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14 Jan 2004 : Column 321WH—continued

Health Funding (Telford and Wrekin)

4 pm

David Wright (Telford) (Lab): It is a great pleasure to be in your company this afternoon, Mr. O'Hara. I appreciate this opportunity to raise the issue of health funding in Telford and Wrekin. I shall focus my remarks largely on the funding of primary care services, but it is useful to look first at the whole health economy in the area to place the debate in context.

Since 1997 health funding in Shropshire, which includes Telford and Wrekin, has doubled to nearly £330 million and it is still rising. That is a record of which the Government can be rightly proud. The two main hospitals serving the Telford and Wrekin residents—the Princess Royal hospital in Telford and the Royal Shrewsbury hospital—have received £20 million of new capital investment in the past three years on new facilities and service development.

The Princess Royal hospital has acquired a new endoscopy unit, a new maternity unit, new trauma and orthopaedic facilities, new X-ray facilities, a new fracture clinic, a refurbished gymnasium and a fully refurbished accident and emergency department. In future years I hope that we can deliver a new satellite renal unit, new day surgery theatres, haematology and chemotherapy treatment facilities and a dermatology unit to serve people right across Shropshire, split between the two hospitals.

That is a record of investment in acute services of which we can be rightly proud. It is a superb performance by our Government since 1997. More patients are being treated in our hospitals in a better environment than ever before. Between 1997–98 and 2002–03, the total number of cases being dealt with by the two hospitals rose by about 12 per cent. to 433,000. Even with that increase, in-patient and out-patient waiting lists fell dramatically.

The chief executive of the hospital trust, Neil Taylor, said:

Those are the views not of a politician but of the man in charge of our hospital services. So, we have a good record on hospital services. I will return to their broader funding position later in the debate.

Having set the scene in relation to acute services, I shall now move on to the main focus of my comments this afternoon: the activities of the primary care trust. Telford and Wrekin PCT was established in April 2002. It is a medium to large PCT and its boundaries are coterminus with those of the local authority, which is useful because services can be planned extremely effectively across partner agencies. It has 625 employees and 22 GP practices in its area. As we know, it has health care commissioning and provider roles and runs a wide range of services in partnership with other agencies, notably the local authority, and it works hard with the council's social services department.

The PCT already has a good performance record. We have seen genuine improvements in waiting times to see a GP. Indeed, 94 per cent. of people in Telford and

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Wrekin see their GP within two days, patient choice has improved and we have seen major investment in the fabric of primary health facilities in Telford. Two new large GP surgeries have opened in Dawley and Oakengates in the past 18 months, replacing outdated facilities, and a fully refurbished large practice has also been provided, again in Oakengates. I ought to declare my interest at this point: it is the medical practice that I use, and extremely good it is too.

The challenges that the PCT and its partners face in Telford and Wrekin are significant. Our health indicators are often worse than the national average. For example, our performance is well below the national average in relation to premature mortality from circulatory disease, premature mortality related to cancer, levels of emergency admission for general medicine and surgery, levels of childhood dental decay and levels of teenage pregnancy.

Telford has a deprived community. It is a new town community, built on the principle of new town estates. Many people came across from the west midlands, and we have the profile of an urban area although we are in Shropshire. We have an economy based on manufacture. In many parts of the area, there is a low wage economy. Health indicators reflect some of the problems that, as hon. Members know, are to be found in urban areas.

We are confronting the issues with a partnership approach across agencies. The vision statement of the Telford and Wrekin partnership highlights the importance of health, and its ongoing priority in terms of funding. The vision states that the partnership needs to build

The partnership is doing that, and some extremely good schemes on the ground assist in delivering better health care. Sure Start, for example, is an excellent scheme that dovetails well with the role generally played by the primary care trust and the local authority. My constituency has a superb Sure Start scheme, and two other areas will roll out Sure Start schemes in the next six to eight months. That will have a significant impact on the health of children in the area, and on that of parents. We are also developing a comprehensive estate renewal strategy while targeting areas with housing problems. We are using health indicators as a key mechanism through which to target resources.

