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8 Jan 2003 : Column 246—continued

Mr. Simmonds: Has the hon. Gentleman considered the possibility of extending foundation hospital trust status to hospitals that do not have three stars? I put that point to the hon. Member for Mitcham and Morden (Siobhain McDonagh), as it may be a way to improve the performance of hospitals with two or fewer stars.

Andy Burnham: That is a reasonable point. My guess is that the Government are starting with three-star hospitals because the initiative is taking the form of a pilot. Such hospitals are perhaps best placed to go forward with what is, effectively, a new structure. Wigan and Leigh NHS trust in my constituency has two stars and I would very much like it to be able to graduate towards foundation status in due course. I hear the point that the hon. Gentleman makes.

With all respect to my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson), I do not see how the policy is being introduced at the expense of the rest. I do not see that it will take anything from the rest. In fact, all it will do is create a system under which they may aspire to do something that they do not do at the moment. I do not see how it will impoverish them in any way.

My main concern echoes the remarks of my hon. Friend the Member for Wakefield—I agree fundamentally with a lot of what he said. Welcome changes have been made in the NHS with the creation of primary care trusts and a shift of resources to

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community level, but I have a small concern that those changes will reassert the primacy of the acute trust in the local health economy. That would risk undoing some welcome progress that has been made in this regard. I wholeheartedly endorse the principle that more and more of the NHS cake should be spent at community and primary care level.

Some—including, I believe, the NHS Confederation—have suggested that foundation status might be applied to a local health system and not just the acute trusts. There is something in that idea that might be worth investigating. Will the Minister touch on that in his remarks?

I want to comment on the rise of mutualism not just in the NHS, but in social policy generally. We have heard a lot of talk in the past few years about the search for a third way, but I strongly believe that community and mutual ownership is the closest that people can ever get to that. We are seeing a welcome revival in the co-operative sector, for the simple reason that it offers solutions to some of today's social problems. I am thinking in particular of estates, for which crucial public services are simply not provided sufficiently well by current providers. Mutual solutions can offer an answer to these gaps in the market.

One example is nursing homes. Conservative Front Benchers go on at great length about nursing home capacity and the quality of care in nursing homes. The option introduced by the Conservatives failed local communities, and the previous system was not particularly good either. The Conservative option failed because it allowed a private nursing home, on which a community can be dependent, to up sticks at will and go, leaving that community high and dry. The lack of sufficient safeguards to maintain the service within a community was a real flaw in the changes introduced by the Conservatives in the early 1990s. The nursing care sector is crying out for a mutual solution whereby people become members of a scheme that they pay into, and which will look after them in old age. Perhaps the Minister and the Government should look into that.

If we get right the planned reforms in respect of foundation hospitals, they could set an exciting precedent in the introduction of community involvement and ownership across the public sector. I chair an organisation called Supporters Direct, which was set up by the Government to promote supporter and community ownership of football clubs. Its aim is simply to help supporters' groups to set up mutual trusts as a vehicle for raising funds, purchasing shares and gaining influence in the clubs that they love. To date, it has helped to set up more than 70 supporters' trusts in England and Scotland, the vast majority of which are mutual societies and industrial and provident societies. They have a range of influences; some have a very small shareholding in a club, others own a club—I am thinking of Lincoln City and Chesterfield—outright.

As hon. Members know, I always try to get the conversation on to football as quickly as I can, but there is a genuine parallel to be drawn here. Football clubs and hospitals are linked. People feel emotional about them; they are a source of civic pride and civic identity. People care about them, and they want to see them thrive and improve. People wring their hands about

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declining participation in the democratic process, but at launch meetings for supporters' trusts, some 800 to 1,000 people—including young people—are engaged in a community endeavour. I see no reason why that enthusiasm cannot be introduced to the NHS and the provision of hospitals and health services. People would like more involvement in the way that their services are provided.

This must not be a token, paper exercise whereby someone has a vote in a mutual society but they never use it; it must be a genuine, democratic process. I agree with the Secretary of State that people need to opt into the process of becoming a member of a trust; simply giving them membership is not enough. Mutual societies work when there is a groundswell of emotion, and people want to do something about a service that they care about. I urge the Government to keep that principle as part of the forthcoming legislation. I also ask them to look at the industrial and provident society ownership model as a way forward for foundation hospitals. It is a truly democratic, transparent and accountable system, and an excellent vehicle that could be applied to foundation hospitals.

I understand Members' reservations about this policy, and a whippersnapper like me would do well to listen to the likes of my hon. Friend the Member for Wakefield and my right hon. Friend the Member for Holborn and St. Pancras. Their concerns are genuine and need to be thought through, but they should not stand in the way of a potentially exciting reform and a new era for the national health service.

5.4 pm

Mr. Andrew Lansley (South Cambridgeshire): I appreciated the speech by the hon. Member for Leigh (Andy Burnham), who was going well until he got onto football. I want to use as my starting point the speech made by the hon. Member for Stockton, South (Ms Taylor), who was kind enough to allow me to intervene on her. She and I both have a three-star hospital in our constituencies: in fact, I have two—Addenbrooke's and Papworth, one a teaching hospital, the other a specialist trust.

