NHS Reform and Health Care

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Mr. Hutton: I will come to it, if the hon. Gentleman can bear with me for a second.

In the past financial year, only one health authority—Bexley and Greenwich—failed to achieve a balanced financial position. That health authority is a new one—it merged in April this year—and has taken on difficulties that it is trying to address. However, all health authorities plan to achieve a balanced financial position, which is a massive improvement on the deficits of £459 million that existed in NHS trusts in 1996–97. That is due in part to the financial stability that we have given the NHS, and it means that strategic health authorities have the best foundation on which to face the full challenges of their devolved responsibilities.

Amendment No. 144, which relates to provision in Wales, raises wider issues affecting the government of Wales and the devolution settlement. As part of its devolved functions, it is for the National Assembly for Wales to consider how debts arising from historical overspend are to be addressed. It is not a matter for primary legislation, and the Government do not intend to alter the terms of the devolution agreement. It is properly for the National Assembly to decide, and the amendment, inadvertently or not, would cut directly across that.

The debate has been primarily about deficits. It might be helpful to say a few words about those deficits that exist. The NHS has run up accumulated deficits during the years. An accumulated deficit is not necessarily indicative of either a poor financial position or a cash shortfall. It is a consequence of normal operations in any normal organisation. In any public or private sector body, amounts are due to be paid at the end of the year. In the case of health authorities, most sums will be moneys owed to and from other NHS bodies. It is not, as I said earlier, all a debt repayable on demand. As accounting rules require building values to be recorded on a balance sheet, the majority of sums do not involve repayment. I am not an accountant, but I wish that a set of accounting rules applied to my overdrafts in the same way as to these matters.

The hon. Gentleman explained the amendment well and we understand his point. Strategic authorities will not inherit the deficits of NHS trusts. Assets and liabilities relating to provider functions will be mainly retained by the NHS trusts themselves, not passed on to the new primary care trusts. We are dealing with important issues about deficits in the national health service. Significant extra resources will provide the NHS with the best possible financial platform for the future.

Mr. Heald: Is it correct that a health authority is responsible to the region for the debts of NHS trusts, as well as its own? If so, will PCTs acquire that liability under the new arrangements?

Mr. Hutton: I do not think so, but I hope that the hon. Gentleman will allow me to provide a more detailed answer later. I have tried to deal with his concerns about precisely where the deficits will go. As I understand it, they will mainly stay where they are. An NHS trust's deficit stays with the NHS trust. The health authority has an obligation to break even and maintain a sound financial position overall, but my understanding is that deficits of acute trusts, for example, will not become inherited deficits for the strategic health authorities. That is not how the new arrangements will work.

Mr. Heald: Will the Minister clarify whether the PCTs will inherit any deficits?

Mr. Hutton: Not unless it is a deficit of the PCT itself. They will not take over responsibility for deficits inherited or accrued over the years by acute trusts. I hope that that explains the position. If I am incorrect, I shall take the opportunity to clear it up later in the Committee or through correspondence.

Dr. Harris: If a PCT were heading for a deficit, would the Government's advice be to accept it and overspend, or to cut treatment provision? If a PCT cuts back because it has not been allocated enough money, who, if anyone, would be to blame?

Mr. Hutton: The hon. Gentleman is obsessed with blame, but I am not getting into that. I tried to explain earlier the nature of the deficits, not all of which give rise to a demand for immediate repayment. Some are bound up with accounting transactions and the recording of asset values on balance sheets. With record investment going into the NHS, trusts cutting back on services could never be justified. A growing financial resource is available for the NHS and we are not in the business of reducing health service expenditure.

We have dealt fully with the issues, but I suspect that we might have to return to some of them. If I can provide the Committee with further information—particularly about the questions asked by the hon. Member for North-East Hertfordshire—I shall do so.

Mr. Heald: We have had an informative and helpful debate. I am prepared not to press amendments Nos. 89 and 144. The Minister said that he would write to clarify whether PCTs would inherit liabilities for the debts of acute and other trusts. Given that there remains some doubt—I await the Minister's letter—it would be sensible to press amendment No. 138, which gives the Secretary of State the power to take account of any deficit inherited from a predecessor body in determining the amount to be allotted to a PCT. I would seek to divide the Committee on that amendment, unless there are procedural difficulties. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.45 am

Dr. Harris: I beg to move amendment No. 149, in page 8, line 21, leave out subsections (3), (4) and (5).

The Chairman: With this it will be convenient to take the following: Amendment No. 148, in page 9, line 7, at end insert—

    `and sums paid under this subsection shall be disbursable at the sole discretion of the Primary Care Trust.'.

Amendment no. 150, in page 9, leave out lines 17 to 43.

Amendment no. 151, in page 9, line 46, leave out from `year;' to end of line 2 on page 10.

Dr. Harris: I am grateful to members of the Committee for allowing the amendments to be taken today, when I am able to attend. I recognise that that involved inconvenience to other hon. Members and that it has disrupted the timetable. The hon. Member for Wyre Forest also wanted to participate in the debate, as he has done in others. Amendment No. 148 stands in his name as well as mine, although the other amendments do not. The hon. Gentleman is presently at the Health Select Committee; I understand that other hon. Members would have liked to attend the Select Committee but have chosen to be here. I shall be as brief as possible, because I know that we need to conclude these matters quickly.

