Examination of Witnesses (Questions 140-159)
MR JOHN
BACON, MR
RICHARD DOUGLAS,
MR GILES
DENHAM AND
MR ANDREW
FOSTER
16 OCTOBER 2003
Q140 Dr Naysmith: What part does
brokerage play in this process?
Mr Douglas: It depends how the
money is brokered. It is slightly complicated. I apologise.
Q141 Dr Naysmith: This happens all
over the country?
Mr Douglas: We have a position
where we can move money from one health authority, or Trust, or
PCT, to another, so we move it sometimes to help with financial
problems. Where we have agreed and the local health community
has agreed to move that money at the start of the year, as part
of a plan, then the receiving organisation will not show as being
in deficit, because it is planned, it is managed within that resource.
If an organisation hits financial problems during the year and
then we have to move money, effectively, we will cover the deficit
but the deficit will still appear in the receiving organisation's
accounts.
Q142 Dr Naysmith: Would it be fair
to say that this opens up all sorts of possibilities for financial
juggling, shall we say?
Mr Douglas: No.
Q143 Dr Naysmith: Creative accounting?
Mr Douglas: We agree at the start
of the year where the planned support is, so people have to tell
us if there is going to be planned support to an organisation.
We can then check that through our records at the end of the year,
so we can always make the distinction between planned support
and something which is done just to help someone out in the middle
of the year. All the adjustments to organisations' resources effectively
have to be made through the Department of Health.
Mr Bacon: I think it is fair to
say as well, Richard, that over the last few years we have been
tightening up these types of activities.
Q144 Dr Naysmith: You think brokerage
and brokering is something on which you want to tighten up?
Mr Bacon: Yes. We are looking
to ensure that, as we put it, the deficits lie where they lie,
so that the true position of organisations is shown in the accounts
on their operating base. Which is why you might expect to see
slightly more organisations with deficits now than perhaps historically
has been the case, because we have sought to ensure that organisations
focus properly on their financial management and that they do
not have so many opportunities to engage in—
Q145 Dr Naysmith: That is a slightly
different answer from that of Mr Douglas, I must say?
Mr Bacon: I do not think so.
Mr Douglas: I do not think it
was different.
Dr Naysmith: Alright. Do not bother to
reconcile it.
Q146 Jim Dowd: I want to pick up
what Mr Douglas said. You said that you move funds, resources,
between Trusts?
Mr Douglas: We can do it between
Primary Care Trusts, then we can do that with Trusts, yes.
Q147 Jim Dowd: For what reason would
you do that, and, say, what does the donor gain from this?
Mr Douglas: It does not happen
without the donor's consent. What will happen, potentially, within
an area, an individual Trust or organisation within a strategic
health authority might have particular difficulties in a single
year. As part of helping out that part of the NHS, the strategic
health authority might arrange for someone else effectively to
loan them money over the year. The money then comes back in the
following year to the donor.
Q148 Jim Dowd: Interest-free?
Mr Douglas: At the moment, interest-free,
yes. We have operated an interest system in the past but it was
quite a few years ago.
Q149 Chairman: One wonders what will
happen with Foundation Trusts and donations, whether that will
continue?
Mr Douglas: I think it would be
quite difficult.
Chairman: Yes, I thought so.
Q150 Mr Amess: I think you can understand,
gentlemen, why I said that Members of Parliament do have some
difficulty understanding these figures, but we do accept that
you have total command of the figures with which you are presenting
us. Talking now about the greatly discredited star rating system,
which is totally meaningless, I am puzzled why a greater proportion
of Trusts failed their financial management targets in 2002-03
star ratings than in the previous year? Mr Douglas is obviously
going to tell us.
Mr Douglas: I think that relates
back partly to Mr Bacon's comment a few minutes ago. We have tightened
up the criteria significantly, in terms of how people present
their financial information, so I think there is a tightening
up of the system which has had that impact. I do not know whether
the figures that you are referring to include the Primary Care
Trusts as well, or just the NHS Trusts. I am not certain whether
there is a Primary Care Trust impact in that as well.
Q151 Mr Amess: I think it is just
the Acute Trusts, Ambulance Trusts, Mental Health Trusts, NHS
Trusts?
Mr Douglas: It will be partly,
at least, down to the tightening up of the financial reporting
criteria, not entirely. It may be that just some of those organisations
have not controlled their finances as well this year as last.
Q152 Mr Amess: Where does the impetus
for the tightening up come from?
Mr Douglas: The impetus comes
from the Department of Health.
Q153 Dr Taylor: Is there not a more
obvious answer, because we have lost health authorities in the
time between these two figures, and so the health authority deficits
have been subsumed into some of the Trust deficits? Is not that
the explanation?
Mr Douglas: No, because generally
they would have moved to the Primary Care Trusts rather than to
the NHS Trusts.
Q154 Mr Amess: My final question
is on underspending, which always is something which I think causes
us trouble. While this might be a small amount in comparison with
the totality, gentlemen, I want to know why there was an underspend
of £702 million on hospital, community health and discretionary
family health services in 2001-02?
Mr Douglas: I think the point
that you made at the start is the key point there. It is a relatively
small sum on the global budget. The equivalent figure in 2002-03
was about £590 million. What we are trying to do is manage
finance effectively across about 600 organisations, not including
the Department itself. We cannot overspend our voted monies by
one penny, so inevitably there will be some degree of underspend
each year. None of that money is lost, it is all there, available
to spend the following year. It is all there available for those
organisations which underspend the following year.
Q155 Mr Amess: Moving on from that,
what specific areas within this saw the largest underspends? Have
you been able to do any analysis on that, or is there any trend?