I gathered from her speech that the hon. Member for Stockton, South will encourage the University hospital of North Tees to seek foundation hospital status, and I shall encourage Addenbrooke's to do the same. I spoke to that hospital's new chief executive on Monday, and I want to use my speech to influence the Government's policy, as I want Addenbrooke's to have the freedoms that go with foundation status. I want it to be able to respond more effectively to the demands and needs of NHS patients. However, unlike the hon. Lady, I do not believe that the policy has been developed to the point where hospitals have the sort of freedoms that they should have in an NHS that is going to meet patient need.

Addenbrooke's has expressed a broad commitment to apply for foundation status. It wants to expand community engagement and take further its already excellent relationships with local people. Although foundation status will offer local people the chance to engage in hospital governance, I believe that the hospital could achieve much of what is intended to be achieved by means of foundation status without actually securing that status. However, if that is what is required, that is fine.

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The Minister of State, the right hon. Member for Barrow and Furness (Mr. Hutton), is on the Front Bench at present, and he and I have debated elsewhere the Xagenda for change" proposals in the NHS. I want to help Addenbrooke's hospital in its aim of accelerating that rate of change, and to that end I shall focus on two important matters—real local accountability, and freedom and financial flexibility.

I listened with care to the speech by the right hon. Member for Holborn and St. Pancras (Mr. Dobson). He asked what was wrong with the current system that required the introduction of foundation hospital status. I shall give an example of the way in which the present system is not delivering. Addenbrooke's is a highly successful teaching hospital with an international reputation, and also a district general hospital to which doctors want to refer patients. To be most efficient in operational terms, bed occupancy should be between 82 and 85 per cent., but it is currently running at 98 per cent.

The NHS has rising real resources and rising demand, but constrained supply. That is where the system needs to be changed. We need greater productivity and efficiency from the capacity that exists in the NHS, and we must ensure that increases in capacity respond more effectively to patient demands, as expressed through patients' relationships with clinicians.

I turn now to the issues of local accountability and of freedom and financial flexibility. I am worried that local accountability will remain limited in two respects. First, the Government say that the centre will give up control to people in local areas. The Secretary of State was careful to talk about control from Whitehall, but control does not have to be traceable to Richmond house to qualify as central control. The independent regulator will still be a central control over the activities of foundation hospitals. The proposed Commission for Health Care Audit and Inspection will be a form of central control. As the NHS Confederation has pointed out, the data collection requirements will also be a form of central control. The purchasing relationship with primary care trusts and other commissioners, in so far as they are subject to NHS central guidance, is a form of central control.

All these forms of central control will, in their way, limit local accountability. Only to the extent that those controls can be progressively reduced over time in response to the increasing standards of the NHS foundation hospitals, as one would hope to expect, would one achieve the local accountability that matters.

The second problem with local accountability is structural, and it brings me back to PCTs and purchasing. My right hon. Friend the Member for Charnwood (Mr. Dorrell) made the point that if we want to allow local people to change the shape of services and develop innovative, enhanced services in the way that they wish, the most immediate and direct way to do that is to give them more effective control over primary care trusts, because they are the commissioners of services. The implication of the question of the hon. Member for Leigh about foundation status for a locality is in effect that locality commissioning, which was provided for in the legislation before the 1997 election, is a means by which, if local people are involved sufficiently effectively, services that respond to local needs can be delivered.

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The other means of delivering such services is to respond to patient choice. It will not surprise right hon. and hon. Members to know that that is the way I wish to go. Instead of setting up a bureaucratic mechanism for providing local interpretation of patient needs, we should allow patients to do that more directly through the reintroduction and extension of patient choice. That is where I think, structurally speaking, there is a large lacuna in the philosophy underlying foundation status.

On freedoms and financial flexibility, Addenbrooke's quite rightly pointed in its document to the opportunity to retain proceeds from asset disposals, to retain any operating surpluses and to access capital from public and private sector sources. That reflects the language of the Government's document published in early December. However, retaining proceeds from asset disposals is an interesting concept for a hospital that is on a constrained site where every bit of land should be used for a medical or biomedical purpose and considering that the Government put a lock on assets so that they cannot be disposed of. Quite what freedom that means for Addenbrooke's, I do not know.

Retaining any operating surpluses is a curious concept. Under the current financial system, although the work load at Addenbrooke's has risen dramatically and it is operating at capacity, it is still running operating deficits. Perhaps the so-called payment by results system and money following the patient will deliver operating surpluses. If so, that is a worthwhile benefit. However, the borrowing proposal is not as obvious a benefit as it looks. My interpretation is that undertaking a private finance initiative investment project with a 25-year profile of repayments and involving the private sector may mean that a five or seven-year long-term agreement with a primary care trust will not suffice for the private sector investor's purposes. That investor will still require the Secretary of State's guarantee in some form. Perhaps a letter of comfort will be provided whenever the foundation hospital receives the assent of the independent regulator to forward business plans. None the less, the money on offer is still essentially public sector underwritten investment for the future and the foundation hospital will be locked into it.

The financial freedoms do not seem as great as they should be unless the revenue—and this is where borrowing is intended to be secured—is sufficiently responsive to the performance and capacity growth of the foundation hospital. If a foundation hospital improves its efficiency, it ought to be able to attract additional activity. If it improves its quality, it ought to be able to attract an additional premium on its price. I do not want to introduce a dogmatic, ideological note but I am worried that, because the Government rail against the so-called internal market, they have, as a matter of ideological conviction, decided that there should be a national tariff with regional variation. In effect, that means that commissioning can only be undertaken on the basis of cost and volume with no discount for efficiency or premium for quality.

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