The amendments are about the discretion for primary care trusts—strategic health authorities as well, but primary care trusts are the main recipients of funding—to choose how they spend their resources. What discretion do they have with respect to genuine deficits as opposed to accounting deficits, caused by some bills not being paid until the first quarter of the following year because they have not been received in time or by large bills, such as energy bills, being handled in that manner?

I accept that I was provocative in asking where the blame would go; I regret that, because I genuinely want to discuss the issue. However, in the Minister's response to my last point, he said that because of the generous growth settlement this year, no primary care trust—I suspect that he meant commissioning group—should be reducing current service levels. By implication, that means that everything can be afforded and nothing has to be cut. That is either an astonishingly naïve assumption—I would not accuse the Minister of naivety—or spin.

I accept that this year growth has been high, relative to previous years, but surely the Minister accepts that pressures on commissioners are increasing. Only if the growth money exceeds the pressures will there be genuine growth and protection of existing services from cutbacks. That is a mathematical reality. Health authorities, which are currently the commissioners, and primary care trusts have told me that the growth of must-dos—we will not go into their merits—stemming from the Government with respect to national service framework requirements and rulings from the National Institute for Clinical Excellence have outstripped growth again this year, even though the growth has been more substantial than in previous years.

That is why many of our constituents are seeing cutbacks in service levels. Indeed, although the picture is variable, any increase in average waiting time is, by definition, a reduction in service and implies that resources were removed to meet must-do requirements.

The Government are concentrating on elective issues and, as a result, it is often areas outside of those favoured that end up having their funding reduced. Does the Minister wish to qualify his view that there is sufficient growth money this year, so no service provision needs to be cut? If hon. Members demonstrate that health authorities and PCT commissioners have had to reduce from the current level of service for financial reasons rather than for reasons of doubtful efficacy and rationalisation of service re-provision, will he, as he implies, say that they are responsible for that decision? They need not have made that decision on financial grounds, as there may have been enough money in the system.

If there is enough money in the system for the NHS to get better and never to get worse, how can the Minister explain his analysis when, the day before yesterday, we were told that the NHS needed much more money? Indeed, last week, his right hon. Friend the Member for Norwich, South (Mr. Clarke) accepted that, in some areas, some services had gone backwards because of the funding problem.

Amendment No. 149 seeks to leave out subsections (3), (4) and (5) of clause 7 which add strategic health authorities to the existing provisions in the amended 1977 Act. As I understand it, that will allow the Government to change the allocations based on performance measures of strategic health authorities.

Amendment 148 takes a slightly different tack, but was rightly selected in this group. The amendment proposes that the disbursement of funds paid under the subsection should be at the sole discretion of the PCT as opposed to the Government, or a Government agency directing how to spend those funds. This is an important point that I have made previously. If the Government are genuine about seeking to devolve budget and responsibility to a low level and to the front line, they cannot claim to have devolved responsibility while having multiple directions and lists of must-dos with which PCTs have to comply.

Amendment No. 150 leaves out the parts of clause 8 that set out these measures, specifically subsections (3), (4), (5) and (6). The further amendment in the group takes out the lines in subsection (7) that relate to the Secretary of State's power to change the allocation based on performance measures of some kind.

I said earlier that that is inconsistent with the maximum devolution of discretion and responsibility, and there is a question about whether it is appropriate for the Government to set targets, which will be political in nature, for managers and clinicians, who are supposed to be patient-driven rather than politics-driven.

The Government do a fantastic job in respect of the setting of political targets and expecting managers and clinicians to meet those, but does the Minister accept that if those targets are set for political purposes and are not clinically driven, that can distort clinical priorities in a way that impacts on the best interests of patients? An example is the Government's obsession with the numbers of people on a waiting list. The setting of a maximum waiting time—even if subdivided by clinical areas, as the Conservatives propose; a matter that I discussed at length with the Front-Bench predecessors of the hon. Member for North-East Hertfordshire—will mean that the patients that a PCT commissioner must get treated most urgently are not the most urgent in clinical terms but those that run the risk of exceeding the maximum waiting time. Is it ethical for doctors, whether managers or front-line clinicians, to accept a diktat to fulfil performance measures when that conflicts with what they consider to be appropriate clinical priority?

Although the Government have said that nothing in the targets should be seen to override patients' clinical priority, managers are clearly measured on their performance. The Government are angry when people exceed the waiting time limits because Opposition Members take them up on it. The Minister may realise that I have never, in my current role, attacked the Government for failing to meet an 18-month maximum waiting time limit. To do so would be to support the view that it is important to stay within the limits, when it may be appropriate for people to wait for what could be described an unacceptably long time if clinical priorities dictate that other patients are seen earlier.

Are the Government's likely targets reasonable? The record of the Government—and, probably, that of any Government—shows that the targets will be not evidence-based or patient-driven, but politically driven. Managers inevitably will feel obliged to ask doctors to work in line with the performance measures, rather than clinical need. Doctors, clinicians, nursing staff and other health care professionals may feel torn between their ethical duty and their employment duty to do the bidding of the Government and the managers. This part of the Bill creates that tension.

It is invidious to reward commissioners who are in the fortunate position of being able to implement measures, regardless of their merit, by taking money from the general amount available—and, therefore, from other commissioning groups—while penalising commissioning bodies, PCTs and strategic health authorities who, because they have not had enough funding, have been unable to meet the targets. Taking money and resources from them creates more problems because it penalises the underfunded to pay those who, by a quirk, are better funded.

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Prepared 29 November 2001