Select Committee on Health Minutes of Evidence

Supplementary evidence by the Department of Health (PE 2)


  1.  Which SHAs are in deficit? (Dr Taylor, Q15)

The information requested is provided in the table below.



% Under/
SHA Name£000s £000s£000s
Norfolk, Suffolk and Cambs(10,373) 2,148,833-0.48
Bedfordshire and Hertfordshire2,088 1,479,1700.14
Essex3,3201,506,212 0.22
North West London(12,923) 2,248,023-0.57
North Central London11,375 1,631,7320.70
North East London9,083 1,874,9640.48
South East London4,332 1,985,0180.22
South West London6,819 1,350,9760.50
Northumberland, Tyne and Wear8,489 1,737,4460.49
County Durham & Tees Valley1,207 1,321,1010.09
N & E Yorks and Northern Lincs1,666 1,558,3520.11
West Yorkshire4,825 2,332,2590.21
Cumbria & Lancashire4,345 2,356,3990.18
Greater Manchester13,233 2,948,8930.45
Cheshire & Merseyside9,990 2,693,6460.37
Thames Valley10,124 1,944,3840.52
Hampshire & Isle of Wight(9,235) 1,714,173-0.54
Kent and Medway(4,702) 1,505,496-0.31
Surrey and Sussex(5,342) 2,605,188-0.21
Avon, Gloucestershire & Wiltshire(4,231) 2,218,894-0.19
South West Peninsula(14,210) 1,605,089-0.89
Dorset & Somerset8,735 1,174,0110.74
South Yorkshire8,944 1,537,0050.58
Trent10,9572,633,335 0.42
Leics, Northamptonshire & Rutland4,738 1,414,1210.34
Shropshire & Staffordshire3,423 1,389,6030.25
Birmingham & the Black Country617 2,518,2520.02
West Midlands South5,238 1,451,9030.36
Total72,532 52,884,4780.14

  2.  Details about allocation of extra funding to growth areas of Thames Gateway, Stansted Corridor, Milton Keynes and Ashford. (John Austin, Q21)

  The Department of Health has given its backing to providing a proper health service infrastructure to support the development of Sustainable Communities with access to high quality health services.

  The Department has agreed to provide an extra £20 million of revenue funding in 2004-05 and 2005-06 to be allocated to Primary Care Trusts (PCTs) and £20 million of capital resources in 2005-06 to be allocated to Strategic Health Authorities (SHAs).

  The additional £20 million has been allocated to PCTs pro rata to the number of net additional dwellings in the Growth Areas over the past three years weighted by the Market Forces Factor. Data on the number of net additional dwellings has been provided by the ODPM and is considered the best available data to use.

  This additional funding is specifically targeted at the ODPM Growth Areas (Thames Gateway, Milton Keynes/South Midlands, Ashford and London-Stanstead-Cambridge).

  3.  Details about changes in market forces factor banding system, and specifically when these are likely to be introduced (John Austin, Q49)

  In order to be equitable, the weighted capitation formula takes account of the fact that the cost of providing healthcare is not the same everywhere. The Market Forces Factor (MFF) equalises the commissioning power of PCTs by adjusting for unavoidable variations in NHS Trust costs directly related to location.

  The Advisory Committee on Resource Allocation (ACRA) makes recommendations on any changes to the weighted capitation formula, and also looks at issues of equity in resource allocation. The development of the MFF has therefore been overseen by, and reflects recommendations made by ACRA.

  Work has commenced on the next round of allocations, which will cover the period up to 2007-08. ACRA has held a series of meetings to look at specific areas in relation to the next round of allocations. One of these was to review the MFF in relation to Payment by Results (PBR).

  The Department of Health is now considering these recommendations in relation to the next round of allocations.


