Members present:

Mr David Hinchliffe, in the Chair
Mr David Amess
John Austin
Andy Burnham
Mr Simon Burns
Julia Drown
Sandra Gidley
Siobhain McDonagh
Dr Doug Naysmith
Dr Richard Taylor


RT HON ALAN MILBURN, a Member of the House, Secretary of State for Health, and JACQUI SMITH, a Member of the House, Minister of State, Department of Health, examined.


  1. Colleagues, can I welcome you to this session of the Committee on the expenditure inquiry and particularly welcome the Secretary of State and Minister of State as our witnesses. We are very pleased to see you once again. Can I repeat my thanks that I gave to your officials for their co-operation in this inquiry. We do appreciate that there is a lot of work involved and we are grateful for the efforts made by the Department in responding to our questions. Could you briefly introduce yourselves before we start.
  2. (Mr Milburn) Alan Milburn, Secretary of State for Health.

    (Jacqui Smith) Jacqui Smith, Minister of State in the Department of Health.

  3. Thank you. I was conscious when we had the officials a couple of weeks ago that we did not perhaps do justice to the personal social services side of your responsibilities. I wondered whether we might start with some of the issues arising from this report and also some wider concerns within the Minister of State's responsibilities. I do not know who would want to answer these questions; I leave that to you. I wanted to ask a question, first of all, about the figures on looked after children which I found of interest because I think it is fair to say that in the early 1990s we reached a post-War all-time low of about 45,000 children in the care system, but from 1997, looking at the figures from the current Government, these appear to have increased. It is a trend that I find worrying and I am not quite clear of the reasons behind it. If you look at your figures from 1997, it was 51,400 gradually increasing until the 2001 figure of 58,900. I have not got the latest figure although you may have it. Bear in mind the steps that have been taken by the Government to very seriously address social exclusion, things like the Sure Start programme and other initiatives (which I certainly very strongly welcome) why do we apparently have more children coming into care?
  4. (Jacqui Smith) I think, Chairman, you have probably answered your own question. Certainly our view would be - and yes there has been an increase - our latest survey suggests that the numbers in care are about 61,000 ---

  5. So it is a significant increase then on 2001?
  6. (Jacqui Smith) It is a small increase. I know that one of the things you have been concerned about is the balance between the sort of preventative work that we can do and the spending that relates to children that are in care. There is a suggestion that, whilst you are right there has been a shift towards the number of children in care, the amount of spending on those for whom social services departments have responsibility but who are not in care has remained at the same sort of proportion, even though the numbers there have gone down slightly. So there does seem to be a slight shift of priority in terms of the overall spending patterns towards prevention. To go back to your original question, yes, the numbers of children who are in care is of concern. I think it relates to some of those broader issues, as you suggested, to which the Government has to pay attention, whether or not those are general issues around social exclusion like some aspects of child poverty (not that I am suggesting that children always get taken into care because of issues around poverty), wider action in relation to drugs, or broader issues with relation to social exclusion. That is why some of those cross-cutting initiatives, for example Sure Start, are likely to have an impact, I would expect, in the future in a preventative way on the numbers of children going into care. What is also important is what happens to those children when they are in care. That is why quite a big emphasis of the Quality Protect programme and the investment there has been on how we provide stability for children when they are in care and what we need to do in some cases to get them back out of care again.

  7. In looking at what we can analyse from the figures that your Department provides, are you satisfied that the methodology of the SSIs on local authority performance in this area is carried out in a way that is meaningful in respect of comparisons that are actually made? We are working around averages without detailed analysis of performance. How are we in any way able to measure the preventative work to which we are referring? To me if we were taking steps with prevention then we would not have had a 10,000 increase in the number of children in care. I find this very worrying and inconsistent to me with the wider policy directions being taken by the Government. This is not a trend I would have expected to see.
  8. (Jacqui Smith) There are two questions there. Firstly, am I confident about the SSI approach to prevention -

  9. Not the approach but the measurements used in terms of performance.
  10. (Jacqui Smith) You are right, it is difficult to have hard performance indicator measures about prevention and what we need to have is some sort of proxies in terms of children's outcomes with relation to spending on prevention, but that is also, of course, why we need - and this really links into the second part of your question, Chairman - to take action across government on prevention, and I am sure the Committee will be aware of the work announced by John Denham in relation to how we get the different agencies - so social services and the other agencies who are working together at the local level - to bring their strategies for prevention together. And this is not about "let's have a new strategy"; this really is about much better joint working across the considerable areas where the Government is both investing money and has already seen benefits in terms of the way in which agencies work best together.

    Siobhain McDonagh

  11. I know it is a very London-based point but I wonder how far the increase in numbers is related to the numbers of unaccompanied minors that come and claim asylum. I know that the most devastating impact on the numbers in care in my own borough of Merton normally happens between Christmas and New Year when they regularly get 10 or 12 children arriving at Heathrow and it falls on Merton to pick them up. On quite a small borough that has an enormous impact. I do not know whether that has something to do with the increase.
  12. (Jacqui Smith) That has a very big impact on particular social services departments. Kent, for example, we know has had particular problems. I will write to you if I am wrong but I suspect that the largest number of those unaccompanied asylum seeker children are generally supported by social services departments outside care. So they tend to be 16 and 17-year-olds and they are not taken into care. Some of the younger ones may be but on the whole there are other ways of supporting them. I know that in London there are some good projects that we are supporting as a department along with the Department of Health on how we can provide, for example, better housing support for unaccompanied 16- and 17-year-old asylum seekers, and link that into the other sort of support that they need as well, but that would not be included in the numbers of children in care.

    Mr Burns

  13. Minister, as you will be aware, for a number of years local authorities have consistently on average overspent on their SSA on social services and some of them have diverted money from the care for the elderly to meet their statutory requirements for children's care, for example. All of them agree that there is not enough money, despite the funding settlement for this year and the next two years, and I was wondering, given that this has led a number of local authorities to use their, to put it crudely, bulk purchasing power to force down prices in the private sector, if you could elaborate more on your written answer about the impact that the Competition Commission Appeal Tribunal decision in Better Care will have on local authorities?
  14. (Jacqui Smith) There is a series of assumptions in that question, Chairman. Firstly, I have to say your interpretation of diverting of resources can also be interpreted by local authorities as making correct decisions about what their priorities are locally.

  15. I am not arguing that.
  16. (Jacqui Smith) Secondly, on the implication that bulk purchasing power has been used to force down fees, of course, evidence from this year - and that is not our evidence, that is (?) evidence - is that as we have increased investment into local authorities, and specifically, as local authorities have looked at the way in which they are using their Building Care Capacity Grants bringing 300 million in, there has been evidence of fees actually increasing to care homes, and we do consider that to be important. Alan made very clear when he announced details of the older people's package some of the details about how the additional investment over the next three years would be spent, but where it is necessary to maintain capacity in the care sector it is appropriate that some of that extra investment is used for fees. On the specific point about Better Care, our view of the Better Care judgment is that, if you like, it goes some way towards clarifying, although of course in a very different situation to the situation that most English social services are in, that there was justification in that particular case for defining the authority as an "undertaking" with relation to the Competition Act. If what you are trying to create is a case that that has very wide implications in England, we do not subscribe to that view because we do not believe that that is a conclusion of that particular judgment.

  17. Why not?
  18. (Jacqui Smith) Because it was based on the very particular circumstances of that individual case. What it did was it made a particular judgment about whether or not, as I have suggested, the authority in that case was an undertaking; it did not make any judgment about whether or not they were correctly or incorrectly using their purchasing power in those particular cases. If what you want to say is that there is a broader issue about how local authorities should work in partnership with their private partners in order to commission care, that I would very much take on board. I think that that is a very important area in which in very many cases local authorities, in the terms of way in which they act both now and with the extra resources that will be coming into their older people's services, need to improve on the way they are operating. That has been a focus, for example, of our Change agencies in working with specific local authorities on better commissioning, it has been a focus of the Strategic Commissioning Group that I chair and, of course, it was the subject of the ground-breaking agreement we published about good practice on commissioning.

  19. Would you be prepared, given that there is some confusion about the Better Care decision, to provide each one of us on this Committee as soon as conveniently possible with an explanation of exactly what the decision means and how you think it relates to the world of care for the elderly?
  20. (Jacqui Smith) I would certainly be willing to provide our view of what the implications of it are.

  21. That is great, but can I now move closer to home because you did mention that there was evidence that fees were rising in the long term care sector from local authorities. That is an interesting point because, of course, as the Member of Parliament for Redditch you will be acutely aware of what is going on in Birmingham where I do not need to remind you (but I may need to remind the Committee) that there is, by any definition, a crisis in care in Birmingham because one is seeing a significant closure of homes, and loss of beds and capacity because of what Birmingham City Council social services department is prepared to spend on beds in the private sector. I know that you have had representations from the different organisations in Birmingham, as have Birmingham MPs and one of your colleagues Stephen McCabe, of course, has tabled an Early Day Motion calling on your Department to do something to help the problem that is continuing. Given your proximity to Birmingham and your knowledge of the problem, who do you think is in the wrong and how do you think the situation can be resolved to put an end to the loss of capacity and the driving out of business of badly needed homes in that city, because it seems that not the Department of Health but Birmingham City Council has got its head in the sand and will not recognise there is a problem.
  22. (Jacqui Smith) Firstly, Simon, can I say what a pleasure it was that you came to my constituency and took such a close interest in what is going on there.

