Examination of Witnesses (Questions 200-219)
RT HON
DR JOHN
REID MP, MR
JOHN BACON
AND MR
RICHARD DOUGLAS
3 NOVEMBER 2004
Q200 Dr Naysmith: Secretary of State,
one of the areas where the centre has been very generous and very
helpful is in my area, the Bristol area and the Avon area. One
of the points that arises from what you have just said, and I
do not want to in any way criticise, I am very grateful for the
generosity that has been shown and the understanding that has
been shown, but from what you have said sometimes it might be
that you have got old hospitals who are pretty inefficient and
up against a modern all-singing-all-dancing hospital. The costs
are bound to be different in that situation. Is that not the case?
You have got to take that into account when you decide where the
deficits are arising.
Dr Reid: I understand that, and
I do not want to court unpopularity from the Committee, but let's
call a spade a spade. I can go from Bristol to Yorkshire, I can
go from there to Manchester, I can go from there to Milton Keynes,
I can go from there to the south-west, to Dorset. Every single
area I visit has a specific reason why they should get more money
or they should get deficits right now. If you go to Yorkshire
they will tell you, with absolute justification, that they are
the furthest away from target and the highest in need to places
like Easington. If you go to the south-west, they will tell you
that the market forces militates against them, and, although they
have between £3-400 million extra, actually there is £60
million more which has been taken to give to London. If I go to
Manchester, they will tell you the census was wrong.
Q201 Mr Bradley: He is coming!
Dr Reid: And I could go on ad
infinitum, because we visit—this team of ministers has
done I think it is something like between 50 and 100 visits in
the last year, and it may even be more than that; so I know this.
In other words, despite the fact that we have got the biggest
ever increase in health expenditure, and despite the fact it has
gone from £40 million odd to £90 million odd over five
years in England—sorry billion—£110 billion throughout
the UK—everybody has a good reason for saying they want
more, and in the case of Bristol, you know, it will be one particular
reason, but there is only so much money that goes round. It so
happens the pot is bigger than ever before, but if we take from
one area, or we waste a pound anywhere, or we say to people they
have to face up to their responsibilities, somebody else is losing
that, and actually, after many years of under-investment, everyone
has a very legitimate claim: because the truth is that there are
a lot of potholes in this road which we hoped that the new money
would immediately put traffic on the road, but actually the back-filling
of the potholes means that some of it has been used for that,
I accept; but I now think we are beyond that, and in all those
areas I mentioned there is substantial progress.
Q202 Chairman: Before I bring our expert
on the census in, Mr Bradley, can I ask you a little bit about
the capital schemes? I asked Mr Bacon this question last week.
One of the concerns is that because we have moved to PFI funding
primarily on the capital schemes, the situation in respect of
deficits may be somewhat different from what it would have been
had it been direct Treasury funding. Mr Bacon gave me a fairly
confident reply in terms of the capital schemes, which I hope
he is not regretting giving me a week later. Are you still confident
that the capital schemes, the PFI schemes, hospital schemes that
are now planned, despite some pretty significant deficits in some
of the trusts concerned, will go ahead as anticipated?
Dr Reid: Yes, I am still confident.
Does that mean that I am omniscient or arrogant enough to assume
that we will never have any problems with the PFI scheme? No,
I am not, because whether it is in the public or the private sector,
whether it is PFI or straight public funding, there are always
in the real world, and construction involved, and costs involved,
there are always going to be problems, but I have no doubt that
there will be on occasions designs that would have been better
thought through, costs that have over-run, contingencies that
have not been thought about when you go down the road of PFI,
but all of us know here, again calling a spade a spade, that those
problems were not entirely absent from procurement through the
public sector. One merely looks at the £40 million Scottish
Parliament that has come in at just over £400 million or
the history of defence contracts, all of which used to be done
through the normal public acquisition, and they ended up invariably
over cost, overrun and somewhat separate from the original plan.
So the truth is, there is no way of acquiring these assets known
to human kind which is absolutely free of either risk or problems,
but the transfer of the risk, the maintenance of the cost over
a longer period and the fact that they are both thought through
at the beginning, I think, gives me a degree of confidence with
these schemes which is higher than I would have if we were just
saying, "Let us bear all the risks ourselves and think merely
of the capital costs initially without the through life maintenance",
Chairman.