  4.  What is the current unfunded spare capacity in NHS treatment centres, including NHS Elect? (Dr Taylor, Q74)

  In the financial year 2003-04, for the four treatment centres which are members of the NHS Elect network (Central Middlesex ACAD; Ravenscourt Park; Kidderminster; Weston-super-Mare) management information shows that they were working at 81% of their planned activity. So far in this financial year (to August), management information shows that they have working at 78% of their planned activity.

  Treatment centres play a vital role in helping the NHS to meet waiting times targets and offering increased patient choice. PCTs commission services from them as appropriate to meet the needs of their local populations.


  5.  Estimate of the total cost of using the private sector to treat NHS patients over and above what it would have cost had they been treated in the NHS, since the introduction of the concordat with the private sector (Chairman, Q93)

  The total expenditure on the purchase of healthcare from non-NHS bodies was £2.3 billion in 2002-03.

  We can only make direct cost comparisons for expenditure that is covered by the 2002-03 reference cost data. This shows that for £100 million of activity purchased by the NHS from the independent sector the equivalent NHS cost would be £70 million, so the premium for commissioning this activity from the independent is £30 million. We would expect this disparity to reduce considerably as longer term commercial arrangements between the NHS and the independent sector for the treatment of NHS patients come on line. This activity principally represents purchasing under traditional short term and low volume arrangements from the independent sector. Similar data will become available for 2003-04 with the publication of the 2003-04 reference costs.

  6.  Information about the cost of NHS patients being treated in the private sector by the same consultant who would otherwise have provided care to them within an NHS setting (Chairman, Q101)

  We have no information about the cost of NHS patients being treated in the private sector by the same consultant who would have treated them in the NHS. We are aware that some NHS commissioners are still using spot purchasing with the private sector which may lead to NHS consultants who also work in the private sector treating patients in private hospitals. As already indicated elsewhere the cost of spot purchasing can be as much as 40% higher than the equivalent NHS cost for the treatment. Through the ISTC programme and other policies we are seeking to discourage the use of spot purchasing to improve greater value for money for the NHS when using the independent sector.


  7.  What estimates has the Department made of the national economic burden of illness induced by the adverse affects of medicines overall? What resources has the Department applied to establish such costs? (Dr Naysmith, Q107)

  A recent study, funded by the Medicines and Healthcare products Regulatory Authority and published in the British Medical Journal, provides relevant information.

  Of 18,820 patients aged over 16 years admitted to hospital over a six month period and assessed for cause of admission, there were 1,225 admissions judged to be related to an adverse drug reaction (ADR), giving a prevalence of 6.5%. Of these 1,225, the ADR was judged to lead directly to the admission in 80% of cases. The median bed stay was eight days, accounting for 4% of the hospital bed capacity. The projected annual cost of such admissions to the NHS is £466 million.

  [BMJ. 3 July 2004; 329 (7456): 15-9 Adverse drug reactions as cause of admission to hospital: prospective analysis of 18,820 patients. Pirmohamed M, James S, Meakin S, Green C, Scott A K, Walley T J, Farrar K, Park B K, Breckenridge A M. Department of Pharmacology and Therapeutics, University of Liverpool, Liverpool L69 3GE.]


  8.  Table of figures showing cost of abolition of CHCs and establishment of new system of patient and public involvement (Chairman, Q114)
set up
CPPIH total budget
(including patients' forums and
Forum Support Organisations FSOs)
2002-03£23m0 £2.5m£0.77m
2003-04£13.981m £15.332m0£30.192m
2004-0500 0£33.3m


  9.  Are Social Security costs quoted in table 4.1.4 gross or net? (Mr Burns, Q145)

  The figures quoted in table 4.1.4 are gross of charges—it is a total spend including government and client money.

  10.  Why does Competition Tribunal Decision in Belfast not apply in England? (Mr Burns, Q158)

  BetterCare (an independent provider) alleged that N & W Belfast Health & Social Services Trust was in breach of the Chapter 2 prohibition imposed by the Competition Act. The OFT decision on this does not apply in England because the basis of the decision was unique to how care homes operate in Northern Ireland. These considerations do not apply in England. Thus, we can infer nothing about the operation of the care home market in England from this decision.