    John Austin

  23. I hope the rest is going to be more truthful!
  24. (Jacqui Smith) But with relation to Birmingham, I think I have to say once again that I would dispute with you the suggestion that there is a crisis in Birmingham.

    Mr Burns

  25. Speak to Stephen McCabe, he is the Labour backbencher.
  26. (Jacqui Smith) I do not think he has called it a crisis. I would not disagree with you that there are considerable problems in the Birmingham social services department. That of course is why when we did our first star ratings of social services departments Birmingham had a zero star rating and therefore has been working with a performance action team that we have sent into the city since then on a variety of issues, some to do with their children's services, some to do with their older people's services. I also know that there is a lot of concern amongst members of the Birmingham Care Consortium about the relationship between Birmingham City Council and care home owners. I also know that there is a split in the Birmingham Care Consortium. What is quite interesting is that recently I had a meeting with representatives from Birmingham City Council who brought with them care home owners because I had specifically said publicly to Birmingham that I was concerned about the breakdown in the relationship between the City Council and those partners in the private sector that, you are quite right, they depend on to provide the quality of care. I was somewhat reassured by the fact that certainly the care home representatives that came with that particular delegation spoke about the efforts that the City Council was making to rebuild that relationship with private providers in the city, and I know that they have worked quite hard to negotiate a package not only of fee increases but also, for example, using some of the considerable extra resources that they got as a City Council from the Building Care Capacity Grant. Remember. Remember, we recognise that Birmingham did identify the fact that there were areas where there were particular problems with delayed discharge, for example, and that is why out of the 300 million Birmingham has got somewhere around 9 million of that money. They have been able use that both to look at fee increases and to look at how they could support private providers in training their staff, so I think some progress has been made and, of course, the key determinant of the progress that is being made there is the fact that they have had some success - they still have a long way to go - in reducing levels of delayed discharge and I think the general consensus in the health and social care environment in Birmingham is that there is a better and more constructive working relationship than there was perhaps this time last year.


  27. I do not want to dwell on the issue of Birmingham because I do not know Birmingham as well as Mr Burns or yourself, Minister, but why has the Government not trumpeted the successes of developing alternatives to care home capacity, because it strikes me in the numerous exchanges we have had downstairs about this issue that we are bogged down in this debate about whether it is 19,000 or 50,000, now revised to 60,000 by the Conservatives. We estimated it was 31,000 delayed discharges. Surely we ought to recognise that there is some degree of success when we move away from the dependence upon care home capacity and the number of beds. Why is the Government not trumpeting that as a success and why are you being so defensive about the reduction?
  28. (Mr Milburn) We are not being defensive about it, he said, being defensive! It is like a lot of these things - inevitably throw another bed on the health service - people get terribly focused about the acute sector and not primary care. It is true that care home places are a very, very important element of the spectrum of care that should be available for elderly people. I have said on many occasions downstairs and in Committee that for very many people and very many families a residential care home or a nursing home would be an appropriate choice for that family or for that individual. But, equally, we cannot have a situation where the only choice on offer to people is care homes. Care homes do a good job of work and so on, however, they are not the be-all-and-end-all of elderly care, and what we know from every single survey that either we have conducted or anybody else has conducted of elderly people themselves, their number one choice is to be as independent as possible for as long as possible. That is what we all want. It is what we want in our lives and it is what older people want as well. What we have got to do with the Government, with the private sector and with the local government organisations and so on is to foster a greater choice of provision for people. When I made a statement in the House a few months ago, that is precisely what it was about; it was about stabilising the care home market and, Simon is right, there are problems in particular parts of the country, largely driven by increasing in property prices and so on, and if the local authorities can use some of the extra resources where it is necessary to stabilise the market to increase fees, that is a matter for them to determine. We cannot determine that centrally. It would be quite wrong for us to do so because Birmingham is very different from Darlington, Wakefield or London. Equally, we have got to open up more choices and that means more extra care housing, more supported housing, more home-based care, more free community equipment and more elderly people, in time, having a greater choice over how they decide for themselves how care is purchased. The package of measures I was able to announce means that at the end of the period 2005-06 we will have more old people cared for where they want to be cared for which is at home. People always want to do an either/or about this. When I go and speak at a primary care conference, I always get people there slagging off the hospitals. If you go and speak to an audience of hospitals they say the problem is with primary care. We can all give out if, frankly, it is either/or; we have got to have both and crucially we have got to have a spectrum of services in each and every area that allows older people and their families to make the appropriate choice for them, and that is what we are trying to do.

  29. Do you foresee a time when a Secretary of State - and figures come up where we have lost 25,000 beds - will feel able to stand up and say that is an achievement rather than a problem?
  30. (Mr Milburn) You have got an ageing population. You have not just got an ageing population but you have got more people being more acutely dependent towards the end of their lives in very old age, 85 plus. You only have to go to any nursing home to realise what the demographic make-up of a nursing home?

  31. The Minister and I had an exchange when she was last before us on this issue. I pointed out that other countries had a similar proportion of elderly people who do not have any form of institutional care. Do you see a time when we may move towards that?
  32. (Mr Milburn) That is why we have got to get the spectrum and the balance right. As I said in my statement, we have got to move towards a situation where more and more elderly people have the choice of being cared for as long as possible in their own home rather than facing only one choice which is care in a care home. What we will do, with more intensive packages of support and the gamut of things and more levels of support, too, over these next few years is we will allow a greater proportion of elderly people to be cared for where they want to be cared for, outside an institutionalised setting, and long may that trend continue.

    Julia Drown

  33. Many members of the Committee would welcome your target by 2005 of twice as many people receiving intensive help at home, but the data supplied to us for this public expenditure inquiry shows there is more intensive help going to fewer people, so how are you going to achieve this turnaround which the Committee have pursued on a number of occasions, and the idea that low-level help may be really effective, preventative help. We have not got the concrete evidence to show that to be true but all the anecdotal evidence would suggest that to be true. How are you actually going to achieve that turnaround?
  34. (Jacqui Smith) The first thing to say is the Chairman accuses ourselves of not trumpeting our success. You are right - it is a success that we have a 38 per cent increase in those people receiving intensive packages of care in their own homes since 1997 and that we have got more hours of home care being provided in home since 1997. The problem, I think, comes when you define low level care as only being about the hours that somebody comes in and visits you in your home. My argument would be that in the past sometimes what local authorities have done is to send in a home help for perhaps sometimes as little as 15 minutes a day for something which is really not appropriate for the older person. That goes on for a long period of time and it assumes that no effort is being made to ensure that that older person is enabled to be independent. Some of the other things are not included in that figure of home care, like community equipment services, like the use of occupational therapists, like people going out to day care and receiving support there, like housing adaptations, where we are also with the Office of the Deputy Prime Minister investing more. Those things in terms of low- level support are more effective in providing the sort of care that people need to be independent and, in fact, if you look at those figures, in the last year there is a figure of something like 1.3 million people who have been supported through that variety of low-level care. Perhaps the accusation is we do not record that information properly and I think that that would be a fair accusation. I do not think we do. I do not think our data collection has kept up with the new ways in which we need to provide support for older people, all the various different elements of it.

    John Austin

  35. On the ability to support and maintain someone at home rather than in an institution, whether it is high-level care or low-level care, there are many more people, in my view, who could be cared for at home if their home were suitable, but of course the provision of suitable homes, ie sheltered housing, is not your department's responsibility, so in terms of planning for the future and in terms of what level of capacity we need, how does the Department of Health tie in with the other providers of bricks and mortar to provide say sheltered housing whether it be local authorities or housing associations?
  36. (Mr Milburn) I think there are two things there. I think there is what can be done to better help people stay in their existing homes. You must find it, I find it in my constituency that one of the most frustrating things for older people, and largely their families who come along to surgeries, is about the delay that they face in getting some pretty simple, bog-standard community equipment that makes all the difference as far as maintaining independence is concerned - rails, ramps, showers, and all that sort of stuff. That is a real problem and local authority performance is extremely variable, it has to be said, and of course presently, although we will change this before too long, there is a charge for that fairly low level but pretty vital community equipment. The stuff of handrails and hoists is never going to make the newspapers, with respect, but it is hugely important for lots and lots of elderly people. If we could provide more of it, first of all, and, secondly, if we could provide more for free, which is what we want to do and, thirdly, provide it more quickly which is why we have set some pretty demanding objectives for local authorities, I think that, in Julie's words, is a very simple, good, cost-effective measure that will prevent people necessarily having to go into hospital and indeed remain independent when they want to remain independent. That is point one. Point two is what can we then do for those people who do need an increase in intensive help and support, but outside of the Chairman's institutionalised setting, outside of a care home - extra supported housing and so on and so forth. There are some fantastic and very innovative schemes. I visited one in Leeds in the last year which they put together with one of the housing associations - I do not know which one - which is very good and we would like to encourage. So we are in discussions in terms of what our responsibility as a department is with other government departments and we have been in discussions with housing associations to see if we can migrate them into this market. There are a number of housing associations potentially interested.