I shall deal now in some detail with the issue of resources and the funding position of the PCT. The overall increase in revenue to the NHS over the next three years will be significant in Telford and Wrekin and the wider Shropshire area. The revenue allocation to Telford and Wrekin PCT between 2003–04 and 2005–06 will increase from £124 million to nearly £153 million. That is excellent news. The allocation increases are also impressive in percentage terms. The period 2003–04 saw an increase of 9.3 per cent., 2004–05 will see an increase of 10 per cent. and 2005–06 an 11.7 per cent. increase. That is a good record of investing additional cash in health services through the PCT in Telford, something that we would not have got had the Conservatives been in power for longer. Thank goodness that the Labour Government were elected in 1997 to invest locally in health services.

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However, the area of Telford and Wrekin started a long way behind. In 2005–06, it will still be one of the PCTs furthest from getting its fair share of target resources. Meanwhile, the trust still has to meet its targets alongside other PCTs across the country. The Department of Health calculates a target allocation for each PCT known as the weighted capitation target. That calculates the fair share of nationally available NHS revenue that each PCT should receive. That calculation is based on four factors: the size and age distribution of the resident population, additional health needs—linked with deprivation—and unavoidable geographical variations in the cost of providing services.

It is possible to calculate the distance from target by comparing the PCT's weighted capitation target against its allocation. If the allocation is less than the weighted capitation target, a PCT is said to be under target. Conversely, if the allocation exceeds the weighted capitation target, the PCT is deemed to be over target. The Telford and Wrekin PCT allocation is 9 per cent. below what is required in financial terms to meet the needs of the resident population in 2003–04. That needs to be placed in context.

An enormous amount of new resources has gone into primary care services in Telford, representing a massive injection of new cash. No one should suggest that the Government have not invested heavily. However, we need to catch up with our fair share a little more quickly. The increase in resources—£16 million in 2005–06—improves the position, but the PCT will still be 6 per cent., or £10.5 million, below its nationally deemed fair share target in 2005–06. That is partly a legacy of years of Conservative underfunding of health services. If the Tories had continued in power, we should have been even further behind. Indeed, it is brave of the Government to come up with formulae to show how we can meet the needs of populations in constituencies such as mine.

Based on this pattern of revenue allocation, at the end of 2005–06 Telford and Wrekin PCT will be the ninth furthest from its fair share target of the 304 PCTs in England. The Under-Secretary of State for Health, my hon. Friend the Member for South Thanet (Dr. Ladyman), is also in a difficult situation. I believe that his PCT is also below target, and I am sure he will want to assist both his area and mine to receive their fair shares. In terms of capital allocation, the average national percentage uplift is 10 per cent. per annum, with a minimum of 7 per cent. and a maximum of 14 per cent. The allocation for Telford and Wrekin PCT is good: we have been allocated increases of 14 per cent. in 2003–04, 13.9 per cent. in 2004–05 and 7 per cent. in 2005–06. That is a pretty good picture.

So what are the implications? We need to see the debate in context. The Government have massively increased spending on health in Telford and Wrekin, and performance and facilities are improving dramatically in both the acute sector and the primary care sector. We will take no lectures from the Conservatives on health funding. Indeed, if they were to return to power and to implement the 20 per cent. cut in public spending that they have been suggesting, Telford and Wrekin would see its health services decimated.

Even though we have done a lot, I should like us to do even more. I should like our PCT to move more quickly to its resource fair share position, which would enable us

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to do many more things. We could refurbish even more doctors' surgeries, and undertake more community-based schemes, linking the council's regeneration strategy with health improvement. We would be able to provide more resources for our local hospitals, through GPs, to meet their needs.

We need to move quickly and we need to build on success. My appeal to the Minister is that we need to get our fair share allocation right. Any new resources for the health service allocated through the comprehensive spending review process need to be passed to PCTs. That approach will deliver significant improvements in the health of people in constituencies such as mine.