Q203 Chairman: In a sense I was pressing
you more on whether schemes are likely to go ahead where you have
got some of these serious deficits without getting into the whole
PFI debate. You basically confirm Mr Bacon's confidence that the
schemes we are talking about should go ahead despite some of the
trusts being in difficulties financially?
Dr Reid: Yes, I fully accept that
when people are trying to make up for inherited problems of under-investment
and deficit, and so on, that there is a general mitigating factor
about the capacity you can get out of any level of investment,
but I think by and large now we have overcome that, and, despite
individual instances, I am confident that the generality of these
will go ahead, and I cannot think of any one that strikes me as
being in serious difficulty because of that. John, do you want
to comment on that?
Mr Bacon: Yes. Chairman, picking
up the discussion we had last week, I did explain, I think, at
the time that the trust you were referring to will have to demonstrate
that this scheme is both value for money and affordable.
Q204 Chairman: I am trying not to tie
you down to my local constituency. This is a general concern.
Mr Bacon: This would apply to
any scheme anywhere at any time.
Dr Reid: I have not even said
that, because you see that is not because it is PFI or there is
a deficit; those rules would have to apply to any planning. For
instance, there are huge plans in the country. Manchester: there
was a lot of discussion between local representatives and PCTs
about the balance of benefit between major establishments in the
city centre and the potential loss that would be accounted for
by money being taken away from primary care trust ventures or
on the periphery, if I can call that the periphery. In other areas
you get the same sort of . . . In London at the moment—one
huge scheme there—Paddington, and so on. There is a constant
scrutiny that goes on, but that is not because of deficits and
it is not because of PFI; it is right and proper that that goes
on irrespective of them. The question you asked me is do I remain
confident, without being complacent or arrogant about it, that
deficits will not hamper schemes that would be otherwise proven
to be beneficial? I have a fairly high degree of confidence in
that, Chairman.
Q205 Mr Bradley: Secretary of State,
I am grateful you raised the census with the Committee, and that
is related to the central Manchester development: because part
of the financial deficit problem with Manchester, whether it be
hospital trusts or PCTs, is the abject failure of the Office of
National Statistics to actually count the number of people in
Manchester. Thousands were missed off, and, as you know, all those
people, quite rightly, need, and from time to time demand, appropriate
healthcare. Those people are not reflected in the budgets allocated
to Manchester, and so far, and we raised this with Mr Bacon last
week, there has been an intransigence on the Department's part
to compensate Manchester; and if they not compensated that problem
compounds itself over years by not properly reflecting the population
of the city. As you know, the Deputy Prime Minister has accepted
that argument in terms of local government services. Why will
you not accept it for health services?
Dr Reid: Because, you see, if
I did, and it is unlikely I would come here and do it today anyway—this
is not forum to do it—then I would have to look at Milton
Keynes, who for 30 years have been under-estimated every year
in terms of the projected demographic changes upwards, and there
are several other areas like that. I would have difficulty in
explaining to Easington why it is that they are the area of greatest
need, not the furthest away from target, and I can find the money
to rectify what is a mistake or anomaly in Manchester but cannot
there in Easington—and I can go on in other ones. In other
words, the point that is always forgotten in these forums, and
I am sure it is not forgotten by yourself, Keith, but sometimes
these are the arguments, is that, notwithstanding any deficiencies
of the type that I have mentioned, the increases have been, quite
frankly, huge over a three-year period to Manchester and Easington
and other areas. So the complaint, which I understand, and I do
not say any of them are illegitimate, but the complaint is that
on top of the huge increases we have had we would have had more
had X not occurred. If I say that I am going to rectify one anomaly
or mistake in the case of Manchester, then it becomes very, very
difficult not to open in retrospect every other single area, because
there are a lot of legitimate areas of complaint. I have to say
to people like yourself, although I understand and I do not for
a moment say to you that anything you are saying is incorrect,
but the extent of the increases that we have given overall to
everyone are some compensation for the fact that the increases
might have been bigger in several areas if we had not had inherited
mistakes, some of them unintentional, as in the case of Manchester,
and some of them, when it comes to distribution of resources,
mismatched to needs throughout the country, I find it difficult
to believe were unintentional when I look at the pattern of distribution
over a period of 20 years, and it is so mismatched to the areas
it meets; areas partly, in that case, because of the law of inverse
care where money, personnel resources, was not going where it
was needed but was being the pushed away provided by the challenge,
but also the pattern of distribution away from need to the most
affluent areas looks as though it might be other than unintentional
over these years. I do not expect that to be a satisfactory answer
to you or to people in Manchester, but I hope it is a more satisfactory
answer given the context in which there is a huge additional amount
of money going into the Manchester area for expenditure on health.