  37. But the supply of that will have a profound impact on the numbers of residential care beds that are required.
  38. (Mr Milburn) I think in the short-term given the capacity constraints that exist, particularly in some parts of the country (and, crudely, the further south you go, the worst the position becomes) then I think we need to see a modest increase in care homes places for the interim period, but we need to see quite a big expansion over and above that of intensive home care support, low-level, home-based support. I said in the Commons that we want to see a 50 per cent increase over the course of the next three or four years in this form of extra services and care enhancement, precisely because it works. It both affords people dignity and independence and yet provides support for people. It seems to me to be a good model and one where we are trying to actively encourage, not just local authorities but housing associations and potentially other players to get involved. There is no reason in theory, for example, why local primary care trusts or the National Health Service should not get engaged in this. If there is a problem with hospitalisation rates or readmission rates, the problem of people being in hospital who need not be in hospital, this is a perfect reasonable thing for PCTs to think about their role in this. Very often when you go into one of these places like the place in Leeds what you find is that the building is one thing but there is a huge focus of different services all providing services there, whether it is leisure or the Health Service with occupational therapy and so on and so forth. There are some models on which we can build.

    Julia Drown

  39. Going back to where we were, I would not necessarily want to encourage a lot more data collection, but I would want to encourage better low-level services to be developed where that is possible. Given the huge pressure on social services departments across the country - child protection, the vulnerable elderly and so on - how will you get those social services departments to find money to spend on low-level services?
  40. (Mr Milburn) Can I say one thing just to begin with and then Jacqui can add something. As you know, in a sense one could say, although it is an unfair charge, that we created a rod for our own backs, because our commitment is - and I think it is a right commitment to make - that we will move towards less and less earmarking of resources for social services generally. That came up with the Government White Paper published back in December. I think that is right because in the end I cannot decide what is right for Birmingham any more than you can. That has got to be a decision taken locally by local council taxpayers and by the government through inspection of the councils' accounts.. So there is a low level of earmarking overall and I think we are going to reduce earmarking for social services by about 40 or 50 per cent over the course of the next few years. However, within that what we were very conscious of when we came to look at how best to use the resources when we came to look at the spending review was precisely Simon Burns' point that almost inevitably, because there is a statutory requirement on social services, what they tend to put first, for perfectly understandable reasons, is children's services, and there is no argument about that. Life is always full of difficulties and it is difficult in central government and it is difficult in local government. What we cannot have is one set of decisions adversely impacting on other services, which was why there was quite a high level of earmarking for the elderly care bit of social services. There is more, it is true to say, of the elderly care package within social services which is being specifically earmarked precisely to avoid the situation that Simon Burns described earlier, which means in some ways we are saying to local authorities, "Look, these are areas where you need to spend money."

  41. You mentioned there about it being right for local authorities to dictate the shape of the local market. Would that be the case even to the extreme that if there were a complete monopoly, say, by a private provider in a particular area that you would feel comfortable with that?
  42. (Mr Milburn) I think it is their decision in the end. What is our concern here? Our concern in central government has got to be to ensure that the standards that are being set nationally are being met.

  43. Would that be the same if it was all in-house provision as well?
  44. (Mr Milburn) That is a matter, I think, for local authorities to determine and they will have to report on both standards and value for money. In the case of Birmingham, for example, Simon has raised a perfectly reasonable point, the local authority will have to explain both locally and nationally whether for the money it is getting both from central government and the local council taxpayer it is getting both better outcomes/improved standards on the one side and decent value for money. In a sentence, we are not prescribing a model that says it has got to be this. However, it would be pretty foolish, would it not, if there is capacity available and organisations which can provide local services for there not to be a dialogue and partnership approach to provision.

  45. Finally on these issues of where is the right place to take decisions, I know it is historical reasons that means there is a national system for deciding for charging for residential care. You had the intention with Fairer Charging of trying to look at a fairer framework for other types of care - for care in the home and so on. But what is the reasoning behind there being ultimately a national approach for charging people when they are in residential care but a local one when you are charging for other services which especially in the light of recent discussions about them being really two alternatives - either being at home or being in residential care - it is hard to hold on to the logic for that?
  46. (Jacqui Smith) I think there is a certain amount of history here, to be honest with you. I think we also need to look at whether or not that history delivers what it is that we want to see in relation to both of those two areas. I have no reason to think that moving away from a national means test with relation to residential care would benefit us in terms of the sort of objectives we have been talking about today. In relation to non-residential care we have not said we want to move to a position of a national means test, because that is an issue that is, rightly, for decision at local authority level and, of course, some local authorities, a very small number, have decided that they do not wish to charge at all in that particular area. What we have said, and this was obviously a recommendation that came out of the Royal Commission, is that where local authorities are charging for non-residential care that it is right that there is a framework that puts into operation the sort of principles that most of us would think are right round how you design a charging system. That was the reasoning behind issuing the guidance on charging for services. The sort of principles in there are that we should not be charging people on very low incomes, that we should be recognising disability expenditure before we are charging out of disability benefits, we should be promoting what good authorities already do, to ensure that their clients are making the most of their benefit entitlement, which some of them are not, there is a very strong emphasise on that. Can I say one other thing about how we make sure we get to where we want to go, we have done a lot of work in terms of how we performance-manage social services departments - I touched on star ratings earlier - in relation to older people we already have Help to Live at Home, a performance indicator which will be a very important benchmark of the success that local authorities are having in developing that. We will, given the emphasis we want to place on community equipment, want to develop a performance indicator round community equipment as well as an important output measure of how local authorities are delivering on this objective of supporting people in the broadest possible way.

    Mr Amess

  47. I am listening carefully to what is being said but it seems to me as if ministers are being complacent. If you have elderly people who need to be looked after and you cannot do it yourself the manyana attitude is not acceptable. I have to say that ministers are talking about it being patchy throughout the country, perhaps we are just unlucky in Essex and Southend. Certainly in my area we have a lot of people who need to be looked after. Ministers were warned what would happen about the Care Standards Act and the impact in our area is very, very serious indeed. Hardly a week goes by where there is not some argument between social services and the private sector that someone wants to be moved out. I know you have the best intentions of these people at heart, and all members of the Committee applaud what you want to do, try to look after people at home, but locally it does not seem to be working. Finally, can we have some guidance on this? Local government is saying the government is taking away more and more of their powers. They give members of Parliament the impression that there is a limit to what they are able to do and at the end of day they are looking to central government for funding. Whilst all of these arguments are going on people are suffering. I have many elderly people in my area with no relatives at all, they are just dependent on friends and neighbours, is there not some mechanism whereby the government, I know you have gone out to consultation again, give some immediate help, if you like, arbitration between these endless arguments - none of this is new - between what the private provider is given and what the local authority is given. In my area more and more of the homes are shutting, and they are basically saying, well we argued about the room being six inches too small or the lifts and all of that, we are not going to wait for further consultation we are closing now. Certainly in our area we have a crisis.
  48. (Jacqui Smith) Firstly I do not want to repeat myself, this is most certainly not about manyana, this is about recognising what has already happened in the last 5 years but also recognising there is more that we need to do, more money needs to go into system. You have particularly focused on care homes and it seems to me you have identified two problems, firstly that care homes need to have their costs reflected in higher fees. We accept that. That, of course, was one of the reasons why we introduced the 300 million building care capacity grant which is already, today and yesterday, having an effect on fee levels. It is also part of the reason for the additional extra investment going into social service departments. Heaven forbid we should get into arguments here, one of the reasons why social service departments have had problems keeping up the sort of fee levels they want to maintain quality is because, frankly, the pathetic levels of funding up to 1997 that those social service departments were facing. We are talking about increases from 1992 to 1997 of point 1 per cent in real terms, from 1997 to 2002 of 3 per cent real terms and for the next three years of 6 per cent real terms. Yes, we need more money, we are putting more money into the system. Secondly, you raise the issue of standards. Let us be clear where we came from, we came from a situation not where there were no standards but where there were 250 different authorities imposing a variety of standards on different care homes. Quite rightly care home providers said to the government, they even said it in the time when Simon was a minister, this was an inconsistent system, they wanted a level playing field. That was the reason for introducing the Care Standards Act. We always said we would look very carefully at the impact that was having on care homes. These standards were introduced in April, we had already taken action in January to make clear to the National Care Standards Commission our view that room sizes, lifts and door sizes should not cause good care homes to close when there was still concern that that was not being reflected in what care homes felt about it. As Alan announced in July we are consulting and we intend to ensure that those good quality care homes existing in April 2002 will not face new improved environmental standards, even those that were not due to come until April 2007. We recognised even though we have given than long running time there were some care homes that there were concerns about. That is all action that has been taken today and yesterday and which is already beginning to have an impact. Is there more that we need to do? Yes, there is. We have listened where there are concerns and we have put in money where it is necessary. That is already beginning to make a difference.

    Mr Burns

  49. I just want to ask because possibly, I know you cannot comment on this at this stage, there is going to be legislation in the Queen's speech next week which will presumably, possibly, implement one of your proposals that you announced in the House the day after the Budget, I think it was, to take forward the NHS plan and for the fining of social service departments if they did not fit the relevant criteria. You have consulted on that, could you please tell us what your consultations revealed? Did you have, for example, a 100 per cent consultation saying what a marvellous idea this was? Did you have people replying saying they thought there were better ideas and this was not the best idea to proceed with? Could you share your responses with the Committee?
  50. (Jacqui Smith) It might not surprise you to know that we did not have a 100 per cent positive response for these proposals. However, I think there is a recognition - there was recognition as I said when I came and talked about delayed discharge in evidence given to this Committee - that we do need to have a much clearer idea in the system about where responsibility lies between social services and health. We do need to ensure that we have the necessary incentives in place so that when we begin to get even more of the additional investment into social service departments to provide the sort of alternatives that we have been talking about today to hospital care that we are clear that local authorities will be spending money on those alternatives and we are going to be able to bear down even further than we have already done on delayed discharges.