  The detail of contracting arrangements between local authorities and independent sector providers of care is a matter for local decision. The Department does not set or recommend rates at which local authorities contract with nursing and residential homes. We think it is important that local authorities are able to tailor contracts as necessary to specific local circumstances.


  11.  Information on the value of and the numbers of people using charges levied on their estates rather than having to sell properties to pay for residential care costs (Dr Naysmith, Q176)

  There is no detailed information available at present on the number people using deferred payments, however the Deferred Payments Grant 2003-04 returns so far show that approximately £1.5 million worth of care was provided in 2003-04 through charges placed on homes.


  12.  How many NHS dentists are there? What proportion of their work is NHS work? (Dr Taylor, Q191)

  13.  How many NHS dentists work full-time for the NHS? (Dr Naysmith, Q193)

  The number of NHS dentists is at a record level. There were 19,300 dentists in general and personal dental services at June 2004 which is 3,000 more than in June 1997. The estimate for the number of whole time equivalent dentists is about 13,000. This has been estimated from average fee earnings of NHS dentists.

  Dentist numbers will increase by 1,000 whole time equivalent dentists by October next year.

  Measures to increase dentist numbers include an extra 170 training places.

  Figures for private work for NHS dentists are not routinely available and it is not possible to judge the proportion of time that is spent on NHS work.

  Most NHS dentists are self-employed and can do both NHS and private work. A survey in 2000 found that about 25% of these dentists spent all of their time doing NHS work. A full breakdown is given in the table below:

Ratio of GDS: Private work

% of GDS workProportion of dentists (%)

  A workload survey of general dental practitioners carried out in 2000, found that dentists spent an average of 25.13 hours doing general dental service work. 7.91 hours were spent doing private work. 1.16 hours were spent on shared GDS/private time. There was 0.72 hours on other paid clinical time and 3.05 hours of other dental time with 0.87 hours for travel between workplaces.


  1.  You have acknowledged the substantial variation in unit costs between local authorities. You suggest that such wide variability of individual local authority figures "points to issues of data quality", and that there is misreporting. Indeed, this comment recurs throughout your observations on PSS expenditure information. You also acknowledge that even if the more extreme figures (which may be incorrect) are discounted "significant variation remains". Firstly, what are you doing to address issues of data quality and misreporting? And secondly, could you indicate what you believe lies behind the existing variation, which persists even when more extreme figures are discounted? To what extent does this indicate supply-side problems, and how much is it a failure of local authorities to adequately manage the market?

  Firstly, we are improving validation procedures but improvements in the resulting data are still dependent on councils responding to queries raised and supplying amended data where appropriate.

  For some councils residential and nursing care costs are distorted by the inclusion of cases of care provided by the NHS. These are being separately identified from 2003-04 onwards.

  The unit cost of home care is calculated by dividing the annual expenditure by the hours of home care provided in a sample week. From 2003-04 we are also calculating a cost based on annual home care hours for those councils that can provide the information; this will remove any error arising from the fact that the sample week may not be typical.

  We would expect to see variations in the provision of social care across the country, both in terms of actual provision and the cost of that provision. This is because input costs, levels of dependency and market conditions vary across the country. For example, it costs more to provide the same care service in London because of higher wages and in areas where there is an undersupply of provision, and in rural ares with high travel costs.

  However, local authorities are expected to commission care services that deliver Best Value. Best value is the key element in our agenda to improve the quality of all local authority services, including social services, and the efficiency and economy with which they are delivered. Best Value will ensure that local authorities commission community care fairly and openly on the basis of a full consideration of costs, quality and outcomes for users.

  Unit costs are taken into account as part of star ratings assessment of local authority performance. When deciding how many stars to award CSCI will look, among other things, at the costs of providing services.