Mr Douglas: I have most freshly
in my mind the 2002-03 underspend, because that is the most recent
one. There is a whole mix there. There was £380 million revenue,
£210 million capital, for that £590 million. The NHS
underspend within the revenue was about £70 million or £80
million. You may well ask then did the Department on all its budgets
underspend by £300 million, and the answer to that would
be, yes, it did, but it did that for a very particular reason.
Round about December last year, the NHS was forecasting to us
a potential financial deficit of about £200 million. To make
sure we could cover that financial deficit, we deliberately generated
underspends within central budgets, to make sure we did not overspend
the entire parliamentary vote.
Q156 Mr Amess: Can you tell the Committee
again what specifically you are doing to reduce these underspends?
Mr Douglas: All we can do, frankly,
is continue to do what we do now but slightly better. We are very
careful, in the way we deal with the NHS, to get the NHS forecasting
as good as possible in this. We have had a track record in the
past where in mid year you would get quite a large financial deficit
forecast by the NHS, which by the end of the year would come back
to zero or surplus. That was partly because we tended then to
put out money part-way through the year. If people said they were
in deficit, we would find a way of giving them money. One of the
ways we have improved this is we do not give people money currently
through the year, so if people are forecasting a deficit they
do not get immediately some extra money from the Department. That
is the main change I think we can make. The rest of it is very
direct and regular financial monitoring of the central spend,
week by week, month by month. I would expect still every year
to be in the region of the £300 million to £500 million
underspend, because, anything less than that, in some way, I am
taking far too big a risk on the parliamentary vote, which I cannot
exceed.
Q157 Jim Dowd: Can we look at targets.
I know all annual reports, from all kinds of organisations, public,
private or otherwise, tend to present the organisation in the
best possible light, so you would expect that. In the Annual Report,
when you look in the section here on targets you will find that
they are all either on track or being met, so you get the impression
that the whole thing is progressing smoothly and evenly and uniformly.
Would that be a correct impression to gain, as regards the NHS
Plan overall?
Mr Bacon: Obviously, there is
a wide range of targets in the NHS Plan, and we can talk about
specifics if you like. We have a clear commitment to deliver those
targets across the piece. The system plans to do that, and I must
confess we performance-manage them rather heavily in doing so.
First of all, I think we ought to recognise the Service has been
successful in delivering those targets, and, secondly, we have
been very active in ensuring that they do.
Q158 Jim Dowd: There are parts of
the Plan which clearly are not being achieved, or their events
are worsening, their circumstances, their targets. If you look
at things like rates of children smoking and obesity, there is
nothing in the Plan on obesity itself but it is connected intimately
with targets on cancer and diabetes and other things. Would it
not be better if there were a more total picture, "Is this
where progress is being made?" and that is completely laudable,
but a more objective assessment, where you can say, "We are
not actually meeting the targets here," or "Things are
actually badly against us, in some areas"? Will this not
re-establish, to some degree, or reinforce, public confidence
that they are getting the full picture and not just the rosiest
possible interpretation?
Mr Bacon: First of all, the factual
data we publish is factual, and therefore if a figure is improving
it shows it is improving, if it is not it shows it is not, which
is why you have been able to detect that. Clearly, smoking is
a target which is very high priority, and we have had some success.
It is one of the things on which Primary Care Trusts are adjudged,
and through that we are seeking to ensure that they focus on it
as much as they do on some of the more high profile type. It is
a very difficult problem, but, as you will know, one on which
the Chief Medical Officer is very, very focused and we are keen
to see improving. There is no target for obesity, as far as I
am aware, at the moment, but that is the sort of thing we will
be looking at in terms of thinking about what our future objectives
might be.
Mr Douglas: In terms of the overall
presentation, we require the departmental report, essentially,
to report against progress on our PSA targets, and that is what
we try to do within there. Whether people feel that was a fully
rounded assessment of everything on that is another matter.
Q159 Jim Dowd: One of the most contentious
areas is the waiting list targets, and, of course, the BMA and
others have concerns that actually this distorts clinical priorities.
We get some curious patterns of behaviour, particularly with the
four-hour A&E target, scores of ambulances waiting outside,
because the clock starts running as soon as they unload, when
the A&E is full, which clearly is in nobody's interests. According
to the Department, the change in the definition of the four-hour
A&E waiting target was a result of listening to staff at the
time it was launched originally in the NHS Plan three years ago.
Why has it taken more than three years to take any action to amend
that?
Mr Bacon: I think it is a legitimate
comment. First of all, our priority is directed at the `12 hours
to admission' target, on which we put lots of emphasis and effectively
eliminated 12 hours to admission, that was our primary focus.
I think it is absolutely fair to say that only when we felt we
had really overcome that target did we switch managerial attention
to the four hours target, which, as you know, is four hours from
arrival to either discharge or admission, which is a very, very
high standard. By world standards, that is a very challenging
target. We have seen what I think is pretty spectacular progress
against that, over the last 12 months, to the extent that we managed
to get the figure up to the interim target of 90% at the end of
March of this year. Although we had a very slight drop in April
and May, we are now back up to 90%, and that is being sustained.
I think that is a really significant improvement in the quality
of services to patients. Also, all of our evidence says that not
only is it a much better service for patients but it makes the
working environment for our staff much better, because the whole
system is less pressured and therefore patients are less aggressive,
etc. I think that is a really significant achievement for us.
We are looking now to take that figure up to 100% for four-hour
performance, but we are engaged in some very good dialogue with
the professions about whether there are certain types of cases
where it is not sensible to seek to meet a four-hour target. We
have been persuaded that there are exceptions to that, where we
acknowledge that it is better clinical practice and better for
the patient to spend longer in A&E than either to discharge
or admit. We are in the process of agreeing with the profession
what that list of exceptions should be, and that will mean then
that the target is set excluding those, what we call, clinical
exceptions.
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