  51. That was not exactly the question I asked. I will rephrase the question to press you further, what proportion of responses to your consultation, in percentage terms, expressed support for the Secretary of State's proposal for fines for social service departments?
  52. (Jacqui Smith) I do not know. I know, as we usually do with consultation, we will make that consultation public.

  53. Let me broaden it a bit, I suspect you have a rough idea of the answer to this question, I will be amazed if you do not. Broadly, were the responses more in favour of the Secretary of State's proposals or more against them?
  54. (Mr Milburn) They were more against them.

  55. Thank you. Was it overwhelmingly against?
  56. (Mr Milburn) I have no idea at all

  57. It was more against.
  58. (Mr Milburn) It was more against, so nobody is surprised. However, there is a funny old thing about being a minister, you must remember this, you have to do what you think is right. Sure you go out and consult, you talk to people, so on and so forth, people have a right to put their view and in the end we have to decide what we think is right. I will tell you what I think is wrong, it is fundamentally wrong, in my view, where you have confusion about responsibility. This Committee under the chairmanship of Mr Hinchliffe has argued more cogently than anywhere else in this place that what we need is one care system where people accept responsibility for what they do, particularly for the elderly person, not just the elderly person but those with a mental health problem or learning disability or whatever. Partnership is a really, really nice idea and it is a very, very cosy word to use and we are all terribly in favour of it, I am terribly in favour of partnership, but in the end what it means is that somebody somewhere has to accept their responsibility because otherwise it does not work. Despite extra money going in, despite the fact there are a number of people whose discharge from hospital is needlessly delayed, as it, it is falling, we have far too many people needlessly in hospital because somebody somewhere is not accepting their responsibility. We have to find a way of putting that right. If we do not put it right what you are doing is condemning individuals to being in the wrong place in the system at the wrong time and you are condemning the system to further pressure. I think that is fundamentally wrong. We have consultation, of course we listen to what people will say about this but make no mistake about it, we have to find a structural solution to what is, in my view, a structural problem.

  59. Broadly most of what you just said is absolutely right. If can get back to the question of fining, given that you said in your response you want the best system possible for people to take responsibility to ensure that people are not languishing in hospital unnecessarily but are getting appropriate care, I do not think anyone would disagree with that. You also said that as a responsible person you listen. So you have admitted and accepted that a majority of the consultations were against your proposal for fines. You are listening. Presumably these people have not just written in saying, "we are against...", they have given you a rationale as to why they are against it. As you are in listening mode can you share with the Committee, are you going to make any revision to your announced intentions of the fine system in the light of consultation representations you have received?
  60. (Mr Milburn) We need to wait and see. I am not going to prejudge anything that may or may not be. You asked about the Queen's speech, I am not going to prejudge anything as far as that is concerned. I will tell you, I have found while doing this job, being a minister in general, that very often you are faced with quite a wealth of decisions that you want to take, that is because there are difficult decisions to take. What I have to do, what Jacqui has to do and what we will do is take the right decisions.

  61. Lovely.
  62. (Mr Milburn) We will take the right decision bearing in mind there is a structural problem that requires a structural solution. Where partnerships work they are great but where they do not work it is a disaster.

  63. I am glad you mentioned partnerships because that leads on to my next question, where partnerships are working well - obviously the whole emphasis has to be encouraging the development and the working of partnerships to the best possible levels - what damage do you think is going to be done to them with the introduction of a fine system?
  64. (Mr Milburn) None. I think it will enhance the partnership, not diminish it, because everyone will be crystal clear about their responsibilities.

  65. I am not in a position at the moment, because the system is not in place and if it is introduced we will find out whether that answer is right or not, it will be extremely interesting if the system goes ahead, as envisaged, whether partnerships benefit, because I suspect that it will put unnecessary and undue strains on partnerships. We will see.
  66. (Jacqui Smith) Can I say, Alan's point was right, we are all in favour of partnership because it delivers results.

  67. Why not do the carrot rather than the stick approach? Instead of fines why do you not have bonuses where they manage to avoid and overcome the problems of delayed discharges?
  68. (Jacqui Smith) If you have an effective partnership it is not just about whether or not you feel warm to each other, it is about whether or not you have managed to reduce the number of old people who are struck in hospital when they should not be. If you have succeeded in doing that you will have lived up to your responsibilities and you will not as social services be paying the costs of those older people in hospital. If partnership works then it fits precisely into the system that we are proposing.

  69. Absolutely. I accept in many respects what you just said. I accept that. Surely to encourage it to work a carrot approach of incentives is better than a stick approach, which introduces a blame culture and arguing of fines? Why not be positive rather than negative in the approach?
  70. (Jacqui Smith) We are being extremely positive in terms of --

  71. You cannot be.
  72. (Jacqui Smith) -- recognising what local authorities have said to us, that is part of the reason they feel they have not always been able to exercise their responsibility with respect to older people in hospital because they have not had the resources to develop the alternatives. We are pushing in place the resources in order to enable them to develop the alternatives but alongside that, as Alan says, it is also crucial that given that there are particular responsibilities that we have a system that reflects those responsibilities and reflects it in terms of who pays when. If an older person is in hospital and there is agreement that they should be the responsibility of social services but they are still in hospital how is it reasonable that the hospital is paying the costs of that when it is not their responsibility?

  73. We are not arguing that point. The point we are making is, why not have a positive system to encourage the problem to be overcome rather than a negative one?
  74. (Mr Milburn) Can I answer that, at least in part, I think there is a positive incentive in the scheme as consulted on in at least one major respect. I think local authorities need a positive incentive to ensure that social services money that has been given by the government is actually spent on social services. This is a pretty positive incentive in order for them to do so.

  75. It would be of even more positive benefit if they benefited financially.
  76. (Mr Milburn) Next time you visit Redditch you need to talk to some of the directors of social services. My discussions with them have been interesting, on the one hand they want more autonomy, that is fine, and we are happy to do that, as the local government White Paper sets out, and on the other hand, I think there is a general concern in social services, that the protection afforded to social services by ring-fencing and earmarking money may well be disappearing. One of the very important drivers to ensure that social services cash is indeed spent on building up social care capacity is precisely this scheme. I think you will find that although there will be lots of protests about this now and concern, and so on and so forth, we have to take all of that properly into account. When the scheme is operating people will see that it has beneficial incentives within it.


  77. At this stage we have been underway about an hour on social services and I hope we have done some justice to that very important area. On the last occasion the Secretary of State appeared before us I was taken to task subsequently for the length of the answers I allowed you to give. At this stage can I appeal, as obviously we are time limited, for brief questions and brief answers. I would like to move on to the issue of the NHS workforce. Clearly the starting point will be the issue of consultants' contracts. The last time you were here, Secretary of State, you will recall it was the day that you were making an announcement about the progress we thought at that stage had been made on the consultants' contracts. Clearly the vote announcements last week will affect your workforce planning assumptions, what assumptions are you now making in that area of policy and obviously in relation to outputs what are the implications currently?
  78. (Mr Milburn) I remember the day well. As a point of clarification I did not announce it, the British Medical Association announced it that morning but I used the opportunity here to discuss how we thought it was beneficial. I do not think it has a huge impact in terms of workforce planning, to tell you the truth. Clearly the result of the ballot was disappointing, I think, not least because consultant leaders themselves argued very strongly in favour of it.

  79. What are your views as to the reasons why they voted the way they did?
  80. (Mr Milburn) I think there are a mixed set of reasons. If you listen to what the consultants themselves are saying and if you look at the dispersal of the vote, the fact that they voted yes in Scotland and in Northern Ireland and no in Wales and in England there are probably a variety of reasons in truth. I think this was always going to be a difficult reform. Clearly individual consultants have the right to have a vote, there is no argument with that, to express their views about this. I should say, to be clear about this, in my view NHS consultants overwhelmingly do an outstanding job for NHS patients, I do not think there is any argument about that, however the contract is in essence 50 years old and it is designed for quite a different world and a different health service. We have to move forward. What we were trying to do, as you know, through the consultant contract framework that we agreed with the BMA was in essence, although some of it was complex, it boiled down to this, how could we ensure that we got more NHS consultants time for the benefit of NHS patients in exchange for paying NHS consultants more. That is the essence of the deal. We wanted to reward those consultants that did the most for NHS patients. To do that there were issues about how best to plan NHS consultants time and also, as you know, to try to solve this very vexed and difficult issue about the relationship between partnerships and NHS work. I think that was always going to be difficult, and so it proved. We went through two years of extremely tough negotiations, in my view, and we are now at the point where we are. The issue is really what we do from here on in. I think the result of the ballot does not mean the extra resources we put on offer are lost in the National Health Service. First of all, we certainly standby the financial commitment that we want to make to NHS consultants and to NHS patients but we will have to, I think, deliver our objective in a different way. The objective of getting more work and time for NHS patients from NHS consultants we try to do through the managerial route, as enshrined in the contract. I think it is quite difficult given the fact that at least in England it has been rejected - I cannot speak for Scotland that would be a decision the Scottish Executive would need to take forward itself - it is difficult to pursue that route, we have to achieve our objectives in a different way. What we do have is quite a substantial investment we were planning to make in implementing a new contract for NHS consultants. If you like, in a sense, that money has now been liberated and we can use that in order to try to get the right incentives in place such that NHS consultants who do the most for NHS patients get the biggest reward. We will explore how best to do that, we are, and we ought to come forward with our plans before too long about this. I should say that in terms of our discussions with the medical profession I think frankly renegotiation is impractical. However, my door is, as it has always been, open to leaders of the medical profession to come and discuss their concerns, if that is what they want to do, particularly those people who show commitment to reforming and modernising NHS services. I have written to Dr Bogle from the BMA this afternoon, he wanted to have a meeting with me to discuss some of the issues, we will go ahead with that meeting. There can be no doubt in my view that if we are putting extra resources in we have to see some changes, and improvement in the reforms. The public will expect to see that in working practices and in better ensuring that we get the most out of all of our NHS consultants for the benefit of NHS patients.