Q206 Mr Bradley: I fully accept the increased
expenditure, but we are talking about the best part of 30,000
people that are not counted, through no fault of the local health
economy, and they are having to bear the costs of those people
who need NHS treatment; and I would just urge you—I will
not labour it any further, Chairman—to look again at the
matter?
Dr Reid: I will, of course, at
your request. In any case, we are on the verge of calculating
the distribution of monies to private care trusts for the next
few years. I had intended that that would take place about now
actually, but delays in producing statistics from an organisation
that we will not go into means that it will probably be the New
Year before we get round to it.
Q207 Mr Jones: On another subject, Secretary
of State, practice based commissioning: a new phrase for GP fund
owners, is it not?
Dr Reid: No, it is not actually.
What I have done is unashamedly tried to take the good points
from practise based commissioning and incorporate them in an indicative
approach and to avoid the worst points of practice based commissioning.
There are a number of areas where I think, quite frankly, we could
learn from other systems, and I have always taken the view that
we should try and learn. I am trying to do that by taking the
best of the public sector and the best of the independent sector
as well for the benefit of patients, but I would emphatically
deny that this is the same as practice based commissioning. Fund-holding,
which is what you are talking about, led, in the first instance,
to an equitable distribution of resources because fund-holders
got more money. That is not happening under the indicative commissioning
that we are doing. Secondly, the savings from fund-holding did
not have to be spent directly on patient care. That is the case
with what we are doing. Thirdly, under fund-holding GPs could
simply elect the cheapest cost for a procedure. They cannot under
the system we have got. There are other differences, but there
are three substantial differences between the approach that was
used on the fundable way and what we are doing under indicative
commissioning based on indications from GPs. On the other hand,
the benefits we are getting having avoided some of the inequities
and inefficiencies of the fund-holding system, the benefits we
are getting from decentralising it down to GPs, are that the GPs
are very often best place to indicate to us what level of commissioning
in a given area ought to be most appropriate for that local primary
care trust. So what I was not prepared to do was to say we cannot
learn from the decentralisation elements of this but to say what
can we learn from this that is equitable, that is fair and treats
patients better, and how can we avoid what was wrong with that?
Q208 Mr Jones: As the practice based
commissioning rolls out, what do primary care trusts get left
to do?
Dr Reid: What do they get less
to do?
Q209 Mr Jones: Left to do?
Dr Reid: Left to do. Commissioning.
Q210 Mr Jones: But will not the practice
based people be able to commission?
Dr Reid: They will be able to
indicate . . . Do you want to go through the exact process of
what I am doing? This is indicative. John, just go through the
system.
Mr Bacon: Primary care trusts
have a variety of roles, and there are two fundamental ones, one
of which is developing an approach to public health and health
promotion, health promotion in their local communities. That will
remain with them allied to their general practitioners. The second
is to think about the development of community and primary based
services and to oversee the general practice network. Thirdly,
to oversee the practice based commissioning process. So we are
not saying that they are completely divorced from it. They will
continue to hold the real money. These are indicative budgets.
Q211 Mr Jones: They just want to police
it, do they?
Mr Bacon: They will oversee it
to ensure that services are developed strategically, that they
meet the needs—
Q212 Mr Jones: I am sorry, if I can intervene.
Dr Reid: Can I just stress the
words that John used here: "These are indicative budgets."
Q213 Mr Jones: Yes, but so I can clarify
for my own understanding and maybe other members of the Committee,
if you end up with a practice based commissioner which is inappropriately
commissioning, over-prescribing, or whatever, is the role of the
PCT to come in and police it and say, "Wait a minute, you
are way out of line here"?
Mr Bacon: We are still essentially
engaged in a managed system here. We are not saying this is completely
laissez faire, but what we do want to do is to encourage
general practitioners and practices to think of innovative ways
of providing services to patients that best meet the needs of
those patients. Of course, if practices were acting inappropriately,
we would expect the primary care trust to intervene?