  The Department is also working with local authorities as part of a drive to release £6.45 billion across local government to benefit front line staff over the next three years. The Care Services Efficiency Delivery programme was established following recommendations by the Gershon Independent Review of Public Sector Efficiency and aims to develop a partnership with local authorities to improve the quality of services for vulnerable adults and deliver efficiency gains back to frontline services.

  2. In looking at the Performance Assessment Framework for Personal Social Services, 11 of the 50 indicators relate to cost and efficiency. Indicators B8 and B12 (cost of services for children looked after, and costs of intensive social care for adults and older people) were part of the Best Value Performance Indicators requiring annual improvements. You indicate that these targets "have now been withdrawn because of concerns that driving down costs could damage quality." This is a very disturbing admission; could you indicate the basis for those concerns and what impact you believe this has had on service quality overall?

  It is important that councils achieve Best Value, this includes quality as well as cost. They must be able to demonstrate that the best services possible are provided to their local people, taking account of both quality and cost. The basis for concern was that the targets associated with the indicators B8 and B12 were entirely based on cost and may have posed a perverse incentive to drive down the prices to the detriment of the quality of services provided.

  These indicators are now monitored so that those with very low costs as well as those with very high costs must review their performance and ensure that quality and availability of services are not suffering. Residential homes are inspected and with the implementation of National Minimum Standards, there are systems in place to ensure that the quality of services is maintained.

  3.  There are considerable variations between authorities in their use of the independent sector although clearly the trend since the Community Care Reforms of 1993 has been towards greater use. What—as far as you are concerned—is the policy on this now? Are you expecting use of the independent sector to continue to grow and the direct provider role of the local authority to become increasingly residual or non-existent, and is there a change in the balance between private and voluntary sector providers?

  The policy remains that the balance of roles is to be locally determined on the basis of Best Value review. There has been and continues to be a trend over time of provision growing in the independent sector. Councils are directly providing very few services in comparison to the total.

  The balance between the private/voluntary sector varies greatly between councils and should be a reflection of the local commissioning strategy.

  4. Your recent planning framework document sets out a new framework for standards and aims to reduce the burden of targets. Is there any real difference with the current situation, or are these changes just superficial? Won't Trusts still have to contribute towards a large number of current targets, meet old targets that have been altered into ongoing standards, develop their own local targets and meet new core and developmental standards?

  NHS organisations have made major progress over the last few years and we can be confident that they will continue to do so without the same degree of direction from the centre. Therefore, we are able to take a more devolved approach to planning and performance management, and to create more headroom for organisation to address the needs of their local populations.

The Planning Framework represents a genuine reduction in the burden of national requirements on NHS organisations. It reduces the number of new national targets for the NHS and social care by 2/3 from 62 targets in the last three year planning round to 20 in the next three years.

  There is also a shift in emphasis from targets based on input measures in the previous planning round, to targets focused on health outcomes and improving the experiences of patients and service users. Whilst the strategic direction will continue to be set from the centre, there will be greater local determination of how to achieve the desired outcomes.

  As well as meeting the 20 new national targets, organisations are expected to maintain performance against existing commitments and the levels of service that patients have a right to expect. Altogether, this means there are 20 new national requirements, nine achieved targets which have become core standards to be maintained and 11 continuing targets. This contrasts with 62 national targets in the previous PPF underpinned by capacity assumptions.

  The new healthcare standards, included within the Planning Framework, aim to safeguard and improve standards of quality, equality and safety across the full spectrum of healthcare to achieve the levels that public and patients expect from a 21st century health system. They will, in fact, reduce the burden of guidance on the NHS by consolidating and clarifying existing requirements.

  Core standards set levels of service quality and safety that healthcare organisations should already be providing. Developmental standards set the agenda for improvements in quality in all healthcare services over the coming years.

  Performance against the standards will be assessed by the independent Healthcare Commission from April 2005. It will be for the Commission to develop assessment criteria and to inspect NHS organisations' progress against the standards.

November 2004

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