  81. We will move on to foundation hospitals in the remaining session, philosophically that brings us into the area of local negotiations, what kind of view are you taking on individual trusts moving forward with their own agreements on this issue? Is that a possibility? What are the implications of that?
  82. (Mr Milburn) We have to look at a series of options round this. I want to be a little cautious at this stage really. For example you could see that one option would be to allow those hospitals that wanted to, those trusts that wanted to go ahead with consultants' contracts as negotiated. I think, although I cannot speak for the Scottish Executive, the fact that there was a vote in favour there, I do not know, it may well produce a different response, I do not know whether that will be the case or not. Of course that is one option. What we are more actively exploring is how we can get from the substantial resource that is now available, I am talking about up to a quarter of a billion pounds which is available to invest in extra consultant time, to get the right incentive structure in place such that the NHS consultants who do most for NHS patients get the biggest rewards. That is where our principle efforts are geared. There will be other issues that we will need to think about. You know in the NHS plan we published in July 2000 we said we wanted to press ahead with new consultants' contracts for the reasons that we have set out on previous occasions but in the absence of that we would need to look at other measures, and we need to look at those other measures.

  83. At the weekend the press speculated about the creation of a possible new post, was that just speculation? Was there some substance in that idea?
  84. (Mr Milburn) I think the people concerned looked back to what we said in the NHS plan, we said then the biggest problem we have today in the NHS is still a shortage of capacity. There are issues, although overwhelmingly NHS consultants work extremely hard in the NHS service there is quite a variation in productivity, and so on, which everybody is aware of, and then there is the issue of time being devoted to privately paying patients amongst a minority of NHS consultants. Our priority as a country is to build up the NHS services so we can get more of the time of NHS consultants for NHS patients. We have to look at how best we can do that. As you will remember in the NHS plan the choice was, did we go for the new consultant contract, we tried to do that over the last two years, with very clear objectives, and so on, and if that did not happen we would need to look at other reforms, the way that doctors work and the way doctors are trained. We will need to look very, very carefully at how to do that. Incidentally you will know that a point parallel to this the Chief Medical Officer Professor Donaldson launched his very good consultation document Unfinished Business just a few months ago, looking at how we can reform the system of doctor training. We tend to find in this country compared to Europe and even the States that the training time is quite long. There are issue that we need to look at about that to see whether we can get doctors qualified and into practice earlier. There are some interesting views coming back from the some of the medical Royal Colleges about that arena of debate. I hope that before too long I can be slightly clearer than I am today about that. The point in essence is this, if we are going to put more money in, which is what we want to do, we have to have some changes.

    Mr Amess

  85. Without a winning workforce we do not have a National Health Service. At the last evidence session I asked your officials about the retention of consultants and other staff. They gave their answers, properly, without knowing the outcome of this contract. I listened to the sound bites of your good self after the announcement that the contract had failed and you seemed to be very angry and very disappointed, are you seriously telling this Committee that you as the Secretary of State for Health are going to take on the consultants? If you are you must be absolutely barking mad.
  86. (Mr Milburn) That is tricky one. Some would call it a no-brainer, David.

  87. Were you just talking tough at the time because you were disappointed?
  88. (Mr Milburn) I am not angry about it. People have a perfect right, we live in a democracy, thank God, to vote and decide what they want to decide. I respect that judgment that people have reached individually. As a consultant body I have to respect that judgment. Consultants are valued and valuable people in the National Health Service. People have to look at it from our point of view, what we are trying to do is invest substantial extra resources into the NHS, which is the right thing to do, to grow the capacity of the National Health Service. We have made very explicit promises to the British public that we are not going to put investment in but we are expecting to change the way the system works. There have to be changes in the way people are paid, employed and in working practices. Things have always been conditional and it has been conditional in the consultant contract too. I thoroughly respect what consultants have to say and we have to take stock as a consequence of the ballot, we will. It is quite difficult for us. Journalists put to me on the day, "will you now impose the contract?" I think it is probably quite difficult to do that in truth. I think the managerial route we were exploring I think is difficult for the reasons that I have outlined. It may be possible to do it in some trusts in the way I indicated to the Committee. What I do know is we have a substantial resource we want to invest, so our ends remain the same. Our ends are, how can we ensure that those doctors who do the most for NHS patients get the biggest reward and how can we ensure we can buy more of the valuable time and expertise that NHS consultants have for benefit of NHS patients? Those are the ends. The means we have to think about in the light of the contract. As I say, think our efforts now should focus on how we can best use those resources to incentivise the changes in performance that we would want to see and the patients want to see. I do not think the patients would regard that frankly as a terribly bad deal.

  89. Before asking a specific about projections, what I do not understand in all of this, and the Chairman hinted at it, the whole style of your department is you are pretty sure about what is going to happen when you ask questions. It seems to me you do not ask a question perhaps on the one that my colleague mentioned earlier about fines, perhaps that was a bit of a faux pas but by and large you do not ask big questions unless you are sure of the answer. I got the distinct impression, perhaps I was fooled by it, you were pretty confident the consultants were going to accept the proposition. I know this has not been done for a very long time, it was very difficult, but what the devil went wrong?
  90. (Mr Milburn) Remember, as I said earlier, this was a deal that we had negotiated over two years and it was not just agreed with the consultants' leaders and was not just then subsequently endorsed by the consultants' negotiating committee or, indeed, by the whole BMA Annual Conference, but it was very, very aggressively sold and it was sold hard by consultants' leaders. This was not a one-way street, it takes two to tango and two did indeed. That is what we did. We came up with something and consultants have decided that they do not want to have it. Well, we have got to respect that judgment but we also have a wider responsibility. We have a wider responsibility, not just to NHS doctors, and remember there were quite a lot of doctors who voted in favour of this as well as those who voted against, but we have a responsibility to the whole of the National Health Service and to NHS patients. I think what is crystal clear for most people about the National Health Service is that it needs two things: in crude terms it needs more money and more capacity on the one side, no argument about that, including more consultants, more doctors, more nurses, more therapists and all of those other things, and it needs some pretty fundamental changes in structures, in working practices, in incentives. It seems to me that you only get the benefit for patients when you do those two things alongside each other. That is precisely what we said in our manifesto.

  91. I have really enjoyed everything you have said because ----
  92. (Mr Milburn) That is fantastic.

  93. It seems to me that you are not going to take the consultants on and you are not barking mad.
  94. (Mr Milburn) I feel as though I have been certified sane.

  95. The Wanless Report identified a shortfall in doctors. How confident are you that you are going to get this proposed increase in consultants of 10,000 by the year 2008 in the light of all that has happened?
  96. (Mr Milburn) Now that I have been certified sane I feel even more confident, Mr Amess, I really do. I am glad that I have been blessed in the way that I have. I think it is pretty tough. Getting a big expansion in workforce is difficult for a whole variety of reasons, however I think there is some good progress under way. I think we have got around 3,000 more consultants since the Government has been in office, which is a growth of about 23 per cent, which is good but frankly not good enough and we need to do a lot more. How are we going to do it? Essentially, I suppose, through five means. One, for the long-term we have simply got to increase the number of doctors in training and there is a very big effort, as you know, going on across the whole of the health service and in higher education to do that with the opening of new medical schools, the first that we have seen in a generation or more coming on line. I think the number of new medical students coming through has increased by about 25 per cent in the last few years, which is good. Applications, very hearteningly, are up, which indicates that medicine continues to be an attractive career for young people and we should never, ever lose sight of that. That is point one. Two, I think we have got to look at what we can do to reform the way that doctors are trained, in particular these issues that Liam Donaldson consulted on about how we train doctors and the training period. A few weeks ago I went to the Leicester and Warwick Medical School up in the Midlands to open it and what was very interesting was to see their scheme where they have got a graduate entry scheme for doctors in training, people coming in and doing a four year course. The amazing thing about these people is their absolute enthusiasm and so on and they had some sort of basic training in the biomedical sciences and so on and so forth but they really want to do it. It is slightly more mature people who are coming in and I expect that we will see a lot more of that. That is point two. Three, we have got to expand the number of people in the grade below consultants, SPRs. We need to do more there, although there is some progress, an additional 500 SPRs, I think. We have just invited the National Health Service to come forward with proposals about how we can further expand SPR numbers and I think we have proposals on the table for a thousand extra, which is very, very good indeed, so I am heartened about that. That is point three. Fourthly, we have got to improve retention as well as recruitment. Consultants are just like anybody else, they lead extremely busy lives, very often they have got childcare and other family commitments as well as work commitments and we have got to help them with that: more part-time working, flexible working, better childcare, help for people to stay in the profession towards the end of their lives and so on. Finally, in order to plug some of the gaps in capacity that we have, where it is appropriate we have got to try to recruit doctors from abroad, providing they are appropriately qualified and so on. Again, there is some progress there that is pretty heartening. These are the measures that we are taking. It is not just about shunting more medical students into medical schools and then hoping that in 2008, or whenever it is, that they are out. There is a whole variety of measures, there is no single silver bullet, there are a lot of bullets that you have got to fire here. I am pretty heartened by progress. On the targets that we have set it was the same with the nurses. Back in July 2000 when we said we are going to get 20,000 more nurses people said "you have got to be crazy, you will never do that", but there are 20,000 more nurses, a lot more than 20,000, additional in the NHS and I think it is the same with doctors.

