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8 Jan 2003 : Column 210—continued

Mr. Dobson: Does the right hon. Gentleman agree that there is a huge amount of innovation throughout the health service, and that the biggest problem is identifying good innovation and getting other people to take it up?

Mr. Dorrell: I agree that there is a huge amount of innovation in the health service, but I share with the Secretary of State the ambition to see more innovation because I do not believe that the health service is changing fast enough to keep up with the opportunities that exist in the delivery of modern health care.

From his speeches, the Secretary of State seems to believe that we need a freer regime in the delivery of health care. He understands that that reflects European experience. The right hon. Member for Holborn and St. Pancras was dismissive of that, but it is an important, powerful argument that while almost all other west European countries accept, as we do, the objective of delivering health care on the basis of clinical need without regard to ability to pay, they are better at delivering that policy. The Secretary of State has noticed that and is trying to apply those lessons here. He has a long way to go, but he has started, and I welcome that.

Angela Eagle (Wallasey): Since the right hon. Gentleman is praying in aid Europe, does he agree that European systems have a much higher tax base and spend more money? Does he therefore agree with his Front-Bench colleagues who want to make a 20 per cent. cut in health spending?

Mr. Dorrell: I strongly agree with the proposition that every continental European system spends a larger share of national income on health care than we do. The part of the lesson that the Secretary of State, wherever he is—he has a national health service to run—has not yet learned is that European systems can teach us how to liberalise not only the provision of health care but the demand side of the service, so as to get more resources into health care.

My focus this afternoon is on those parts of the Government's policy on foundation hospitals with which I agree. The Secretary of State has learned from the European experience and from the basic principle that is evident in the management of large organisations the world over: the more that one delegates and gives people responsibility for the services that they deliver, the more innovation and efficient use of resources one gets.

The Secretary of State is also committing himself to the reform of the public sector that the Prime Minister described as one of the most difficult challenges that his

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Government faces. He said, and this must have been two years ago, that his back already bore the scars inflicted by the opponents of public sector reform. One result of the Secretary of State's policy is that the Prime Minister can now at least see who his enemies are—the enemies of public sector reform. They are the 109 Labour MPs who do not accept the logic of the Government's policy.

Those Members are a small minority in the rest of the community, because for most people who are interested in the delivery of health care in this country and the rest of the world, the arguments that the Secretary of State has now accepted have been a commonplace for well over a decade. However, there are still 109 Labour MPs who do not accept them. The right hon. Member for Holborn and St. Pancras and the hon. Member for Wakefield have already made clear their opposition, and we are led to believe that the Chancellor of the Exchequer is not persuaded by those arguments. The Prime Minister can now at least know who his enemies are—those to whom he referred as having already inflicted scars on his back.

Moving from the broad strategy to the detail, because the devil is in the detail of this policy, I want to focus on what I believe is the key question that will determine whether the Secretary of State's logic for greater devolution and greater freedoms for NHS foundation trusts will be carried through in practice. The key question at the heart of the policy is whether what we will be asked to introduce is, in the end, simply a different way of running state hospitals or whether it is a genuine commitment to introduce a new type of institution.

The Secretary of State's speech last May, to which I have already referred, is ambiguous on that subject. He said:

How far down the road to a genuinely new type of institution are the Government prepared to go? I strongly believe that the Government need to be bold and to go as far as possible. That is the test that will need to be applied to the legislation when it is published.

The accountability for the new foundation hospitals has to be seen to operate through the commissioning process and to apply to people who are close to the patient, rather than through the bureaucracy and the command and control system inherited from the old health service. Ministers have to ask themselves, and they must have a crystal-clear answer, what is the core activity of the NHS. I am very clear about what I believe it ought to be. It ought to be the delivery to patients of care on the basis of clinical need. The NHS ought to be a commissioning-led service. Frankly, the management of hospitals and of the delivery of health care, including community-based care, is a secondary consideration. If the NHS is to deliver its promise of equitable access to health care, it is the commissioning and the provision of access that is key, not the management of hospitals. That is why hospital management needs to be seen to be freer from the command and control system.

It is still totally unclear where the balance of this argument will ultimately come to lie. The Government's latest publication on the issue was published in

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December and is entitled XA Guide to NHS Foundation Trusts", and it says that four clear principles will be set out in legislation. I strongly agree with the principles that there should be

and that the foundation trusts should

Other activities should be limited

and we should ensure that

Those are four good, strong simple principles with which I strongly agree.

However, we must understand how the balance between those principles and commissioning is affected by the licensing process that the Government are introducing in the middle. The role of the independent regulator can easily undermine to the point of destruction the Government's objectives as stated in their policy. On that point, the December document gives cause for concern.

The first item that the Government have seen fit to identify as being a function of the licensing system is the

We can all agree that it is a statistical fact that private patients are a relatively small part of NHS activity, but I take no comfort whatever from the fact that that is the first bullet point and the first objective listed for the licensing system. I do not understand why that is part of the licensing function at all when one of the basic principles that I have already mentioned says that other activities can be carried on only if they

the primary purpose of the foundation. Any further limit on the services to private patients is otiose.

The second bullet point is perhaps more fundamental in terms of the concerns that it raises. The licensing system will also deal with the clinical services that the foundation

If the independent regulator has carte blanche to address all the questions of what is the right type of clinical service to provide to a local community, what is the purpose of the commissioning system? That is what commissioning must be about. I agree with very little of what the Liberal Democrats' spokesman said, but I strongly agreed with him on the point that the key to success of the policy is strong commissioning. He advocated strong commissioning, and I would add that that is the natural partner of greater freedoms for the delivery of health care. The Government need to develop and publish clear thinking about the role of the independent regulator. The policy will be successful in direct proportion to the strength of commissioning and the relatively limited nature of the licensing system.

I am not arguing that no licensing system is necessary, but that the commissioning system, and not the licensing system, must be the principal focus of decision making. That extends to all the points that my hon. Friend the Member for Woodspring (Dr. Fox) made about borrowing limits and poaching.

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It is not a coincidence that there is a big debate in the Labour party about the introduction of foundation hospitals at the same time as there is a debate about the future evolution of university policy. The freedoms that the Secretary of State has rightly identified as necessary for the delivery of health care in the health service are exactly the same freedoms that need to be introduced in the schools system—indeed, we introduced them into that system through the grant-maintained schools idea—and that need to be developed in the university sector to allow the universities proper freedoms in the use of resources and the delivery of services to their client groups.

The Government must undertake a bold new reform of the delivery of services across the public sector. The gold standard—to use a phrase from the educational world—that the Department of Health should expect is no less freedom for an NHS foundation than the freedom that is accorded to the universities with which many of the foundation hospitals are closely associated through medical schools. I hope that, when the policy is finally implemented, universities and big NHS trusts—

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