference between that and Tory proposals to hand out even more cash directly to schools than have the present Government?
Mr. Hammond: I am sure, Mr. Maxton, that you would not want me to elaborate on Conservative education policy, but the difference is that the Secretary of State has a specific power of direction to go behind the health authority, give the money to the trust and require it to be used for a particular purpose. I could launch a partisan discussion here, but I acknowledge that in certain circumstances everyone might agree that it was helpful for the Secretary of State to have that power. However, most right hon. and hon. Members would also agree, if they thought about it for a moment, that real problems of accountability arise in respect of the proper direction of substantial sums in an organisation as large as the NHS.
We cannot endorse a degree of micro-management that would allow the Secretary of State to make discretionary payments to individual PCTs for a specific purpose—£20,000, for example, to hire an extra person of a certain description in a certain PCT in Northumberland. That is a step too far. The Secretary of State should not have such power: in any case, he could not use it effectively. The rationale of devolved authority in an organisation on the scale of the NHS is that the central machinery cannot be sensitive to the needs of local organisations and structures. Parcelling out small sums of money from the centre is highly inefficient because the costs of going through the allocation process are relatively high in proportion to the amount involved.
Those are our main concerns about clause 3. I have aired the issues comprehensively. The amendment is designed not to correct all the deficiencies, which would wreck the Bill, but to add a measure of accountability and scrutiny by requiring the Secretary of State to publish details.
Dr. Peter Brand (Isle of Wight): I am uneasy about clause 3 for several reasons. Currently there is a partnership between commissioning health authorities and trusts that deliver, in the case of primary care trusts, through secondary commissioning. The relationship is usually positive under that scheme and it is clear who does what.
I am anxious about allowing the Secretary of State to fund trusts directly and bypass health authorities because it will undermine the process of co-operating locally to find the right way forward and lead to special pleading by the trust and the authority. It will leave the Secretary of State with directive powers to determine what happens in the locality. That may not be what the Government intend, but it is almost inevitable.
The hon. Member for Hastings and Rye (Mr. Foster) raised a relevant point in his intervention. I oppose the Conservative idea of bypassing local education authorities, because that denies the support that, for instance, village schools can get from their local education authority. However, at least the Conservatives have been honest about it by proposing to abolish a tier of administration and manage it directly, so saving costs. Essentially that is what their system would do. It is central management of schools, rather than devolution down to schools.
Mr. Hammond: Would the hon. Gentleman also acknowledge that what is being proposed in the Conservative education policy is not that money should be allocated on a discretionary basis to individual schools, but that it should be allocated by virtue of performance?
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Dr. Brand: We are not discussing this matter in terms of education policy. However, there is a fascinating parallel in that there is a clear direction in the Government's enabling legislation towards directly managed trusts which are providers of services rather than commissioners of services. If that is the direction that the Government want to take, they will be wasting a lot of House of Commons time, as well taxpayers' money, by keeping both parallel systems going. It is important that the Minister makes it clear whether the provisions under clause 3 will be exceptional; whether pilots will be carried out, because of national interest and policy; or whether this will be a routine way of getting something delivered through a trust, bypassing health authorities. Given that that is unclear in the Bill and explanatory notes, it would be helpful if the Minister at least accepted amendment No. 69, because it would allow us to evaluate whether direct ministerial largesse in this instance was exceptional or would become routine.
Mr. Denham: It is probably helpful in responding to the amendment to talk about the scope of clause 3. It may be optimistic to think that we will avoid a stand part debate; that will be entirely in your hands, Mr. Maxton.
The provision will indeed enable direct payments to NHS trusts and PCTs. The power will be used for the direct improvement of the provider infrastructure in the trust, to enable provision of better services. This year, although we were not able to use that power, we have been able to make two allocations, of about £30 million each, to fund hospital cleaning. We have to accept that it was a direct initiative by central Government to bring about a rapid improvement in the quality of hospital cleaning. Members of the Committee will have to form their own opinion whether it is desirable that central Government should take an initiative in response to public concerns to bring about an improvement in hospital cleanliness outside, rather than simply leave everything to the local commissioning process. Our judgment is that that was the right initiative to take.
I must explain why, in order to do that, it would help to have clause 3 in the Bill. As has already been pointed out, at the moment payments to NHS trusts and PCTs as providers should be made only under the terms of a service agreement—in other words, in return for a service provided. Allocations go to health authorities or PCTs under the current arrangements for the commissioning of services. They are not appropriate for making payments to NHS providers—NHS trusts or PCTs—to reward staff performance, or necessary to improve facilities.
If we want to make money available direct to trusts to bring about higher standards of cleaning, we end up having to direct health authorities or PCTs as commissioners to make specific payments to trusts under a service level agreement. That is an onerous and laborious procedure. It involves the Department in determining the lead health authority or PCTs. It means aggregating amounts for NHS trusts accordingly, sending duplicate letters to health authorities, PCTs and NHS trusts informing them of their imminent funding, and adjusting health authority cash limits before making cash advances to health authorities and PCTs.
The point that needs to be understood is that, as we have shown this year on the money for hospital cleaning, it is perfectly possible for central Government and the Secretary of State to decide to undertake such an initiative. However, the legal route that has to be followed to get the money through the system to the place where the cleaning takes place is laborious. I believe that if we are making direct payments of that sort it is better to do it in a simpler way. Similar considerations might apply in the future to the performance fund that can be directed to trusts by the Secretary of State, through the health authority. We would be cutting out a fourfold duplication of effort and sometimes a considerable amount of elapsed time between central Government deciding to take an initiative and it actually arriving in the trust where the action is to be taken.
It is important to reassure the hon. Member for Isle of Wight and the Committee as a whole that we do not wish to undermine the role of commissioning. We created primary care trusts to strengthen the commissioning process. We have put in place, at national and regional levels, new arrangements for the commissioning of specialist services. Local commissioning decisions are now made more effectively by those who best understand local needs.
I recognise that there are occasions where it is reasonable and right for the Secretary of State to wish to bring about change at local level through direct funding to trusts. This provision provides us with the ability to do so. There will be differing views on whether that should be done, but my point is that the power is already in the commissioning arrangements to pass money directly. If one is going to take this approach, it is more efficient, effective and more transparent to do it in this way.
I can understand what the hon. Gentleman seeks to achieve. He wants to make sure that details of such payments are published and their purpose is apparent. There is a slight irony about this debate because, normally, the complaint from the Opposition is not that we secretly allocate money to the health service, but that we inadvertently announce it two or three times. To be accused of wanting to push money out to the health service and keep it a secret is a new experience. I do not think that there is any real danger of that happening.
Formal accounting procedures are already in place. We ask Parliament to vote the estimated expenditure of the NHS before the start of the financial year. We publish actual expenditure funded through allocations at the end of the year in the appropriation accounts of the Department. Financial accounts of NHS bodies are published after the financial year end and those include details of income and expenditure. Those arrangements provide a fair amount of information, but should that not be sufficient it is clear that this information will need to be provided on request, for example, in answer to a parliamentary question. I do not see the need to make this amendment.
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