    Dr Taylor

  97. I was saddened in health questions last week to hear the antipathy from the Government benches for consultants and that is why I thought I was going to have a difficult job today but you have made my job much, much easier by ----
  98. (Mr Milburn) Bringing joy wherever I go.

  99. Your first comments were to acknowledge the dedication and hard work of the vast majority of consultants, which is absolutely justified. Your remarks have been much more conciliatory than I ever expected following that terrible headline in the Sunday Times, I think it was, "Revenge. 130 million revenge on consultants".
  100. (Mr Milburn) Richard, I do not write the headlines, it is my friends somewhere over there. I use the word "friends" lightly.

  101. My concern with you was that the BMA negotiators did not get it right. Dr Hawk himself wrote in Hospital Doctor , or is quoted, "What I did not realise, but I suppose I must take some blame for, is the depth of what can be called open warfare between consultants and managers". This is my concern because I have seen where relationships are excellent and systems work brilliantly because it is a partnership between doctors, doctors in management and managers, but it is not working in places and how can you help that?
  102. (Mr Milburn) I am very chary, I must say, of in any way condoning a view that in the National Health Service there is wholesale war between managers and consultants, I simply think that is untrue. I think by and large relationships are good and productive. There are tensions, of course there are, there are bound to be, but that is just the nature of the beast. I think it is worth remembering one very simple thing: in the end most doctors end up being managed by doctors. Clinical directors are doctors. Medical directors are doctors.

  103. Absolutely.
  104. (Mr Milburn) I think there is quite an issue that obviously needs to be thought about there. I just do not accept this sort of interpretation that somehow or other there is open warfare. I also think the medical profession will get itself into a difficult position, in my view, if the appearance is given at least that somehow or other people are not prepared to be accountable and answerable. I do not think that is where people are at personally at all. I think people nowadays understand that actually accountability is a good thing and not a bad thing. The days have gone where there was that sort of, I do not know if it is particularly helpful but what people sometimes talk about was autonomy for doctors and I do not think that served doctors terribly well, as we have seen over the course of the last few years when some of these problems have come to light. I think people, and particularly taxpayers, will look askance at the idea, were it to gain currency, that somehow or other we are putting more money into the National Health Service, resources are going in, but that is not being accompanied by changes to working practices, changes to structures and, indeed, some reasonable accountability about how the money is used and how people who work in the NHS actually work for it. I think it would be as well to be slightly cautious about that view of the world.

    Andy Burnham

  105. Just a quick point. In Scotland, although we cannot secondguess the Scottish Executive, they did vote fairly clearly in favour of the contract. Are you worried about a situation where they may move to that new contract and the repercussions for workforce planning in the English system if there is a clear difference in the levels of pay on offer in both countries?
  106. (Mr Milburn) I understand that. I cannot speak for Scotland and I cannot speak for the Scottish Executive, it has got to take the decisions that are right for Scotland. As you will remember, the contract that we negotiated with the BMA was a UK contract. However, the reality, unfortunate though it is, is that people have voted differently in different countries and not just in Scotland, in Northern Ireland too, and I think that places people in quite a difficult position.

  107. Do you think it is the end of the UK contract?
  108. (Mr Milburn) I really do not want to get into the position where I secondguess what colleagues in the Scottish Executive are going to do. If you ask me my view of whether or not I would be comfortable were Scotland to decide to go ahead and implement the contract then, yes, I would be comfortable about that, I think that is a perfectly reasonable decision for Scotland to take, or for Northern Ireland for that matter.

  109. Taking it a step further, presumably there are fairly marked differences in the way regions of England voted on the contract?
  110. (Mr Milburn) I do not know that.

  111. If a region came to you saying "we have a clear majority in favour", would you countenance a situation where a region of England would move towards new arrangements?
  112. (Mr Milburn) A region?

  113. I think that is partly one of the things, it is a very mixed picture geographically, is it not?
  114. (Mr Milburn) I honestly do not know because, remember, this is not my ballot. I know people are asking me about it but it is not my ballot, it is the BMA's ballot. The only breakdown I have seen - the Committee may want to ask the BMA about this - is Scotland, Wales, Northern Ireland, England and a breakdown by SPRs, consultants, and a breakdown by public health specialists and others. If there is a regional breakdown I certainly have not had it, so I do not know whether there is a regional pattern or there is not a regional pattern. There is much speculation about whether there is and whether the vote in favour ended just above Hadrian's Wall or whether it ended further south, I do not know the answer to that, I have got no empirical data one way or another. I do not know how a region would approach me to tell you the truth, I do not know what would be the means of doing that. I think it is more likely, and again I want to be cautious about this because there are absolutely no decisions taken about this, that I would get an approach from an individual trust, or group of trusts maybe, in which case we would have to think very, very carefully about it. I do not see a reason in principle why not.

  115. Why you would not accept an approach?
  116. (Mr Milburn) No, I do not see why not.

  117. I have got from what you said that the problems were ones of substance. There has been speculation that there were problems of presentation and the way that it was put over to people. Am I right to infer that you are saying that the problems were ones of substance where people did vote against the fairly substantial differences of opinion about issues that the contract had touched on?
  118. (Mr Milburn) I listened to some of the vox pops, like everybody did, what consultants were saying. Some of my friends are consultants.

    Mr Burns

  119. Still!
  120. (Mr Milburn) I live with one actually.

    Andy Burnham

  121. I hope she voted yes.
  122. (Mr Milburn) Speculate about that. I think there are different views being expressed about this, very, very different views. It is quite difficult to disentangle. Clearly there are concerns and, as I say, if there are concerns about how the NHS is working and so on and so forth then those are concerns that we have got to get into dialogue on and try to address.

  123. I have seen reports of people saying that they were against enforced weekend working and it seems there were some views out there that were not technically right.
  124. (Mr Milburn) Certainly on your sort of division between issues of substance and issues of presentation, on the latter I think that there were issues of misunderstanding. You probably remember that a few weeks before the final vote we tried to issue a clarificatory statement which went out jointly between the BMA and the Department of Health trying to deal with these issues about whether people were going to be compelled to work at a weekend or ten o'clock at night and so on and so forth, which had gained a bit of currency and momentum during the discussions. Maybe those concerns were a contributory factor, I do not know. Personally I do not think there was one single factor.

    Dr Naysmith

  125. Like most of the rest of this Committee, Secretary of State, I am glad that you were misquoted in the Sunday papers as going to take on the consultants. You are right, you do not write the headlines, and I am glad of that because, like you, I know that most consultants work extremely hard and are dedicated to the National Health Service. It varies a bit from speciality to speciality as I understand it, but without a doubt that is true. If I can just ruffle the waters a little bit, the existing contract that has been in place for many years has got things called job plans. I know quite a few consultants, one or two are friends, like you, and I know that job plans for consultants are enforced differently in different places and some consultants take them much more seriously than others. I just wonder is that an area that you could look at with the possibility of getting a bit more efficiency and productivity out of the National Health Service? Have you had any feedback on that?
  126. (Mr Milburn) I think your starting point, first of all, is right. We can both acknowledge the very important role that consultants play and the fact that they are valued by everybody in the country in my view, not just Government or Government ministers or Members of Parliament but by the community and by patients. We can acknowledge that overwhelmingly consultants do a really good job of work for the National Health Service, but also say at the same time that the existing way in which they are employed and the way in which they are paid and the way in which they work, that might have been appropriate for one period of time but it is not appropriate today. If people have interpreted what I have said as being whatever Richard's words were about tough or whatever, I think in the end people will understand, both consultants themselves, their representative organisations and, most importantly of all, patients and taxpayers, that what we cannot have is somehow reform being stalled. These changes have really got to happen. You raised one particular issue which is about job plans. Job plans are nothing new, they have been around for ten years. In some parts of the country, in some organisations, they are taken up and they are just part and parcel of life as a consultant; in others they are not. That is a problem. Point one. There are issues about how we ensure that genuinely the National Health Service and all parts of the NHS provides a 24/7 service because that is the world we live in: more two income earners, more women are working, people finding it difficult to go to an outpatient appointment either at 11 o'clock in the morning or two o'clock in the afternoon because people are in work, thank heavens. Point two. Three, there are issues, as David and others quite rightly know, which remain unresolved about the relationship, some would argue the conflict, between private practice and NHS work. All of these issues are issues that remain on the table and in the light of the rejection by consultants of the contract that we and the British Medical Association jointly have put to the body of consultants, they are issues that remain to be resolved. I am very seized of the fact that job planning, disciplinary procedures, there are other issues that sit there on the table and I guess most people would think this needs resolution.

  127. Finally, if you were to introduce some kind of junior consultant post, or whatever it is called, could you confirm to the Committee that you will not use that to artificially inflate the figures in order to meet the consultant numbers by 2008?
  128. (Mr Milburn) First of all, the term "junior consultant" is an absolutely dreadful term. Two, I think we have got to consider some of the proposals that are coming forward as a consequence of Liam Donaldson's consultation and some of the proposals that are being thought about, quite progressively in my view, in the Medical Royal Colleges about how we can get people into training. I think we are at the stage before the stage that you think that we are at on this. We have got to think very carefully how best we can do this. As we said in the NHS Plan, we have to consider ways in which we can achieve the productivity improvements and, most crucially of all, more services being delivered to NHS patients. We have got to find the best way of doing that.