I said that I would return to the acute hospital sector. I have not dwelt too much on the financial position. The merger of the two hospitals, which I and my hon. Friend the Member for The Wrekin (Peter Bradley) opposed, has resulted in some budget pressures. It would be helpful if the Minister would consider a package of specific support to help the hospital trust through this post-merger period.

To sum up, we want to build on the success in Telford and Wrekin. Our local health service workers and their partners have proved themselves to be high achievers. They have done much with the major new injection of resources from the Government; one can only imagine what they could do with the resources that the formula suggests they should have.

4.13 pm

The Parliamentary Under-Secretary of State for Health (Dr. Stephen Ladyman) : I congratulate my hon. Friend the Member for Telford (David Wright) on securing this important debate on a subject of great interest to his constituents. I congratulate him also on his continued interest in health-related issues in his constituency. He shares an assiduous interest with my hon. Friend the Member for The Wrekin (Peter Bradley), who was unavoidably prevented from being with us.

I have listened carefully to the points that my hon. Friend the Member for Telford has made and I must begin by saying how pleased I am that he recognises the huge advances being made in the national health service in Telford and the Wrekin, in terms of investment and input and, more importantly, of improved services and outcomes. I am pleased that he firmly positions the local challenges in that positive context.

I would like to add a few words about the progress and the investment being made in the area, and praise the hard work and dedication of the national health service staff who work there. Shrewsbury and Telford Hospital NHS Trust was officially established on 1 October 2003. I am aware that there were misgivings, including from my hon. Friend the Member for Telford, about the merger of the preceding trusts, namely, the Princess Royal Hospital NHS Trust and the Royal Shrewsbury Hospitals NHS Trust. There was an Adjournment debate on the subject in April 2003. However, the consultation showed significant local support for the merger, and the then Under-Secretary of State for Health, now the Under-Secretary of State for Constitutional Affairs, my hon. Friend the Member for Tottenham (Mr. Lammy), approved it.

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There are significant financial benefits from merging the two Shropshire trusts. Over the past two years, there have already been management cost savings owing to the sharing of the executive team and the rationalisation of support services. The merger will enable a further £0.5 million worth of savings to be made in management costs.

A number of conditions were attached to approval of the merger. One of them was about the continued provision of accident and emergency services in Telford. I am aware that my hon. Friend and his parliamentary neighbour my hon. Friend the Member for The Wrekin met the Minister of State, Department of Health, my hon. Friend the Member for Doncaster, Central (Ms Winterton), on 4 November to emphasise their views. I am also aware that hon. Members met the new trust chief executive, Neil Taylor, and the chair, Phil Homer, along with the chief executive and chairman of Shropshire and Staffordshire strategic health authority on 1 December. They discussed the new trust's performance development plan, which was another condition of the merger. The trust is discussing the plan with key stakeholders and will publish it at the end of January.

My hon. Friend the Member for Telford has had concerns about the effect of the deficit of the preceding trusts on the local health economy and the merging of the trusts. In the 2002 Budget, the Chancellor announced the largest sustained increase of funding of any five-year period in the history of the national health service. From 2003–04 to 2007–08, the plans will lead to an average annual increase of 7.3 per cent. above inflation in expenditure on the NHS in England. We must consider the challenges in that context.

All NHS organisations must realise that they have a responsibility to manage their resources effectively, without relying on further help from the centre or other parts of the NHS. It is the strategic health authorities' responsibility to deliver the overall financial balance for their communities, to ensure that every body achieves financial balance, and to deliver key targets. We expect financial balance across the NHS, but that is not to say that no health bodies face financial pressures. There are always pressures to be managed in the year and substantial moneys, including NHS bank support for the most hard-pressed health economies, have been allocated to the NHS to meet increasing demands.

