NHS Reform and Health Care

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Mr. Hutton: I did not want to intervene again, but I want to place some important facts on the record. The hon. Gentleman is obviously right that people do not live in a time warp, although Liberal Democrats might. However, he is wrong to suggest that there have been underspends in the national health service only from 1997. As a former Minister, he must know that every year there is an underspend margin. I apologise for not referring to all the figures. I did identify where £390 million was going and I want to explain where the rest goes.

The hon. Gentleman knows that health care providers—PCTs, NHS trusts and so on—have a statutory duty to break even year on year, and they carry a huge amount of money in their budgets. The NHS, like any other well-organised and efficient business, must carry a margin, because the organisations concerned cannot overspend as a result of their statutory obligations to break even. It is important to have a small underspend margin to comply with those duties. In this respect, the revenue underspend amounts to just over £200 million, but I want to make it clear that that money is not lost from the service, but carried forward.

Mr. Burns: I fully appreciate the Minister's point and I was not for one minute suggesting that the money was lost. However, the fact that it will be carried over to next year will not be much consolation to my constituents who need an operation now, but cannot have it because there is not enough money.

Mr. Hutton: As the hon. Gentleman knows, the system does not work in that way.

The other substantial element of the underspend to which I referred is the amount relating to lower-than-planned expenditure on demand-led services, where the resources are in the system, subject to the demand that is placed on them. Expenditure was lower than planned on some demand-led services, part of which was the consequence of the move from a cash to a resource-funded service, in line with recent legislative changes. I do not know the precise figures, but I shall write to the hon. Member for West Chelmsford. That underspend is not carried forward as such, but it can be spent in following years. If there is the demand, the expenditure is provided. In that respect, too, the hon. Gentleman is slightly wide of the mark.

Obviously, we want to ensure that all the money that we allocate to the NHS is spent on NHS patients. That is our priority and it applies equally to the amounts that the hon. Member for North-East Hertfordshire has discussed today. They are not lost to NHS patients; they will be spent on NHS patients.

Mr. Heald: I thank the Minister for his explanation of the way in which the funding system works and, on the basis of that, I shall seek the Committee's leave to withdraw this particular amendment. However, I could not close without making the observation that when the Minister was explaining to us about the underspend and got to the problems with the weather, it reminded me of the expression, ``the wrong sort of snow''. In fact, I was just waiting for, ``Oh, there were leaves on the line.'' However, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.30 am

Mr. Heald: I beg to move amendment No. 135, in page 8, line 20, after `year', insert

    `or any deficit inherited from a Health Authority'.

The Chairman: With this we may discuss the following amendments: No. 138, in clause 8, page 9, line 14, at end add


    (c) any deficit inherited from a predecessor body.'.

No: 89, page 10, line 8, at end insert


    (c) any deficit from a predecessor body.'.

No. 144, in clause 9, page 10, line 27, at end add


    (c) any deficit inherited from a predecessor body.'.

Mr. Heald: I shall try to be relatively speedy because of the amount of business that we have to transact in the next hour.

Amendment No. 135 would enable the Secretary of State to pay the deficit that a strategic health authority may inherit from a health authority. I understand that many NHS trusts are overspent, and receive their funding from health authorities. Health authorities—in effect, the Secretary of State—have liabilities to the regions.

The Minister told us yesterday that only one health authority had a deficit. I am concerned about that. What does he mean by that? Could he explain it more fully? Many colleagues to whom I talk tell me that the NHS trust in their constituency is overspent. Certainly in Hertfordshire, we believe that the deficit, as we would describe it as laymen, is £30 million or thereabouts; at least, that is what the PCTs and health authorities tell me. Is that a deficit? Is Hertfordshire health authority the one about which the Minister was talking? What about East Surrey where, I am told, the trust was heavily overspent? What is the position there?