    Julia Drown

  129. The Independent reported recently that Magdi Yacoub, who you gave a target of 450 specialists in post in three years from abroad, had only so far managed to get 19 doctors in post from abroad, from Spain and Germany. Is that an accurate report and, if so, what needs to be done to get the overseas doctors?
  130. (Mr Milburn) I am just about to check that if I can find it in my big bag of things. No, I do not think it is. There are two separate but related things on international recruitment. One is the work that Sir Magdi is doing for us specifically around the International Fellowship Scheme, which is a very, very good scheme in my view and there is a huge amount of interest out there. People come for a couple of years, we pay their relocation, they get to be employed in the NHS, they get some research time and if they want to at the end of two years they can go back to the States or wherever they want to go back to. I think I am right in saying on the International Fellowship Scheme that thus far we have interviewed around 64 doctors and I think we have short-listed, it looks like 39 according to this very long table.

  131. That may well be consistent.
  132. (Mr Milburn) Basically I think we said that we are going to get 50 by the end of the year and I think that is what is going to happen in a variety of specialities: in histopathology, radiology, I know there is a psychiatrist up north, for example, who impressed ----

  133. So the 50 by the end of the year still means you are on target to get 450 in three years?
  134. (Mr Milburn) Yes. There are two things. There is the International Fellowship and then there is the broader recruitment campaign from abroad and that is going well. Just for the Committee's information, we have had 2,500 firm applications of which almost 900 are felt to be suitable for employment in the NHS and are being assisted through the registration process and matched to posts. So far with these two things together we have got around 100 doctors who have already been appointed to posts and are working in the NHS or are soon to join.

    John Austin

  135. Could we turn to Foundation hospitals. I think you have indicated that the first one will be possibly in shadow form and operational by the end of 2003. Could you tell us how the operation of that first tranche will differ from the traditional NHS trusts and say something about the new freedoms they will have in respect of payment, terms and conditions of staff - I think the Chairman has already asked for that - maybe to implement their own consultants' contracts and in relation to investment and dis-investment in capital assets?
  136. (Mr Milburn) We will be publishing very detailed proposals on this I hope before too long setting out in pretty considerable detail how they will work. NHS Foundation trusts, in outline, will be legally independent NHS organisations providing NHS services according to the principles that we know and understand: services that are free according to clinical need, not ability to pay. Their ownership and accountability will not be to me, as it has been for 50 years for every hospital and every bit of the National Health Service, it will be to local communities and to local staff. I think this is an important issue.

  137. How will you ensure that governance arrangement? They will be free to start their own structures.
  138. (Mr Milburn) We will set out in detail what we envisage as the governance arrangements for NHS Foundation trusts. There will be some leeway but there are two essential principles that are very, very important in my view. The first is that for 50 years accountability has always been upwards to whichever government and whichever secretary of state has had the privilege to hold this office. That might have been fine for the 1940s, and probably was, but we live in a quite different world today and I think there have been increasing concerns in many parts of the country about the growing democratic deficit between local health services and local communities. Above all else, local people have a deep attachment to their local health services, their hospitals particularly but their local health services more generally. Frankly, and I have said this to this Committee before, I believe that if we fail to tackle this democratic deficit we will have considerable and growing problems from a population in this country, as elsewhere in the developed world, who are more informed, more enquiring, who want to be more involved, not just in their own health but in the provision of health care service. We have an opportunity to get the accountability and the ownership in the right place because in the end services are delivered locally, they are not delivered nationally. That is point one. Point two, for staff it is just like anywhere else wherever you work, what is most demotivating and most demoralising is if you feel that you have got no control over what happens in your working lives. In the National Health Service we have the best qualified, the most expert workforce probably of any organisation anywhere in the world. NHS services work best when we empower local staff who then have the freedom and the ability to get on and improve services for local patients. I believe fundamentally in principles of equity and, therefore, I think it is perfectly right and responsible for the job of national government to be defined as setting standards and setting objectives because otherwise you have a free-for-all and lack of equity and provision. Where you have got to get to is a position where standards are national, if you like, but control is local. By "control", I mean both control by local staff through the appropriate government structure and control by the local community. That is where we want to get to. For those Members of the Committee who are interested in the concept of public ownership, I think that NHS Foundation trusts in their governance structures provide a genuine opportunity to see public ownership in the way that local hospitals deliver services to local communities, perhaps greater public ownership than has ever been possible through the nationalised model that Aneurin Bevan put in place in 1948.

  139. That is fine both in terms of your community accountability and staff empowerment, I do not think any of us would disagree with those concepts, but if the new freedoms are going to allow those hospitals to perform better and do this with good staff morale, is there not a real risk that those who are outside of that structure who have problems of recruitment of staff, who do not have the ability and flexibility to do that, will go into a spiral of decline and you will have a two-tier system? If it is such a good system with democratic accountability to the local community and they can perform better, why not for all trusts?
  140. (Mr Milburn) There are two different objections to this which your question highlighted very clearly, John. There are those who are absolutely opposed in principle to the very idea, and that is fine, let us have the discussion and the debate about where ownership and accountability should best be located. Then there are those who have a narrow objection which is, if you like, if this is good enough for some it should be available to all. Those are two quite different positions, with respect. There is an in principle objection to the very idea and then there is the idea if it is capable of working for some trusts or for some hospitals then surely it should be available to all. On the issue of two-tier health care, we are not operating a system where there are no national standards, we are not operating in a system where there is no national system of inspection, and we are certainly not operating in a system where there is no help or support or even in extremis the means of intervention to help hospitals, trusts, local health organisations, that are not doing very well. We have put in place quite a lot of that, whether it is the Commission for Health Improvement, the franchising process, the ability to remove existing managers and to put new NHS managers in. I do not think any of us, and certainly it is not part of my view about the NHS, believe that we should move to a situation where local health organisations are allowed to sink or swim. I do not think that would be responsible or right for the local communities. What you do have to do is make sure that you get both the ownership and accountability in the right place but you have also got to get the incentives in the right place. We have discussed this before in the Committee. When I go around the NHS one of the biggest complaints - I get many complaints - from clinicians and managers alike when I go and visit hospitals or anywhere else is they say the incentives are in the wrong place. Why? Because if you are doing pretty badly what happens is you get more help and financially you get bailed out but if you are doing very well you get nothing at all. If we genuinely want to encourage improved performance, aside from all of the gamut of structures and performance measures we have put in place, we have to align the incentives in that performance framework.

    Mr Burns

  141. I was interested when you talked about two-tier systems because, of course, your predecessor as Secretary of State, who is a close ally of the Chancellor of the Exchequer, at the weekend in an interview condemned the foundation hospitals as creating a two-tier system. Do you think your predecessor is wrong in that assessment?
  142. (Mr Milburn) Frank is a good friend of mine and we have a difference of view amazingly enough about it. There we are. I think we agree on most things but we happen to disagree on this. That is life, is it not? I am sure there are things that some people inside the Conservative Party disagree on. I hesitate to use the phrase, "Unite or die".

    John Austin

  143. Can I come on to the question of one of the freedoms which you referred to when you were here before, which is borrowing. I am not sure whether there have been differences of view between yourself and the Chancellor on this. One of the points I put to you last time was, does this mean if they have the freedom to borrow that they may not have to go down the PFI route, and you said, "Maybe". However, from a more recent announcement about borrowing it is my understanding that although there will be increased freedom to borrow, the borrowing will come off the Department of Health's balance sheet so the sum will still remain part of the conventional public sector. Is that right?
  144. (Mr Milburn) Basically they will have the freedom to borrow, that is absolutely right; they will operate according to a prudential code on borrowing - and I can talk a bit more about this if it is helpful - to ensure what they borrow they have the ability to repay so they are not over-stretching themselves; and they will have the freedom to borrow incidentally as much from the private markets as from the public sector.

  145. Presumably the Department will still underwrite ---
  146. (Mr Milburn) Where we have got to is that their borrowing will be on the balance sheet as distinct from off it.

  147. And on their ability to service the debt?
  148. (Mr Milburn) And on their ability to pay; on their ability to service the debt.

  149. Since the Primary Care Trusts are the organisations which commission the hospitals and services, presumably the PCTs will need to agree to fund any new borrowing?
  150. (Mr Milburn) There are several sets of conditions which, when you see the prospectus, will set it out in detail but I will tell you for the benefit of the Committee, one of the very important conditions for going ahead with foundation trust status is that an individual NHS trust which wants to become a foundation trust, apart from having to satisfy me and due diligence and so on and so forth, will have to demonstrate sign-up by local stakeholders. Amongst the most important local stakeholders are the Primary Care Trusts, not least because they are the organisation, as you know, which will have their hands on most of the resources and decide where the commissioning is going to take place.

    Chairman: I am told there is going to be a division at ten past six. I do not think it is reasonable to ask the Committee to come back afterwards so we will have to skip over a few areas which we would otherwise want to cover.

    John Austin

  151. Although they will be free-standing legal entities, free from direction from the Secretary of State for major capital developments, they will still presumably have to go down the PFI route?
  152. (Mr Milburn) I think for major capital schemes - if you think about some of the schemes we are doing in London now, Barts London is 600 million, UCLH is 400, 450 million - it would be quite difficult to envisage a foundation trust would want to go with other than PFI. For smaller schemes, which is where I think PFI really has not delivered as much, the medium-sized schemes, diagnostic treatment centres, 15 to 20 million, 15 to 25 million, that is precisely the sort of arena where I would imagine the foundation trusts would want to borrow either publicly or privately.