The NHS must operate within available funding. NHS organisations that overspend should and must repay those organisations that have had to forgo the resources used to fund overspends. We cannot simply wipe the slate clean, and my hon. Friend would not expect us to do so. Such an approach would be seen to penalise good performance and give all the wrong messages about responsible management. In circumstances in which full repayment cannot be made in the year following an overspend, strategic health authorities can agree to a recovery plan, which phases recovery of deficits over several years. That would require other NHS organisations in the local health economy to underspend over the same period.

I recognise that there are challenges facing the local health community in my hon. Friend's constituency. Telford is one of the most rapidly growing towns in the

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west midlands and its population has multiple deprivation characteristics that are comparable to those of many inner-city areas. Despite those challenges, I am delighted to note that Telford and Wrekin primary care trust achieved all its key targets in the 2003 performance ratings and was awarded two stars—a considerable achievement.

According to the latest available figures, from October 2003, 98.2 per cent. of patients across the PCT are able to make an appointment with their GP within two days. There is a strong history and culture of partnership working in Telford and Wrekin covering areas such as social inclusion, child care, community safety and others. In addition, there is a number of multi-agency neighbourhood action schemes and the PCT is involved in projects such as Sure Start, children's fund programmes and an education action zone. The public service agreement partnership is also commendable for its work on health targets and I understand that Telford and Wrekin PCT is making commendable efforts alongside its partners to establish a sports action zone in Telford.

The PCT is investing in the area. Examples of the investment include £260,000 to establish a 24-hour nursed bed unit for adult mental health services in Telford; £125,000 on "Help 2 Quit" and other smoking cessation programmes; £40,000 for staffing to improve access to paediatric therapy services; and £85,000 for medical staffing in community mental health teams. That is certainly a story of progress, but it will continue—my hon. Friend is right to raise the matter—only if we maintain the flow of resources in Telford and Wrekin that the area needs.

I am pleased to emphasise that Telford and Wrekin PCT will receive an increase of £39 million over the three years from 2003–04 to 2005–06, which represents a cash increase of 34.4 per cent. for the period. That said, I am prepared to acknowledge that that will mean that the PCT continues to receive less than its target share. The pace of change policy that we have adopted for 2003 to 2006 will reduce Telford and Wrekin PCT's distance from target over the three-year period. For 2003–04, Telford and Wrekin PCT was 8.92 per cent. under target. By 2005–06, it will be 6 per cent. under target, although I have no doubt that it will still be too far away from the target for my hon. Friend's satisfaction.

Those allocations have been made direct to PCTs as part of the process of shifting the balance of power, and to put resources and responsibilities in the hands of front-line services. PCTs now control more than three quarters of the NHS budget. It is not unreasonable for my hon. Friend to ask why some PCTs are seen continually to receive less than their target share. However, pace of change policy involves a balance between how much we give to all PCTs in order to maintain continuity and stability and make progress nationally in priority areas, and how much extra we give to under-target PCTs to bring them nearer to their weighted capitation targets.

Allocations to all PCTs include resources to finance the cost of pay reform, new drugs and treatments and additional capacity, but we have also given extra resources to under-target PCTs. It is important to remember how much extra funding we are making available across the board. The total of PCT allocations

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for 2003–04 was £45 billion, an increase of £3.8 billion. By 2005–06, it will be £53.9 billion, which represents an increase of £12.7 billion over the three years.

We are committed to bringing PCTs, including my hon. Friend's, to their target allocations as soon as is practicable. However, that must be consistent with all PCTs receiving sufficient extra funding to enable them to deliver on national and local priorities. Ministers decide pace of change policy for each allocation round. The policy varies from round to round to take account of a number of factors, including the overall level of resources available and the priorities for the use of those resources. My hon. Friend will be delighted to hear that

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we will consider the pace of change policy for the next round of allocations, which will cover the period up to 2007–08, in the light of all the circumstances at that time. We will make a judgment then about the pace of change.

I hope that my hon. Friend will take it as a helpful concluding comment if I assure him that his comments have been heard, and that they will be considered when judgment is made on the next round.

Question put and agreed to.

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