What is going to happen in respect of the liabilities? If a trust owes a health authority, does the debt pass to the strategic health authority, or to the PCT? If it passes to the strategic health authority, surely the Secretary of State should be able to provide for it in his allotment. Is the Minister saying that the amount must come out of the money that is provided for the following year for the health needs of the strategic health authority? Are all these new bodies going to start with a dowry of debt? What amount is to be given to strategic health authorities to deal with debt, and how is it to be calculated?

Amendment No. 138 would allow the Secretary of State to take account of any deficit inherited from a predecessor body in allotting money to a PCT. The first amendment deals with the strategic health authority and the second in the group deals with PCTs. Amendment No. 89 would require the Secretary of State to pay to each PCT any deficit that it had inherited, while amendment No. 144 would allow the National Assembly for Wales to take account of deficits in funding each health board. This may sound like a rather technical matter.

Mr. Hutton: If I have understood the hon. Gentleman clearly, the amendment is calling upon the Government to make an additional amount of money available to the NHS over and above existing allocations to cover the deficits.

Mr. Heald: We are trying to understand. We are on a voyage of discovery in a way because—

Mr. Hutton: What is the hon. Gentleman proposing?

Mr. Heald: The Minister must let me finish. We want to know what the deficits are, where they are at the moment, who is to take responsibility for them and how are they to be provided for. If the Minister is suggesting that the Government are going to give strategic health authorities a dowry of debt by giving them the money for the health needs of the area and letting them get on with it, that is not responsible. The Minister may recall that when we were in government, he was always prepared to ask me plenty of questions.

Mr. Hutton: I am grateful to the hon. Gentleman for refreshing the memory of the Committee. My memory might prove to be wrong, but I do not ever remember asking the hon. Gentleman any question at all.

Mr. Heald: I would have to trawl through my memory to remember the exact occasion, but I remember debating at great length with the hon. Gentleman on numerous occasions. For example, there was the Committee stage of the Criminal Justice and Public Order Act 1994, when we crossed swords on numerous occasions.

The Chairman: Order. The Criminal Justice and Public Order Act 1994 is not before this Committee.

Mr. Heald: I was not a Minister at the time. When I have an idle moment, I may search through the archives to see what comes out. I commend the amendment.

Mr. Hutton: The amendments would require the Secretary of State to take into account inherited financial positions in determining allocations to primary care trusts and, because they relate also to Wales, to local health boards. It is difficult to avoid the conclusion that the hon. Gentleman is asking us to provide further resources to the NHS, over and above the existing allocations, to cover those deficits. I would be interested to hear what his right hon. Friend the shadow Chancellor makes of the amendments. Perhaps the hon. Gentleman will let us know.

The amendments might be based on the hon. Member for North-East Hertfordshire's concern about the consequences for PCTs and strategic health authorities of taking over part or all of the creditors of health authorities. This comment will not surprise him; the amendments are unnecessary. Funding for the national health service is allocated primarily in response to the identified health needs of communities; it should not be driven by other considerations, which would be the effect of the amendments. From the point of consistency, that has been the view of previous Conservative Administrations as well.

The financial position of the NHS has greatly improved from that which we inherited from the previous Government. I am reluctant to go into great detail, but it is important for the Committee to appreciate that health authorities and NHS trusts plan to achieve a balanced financial position this year, 2001–02. That is a massive improvement on the deficits of nearly £460 million that the NHS inherited, thanks to the stewardship of the previous Administration. I do not have an exact figure to mind, but the current level of deficit across the NHS is just over £120 million. That is substantial, but much better than it used to be.

Mr. Heald: Yesterday, the Minister said that only one health authority had a deficit. If so, that £120 million seems an awful lot of money.

Mr. Hutton: I was talking about health authority deficits, and there is only one health authority with a deficit. Clearly, NHS trusts have deficits; the hon. Gentleman knows that, because of problems in his constituency. I was talking about health authority deficits.

Mr. Burns: Which one?

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Prepared 29 November 2001