  153. What does "the freedom to establish private companies" mean?
  154. (Mr Milburn) They will be established in law as a variant of companies limited by guarantee because that is the only legal structure we have today. There is a debate which has been raging for very many years in the Co-operative movement, for example, although not exclusively to the Co-operative movement - there is also the Institute of Directors, who one might have thought were unlikely bedfellows with the Co-operative movement - which has been arguing the case for a new legal entity of public interest or community interest, a benefit company. I personally think there is much in that but we have not got it today so we have to go for the legal structures we have got. I think when you see the proposals you will see in law the foundation trusts will be enshrined as companies limited by guarantee but with democratic structures which people I hope will think better locate ownership and accountability. Non-profit-making, obviously.

    Dr Taylor

  155. Just a quick question about the care bought from abroad. We asked this last week and did not really get an answer from the officials. The 190 patients who went on the trial from the South East, if you calculate the NHS reference costs, that should have cost about 0.75 million, and in fact the estimated cost was 1.1 million.
  156. (Mr Milburn) That is right.

  157. What is the view of that, because it obviously was not best value for money? Can you improve on that?
  158. (Mr Milburn) I think that is a slightly unfair charge, to tell you the truth. There were huge set-up costs in doing this. Remember, the 190 patients were intended to pilot the whole business of patients going abroad. Incidentally the response from patients has been very, very positive. For example, there were quite substantial legal set-up costs and we had to get that right. I remember talking in Committee about the worst possible hypothetical case being sending patients abroad, there being a legal problem there and we could not deal with it. So there were substantial set-up costs. I think over time what you will find is that that option becomes cheaper overall. I think that some of the costs associated with sending patients abroad, even with the up-front set-up costs, have been very competitive compared to sending patients to UK private sector organisations. Although you did not get on to this last week, it might be helpful to say that we think this year, although I do not particularly want to be held to this because it is not my set of decisions, it is for local PCTs and commissioners to decide, around a thousand patients will end up being treated abroad, largely in orthopaedics but in other specialties too. Obviously the patient has to be happy with that, the clinical governance has to be right, it has to be safe for them to travel and so on.

  159. The Department will be watching the value for money aspects?
  160. (Mr Milburn) And we will continue to assess the overall value of the scheme, not just in terms of value for money but the clinical outcomes and crucially whether the patients themselves are satisfied.


  161. At what stage will you be able to indicate the value for money of the concordat with the private sector? We raised questions about this last time and the survey which was undertaken by the Department was not particularly well-supported, shall we say.
  162. (Mr Milburn) It was disappointing. It was very disappointing. I think we got a pretty poor response rate to it, around 50 per cent as I remember. I have commissioned, as you know, a further follow-up survey and I hope to get a higher response rate. I think the response rate we had makes much of the data not particularly scientific. Provided we get a decent response rate and it is reasonably scientific, I think we can share that with the Committee.

    Chairman: Thank you.

    Dr Naysmith

  163. You said earlier on, Secretary of State, it was regrettable that people often preferred to focus on acute services rather than on primary care provision. If we look at Table 3.1.3 we can see for the most recent year, total hospital spending rose 9.7 per cent, spending on in-patient admissions rose 9.3 per cent, spending on general medical services only 1.11 per cent. Now these figures could mean that spending has maintained a strong hospital bias, in fact we got confirmation of that from the officials last week: inadequate investment in General Medical Services, support and staffing. Do you agree with that analysis? Do you think that is what is happening?
  164. (Mr Milburn) As I remember, I cannot find the figure now but as I remember it, and I will correct this if it is wrong, the GMS figure, I think, was artificially low in that year because if you look at the PMS figure - personal medical services - there was quite an increase. Why? Because what is happening amongst GPs is that the number of PMS GPs, particularly salaried GPs, is growing at a very, very fast rate indeed. Why? Basically because it is a better lifestyle opportunity for many younger GPs, rather than being a partner in a GP partnership, instead to become salaried. The numbers are growing very, very quickly indeed, particularly in poor areas, and that is very good news. I looked at this, and I have got some figures which I am quite happy to share with the Committee which show that between 1997-98/2000-01, HCHS hospital spend, the main hospital spend, grew at an average annual real terms rise of 4.6 per cent, total community and primary care spend grew at an average annual rise of 4.1 per cent. The differences are not as great as they should be perhaps. One final point on this. When PCTs get local budgets, as they will from next April, of course they will be able to decide where the money is spent and what is more they will get three year budgets. What I have been saying to the PCTs is that they must use those budgets to get the appropriate share of services for the local community. If that means that they want to build up primary and community services as their priority then there will be nobody happier than me but that is a decision that they have got to take. We have given them commissioning powers and what we want to see them do is use those commissioning powers so that they get the right services for local patients.

  165. That is a good analysis of what is likely to happen in the future. What will you say to the local PCTs if they say they are stuck with greatly increasing costs from acute hospitals because of things like nursing agency costs and things like that?
  166. (Mr Milburn) I know but it is like the earlier discussion we had about elderly care versus children services. I have not yet met a PCT anywhere in the country which thinks it has got the appropriate range of services in its area.

  167. True.
  168. (Mr Milburn) We know that there is not the appropriate range of services. There is far more that we can do to keep people out of hospital, to get them out of hospital appropriately and so on, maintain their independence and restore their independence after a hospital operation. Somebody somewhere has got to take decisions about that. I cannot take the decision sitting in Whitehall. I cannot decide for Bristol what is needed, the people in Bristol have got to decide that, and that is why the PCTs have got the commissioning powers to do it. The great advantage of three year budgets is precisely this, that they can decide now how to plan for the medium term rather than the short term. I think short term planning, frankly, has bedevilled the National Health Service for too long. It means that you do not get the appropriate services in the right place and PCTs are free, also, to commission services from wherever they like. If they want to commission more private sector or voluntary sector they have to justify that to their local community and obviously to the taxpayer.

    Andy Burnham

  169. Can I move on to the issue of resource allocation and the review of resource allocations that the Department is conducting currently. You said recently, Secretary of State, that the poorest areas tend also to have the poorest health services, the two tend to go together. Can I ask to what extent do you think that is a product of the current resource allocation system within the NHS? If that is the case, that the two are linked, how radically different or how significant are the changes we are likely to see in the new formula when it is finally produced?
  170. (Mr Milburn) I do not know yet because I have not had the results of the academic work that we commissioned from Glasgow University but others were involved in it: Imperial College, York University, Oxford and the Institute of Fiscal Studies amongst others who were looking at the whole way we redistribute cash from a growing pool, remember, across the NHS. You can only redistribute if you have got growing resources and thank heavens the NHS can look forward now to the foreseeable future to growing resources. I think we have got two objectives. One is to ensure that we better get resources to the areas of greatest health need and I think there is little doubt - which is why we have had to adjust the current formula over the last couple of years with an inequalities adjustment, as you know, worth about 148 million in the current financial year - that the current formula does not hit the areas of greatest health need, that has got to be put right.

  171. There is too much focus on age profile and factors like that.
  172. (Mr Milburn) I think it is a variety of things, not least the most obvious is that it is using 1991 Census data and that is a long time ago. It is also using, I think, RPB indices of deprivation which are not necessarily the best or the most up-to-date indices. They are not the indices, certainly, which are used elsewhere in Government, for example by the Office of the Deputy Prime Minister which uses a different set of indicators, multiple deprivation. Objective one, get it to the areas of greatest health need. Objective two, we have areas of high health cost in our country and that is evidenced very clearly, for example, in the differences in nurse vacancy rates which are three times higher in this city, London, than they are in the north of Yorkshire or in the use of agency staff which are five times higher in London and the South East than they are in the North West, for example. We have two objectives here because unless we do something about the areas of high costs as well as the areas of high health need we will continue to have not just health problems but health care service problems.

  173. I understand those two pressures, I see that very clearly. It was rare, I think, looking at the figures for the allocations last year, there were very isolated cases where somebody received a health inequalities adjustment and an area cost adjustment, in very few health authorities was that the case. Given that I would think that the areas where wage pressures are greatest possibly tend to be the areas where the health is better but, secondly, they will be the areas where the use of private medical insurance is far higher. They have less pressures again. I would want strongly to point you towards a system where it is based on the cost of delivering health care to their local population in those areas. I am concerned that if too much weight is given to the area cost adjustment, as the Local Government Review claims, that might negate the very pressing and real need we have to improve health.

(Mr Milburn) Shall I answer this briefly. We have got to get the balance right, absolutely. There are areas which benefit from both. I can think of the East End of London, for example, which is actually the poorest community in the whole of the country, one of the poorest communities actually in the whole of Europe. I think I am right in saying that it benefited both from the inequalities adjustment and from the cost of living supplements and rightly so because it is expensive to staff out there. We have got to get that balance right. That is what we need to do and it will be a difficult judgment, as always with these things. I think the work of the Commission will be very good.

Chairman: Can I say that obviously we will have to end this very interesting session, Secretary of State and Minister. We are most grateful to you for your attendance. We had a number of questions that we had wanted to ask which obviously we could not ask and we will follow up with a written note if that is possible. You have promised to come back on one or two points in your evidence. We are grateful to you and your colleagues in the Department for their help. Thank you.