Dr Reid: Basically it is an extension
of devolution to the primary care trust. Just as we are passing
down a lot of the operational responsibility and operational rights
and money to primary care trusts, so we are hoping that that process
of devolution and decentralisation is not stopping the level of
primary care trust; while minimising and removing the inequities
of the old GP fund-holder, they are involving the front line in
the commissioning of care. That does not mean to say that they
lose the role of doing that.
Q214 Mr Jones: No, but since the practice
based commissioners are doing things which they were not previously
doing which the PCTs are now doing, it is bound to lead to a lessening
in the role of the PCTs. Do you foresee that meaning in the future
that possibly there should be less PCTs or less small PCTs?
Dr Reid: I do not think it necessarily
means that there will be fewer PCTs. What it should mean necessarily
is that the PCTs themselves, which were an attempt to localise
and decentralise decision making, decentralise it and make better
decisions because they are more in touch with the grass roots
front line services. That is what it should mean. Is it possible,
as a result of this, that there would be some shift in the number
of PCTs? It is possible, but not for the reasons that I think
you are implying of redundancy. Up to this point we have stopped
PCTs merging, not stopped them working together, but we have said,
"Look if the PCT were set up to give a local dimension to
this to make sure that we are in touch with local people and their
needs and, therefore, we do not want everybody rushing into merging
them into larger bodies." But say, for instance, and I merely
give this as an example, say there are a series of PCTs in a given
area where, through their own willingness to decentralise, are
putting in place mechanisms within their own PCT structure, within
the local area structure, to enshrine localism and then saying,
"We want to merge with the local PCTs down the road in order
to reduce the overheads and the bureaucracy here, not because
it is redundant but because we think we have now got systems in
place that, even if we were to merge, would route local power
and local decision-making through GPs in other ways." If
that was to happen, one can envisage a set of circumstances where
it might as PCTs evolve, but I do not think it will happen because
(a) they are redundant or (b) it is being determined and dictated
from the centre?
Q215 Dr Naysmith: I am just reading this
paper about the practice based commissioning. It is a little bit
ambiguous, it has to be said. It can be read in the way that you
are telling us today, so that is the right way, but there are
things that say, "The right to hold a budget and our willingness
to see it as a first step"—
Dr Reid: I cannot hear you.
Q216 Dr Naysmith: I am sorry, this is
from the paper Practice Based Commissioning. It says, "The
right to hold a budget and our willingness to see it as a first
step towards the adoption of a sophisticated range of ways in
which practices are involved in commissioning are entirely consistent
with the principle of greater devolution." There are lots
of things like that that can be read, and this is the first step
in actually giving a budget to practices. I know you have just
said that it is not that, but I suspect some people think it is
that?
Dr Reid: I have not said it is
not that. I have said it is not necessarily that. I have not closed
my mind to the evolution of anything, whether it is PCTs, it is
the centre, you know. We are in a situation that is dynamic. I
do not think we are saying, "This is it. We have got it right."
Indeed, the paper to which you have referred there, Doug, I think
is the one issued on 5 October, which has gone out and it is preliminary
guidance, but we are specifically asking the NHS—that is
everyone involved, including PCTs—to give us their feedback
on that. So if the PCTs came back and there was massive resistance
or widespread deficiencies pointed out, people said, "You
ought to put to a cap on this", or whatever, we would take
full account of that. That is why we have issued it in order to
get the feedback from them.
Q217 Dr Naysmith: The reason why it is
an important question and one I am very interested in is because,
as you have just been talking about, there are people who are
saying that current primary care trusts are too small for certain
commissioning decisions.
Dr Reid: Yes.
Q218 Dr Naysmith: You mentioned public
health and care for chronic diseases and that sort of thing—I
have just mentioned care for chronic diseases; you mentioned something
else—and that PCTs are really too small for that kind of
role. That is a view that has been put to us more than once, and
I know it is around. If you speak to PCT people—let me finish—if
we get to that stage, then what happens is GP practices are going
to be left with commissioning the acute services, which is what
always happen in the National Health Service. Funds go towards
the acute services, public health and chronic diseases and community
care gets left behind. How are you going to make sure that that
does not happen?
Dr Reid: Again, when you say that
some say that PCTs are too small to undertake commissioning, it
seems to me a peculiar argument for these people then to say,
"So we go down to small local GP practices to do the Commissioning."
Q219 Dr Naysmith: No, that is not what
we are saying. We are saying we ought to commit a bigger—
Dr Reid: I am trying to reassure
you that I do not start with an a priori view that PCTs
are too small and all ought to merge.
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