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NHS Funding

12.31 pm

The Secretary of State for Health (Dr. John Reid): With permission Mr. Speaker, I should like to make a statement about allocations to primary care trusts in the national health service in England.

I am today allocating revenue resources to England's 303 PCTs for the financial years 2006–07 and 2007–08. PCTs have already been informed of their allocation for 2005–06, so they will now be able to plan for the medium term, knowing with certainty their allocation up to March 2008. I have written to all hon. Members with details of the allocations to the PCTs that serve their constituencies.

This Government believe in the NHS. We believe in its founding principle that there should be equity of access, free at the point of need, for everyone. Furthermore, we believe that the NHS can be reformed and transformed as well as improved, so that health care can be delivered to the standards of, and in a way expected by, today's public. That is why in 2002 the Government outlined our plans for an unparalleled increase in expenditure in the NHS over the five years from 2003–04 to 2007–08.

Today, I can tell the House that I am allocating more resources to the NHS front-line services than have ever been allocated before—£64 billion in 2006–07 and £70 billion in 2007–08. That contrasts with £45 billion only four years ago. That means that PCT allocations will grow in 2006–07 by no less than 9.2 per cent., and in 2007–08 by 9.4 per cent. On average, PCTs will have, compounded, 19.5 per cent. more resources in 2007–08 than in 2005–06. The increases between 2003–04 and 2007–08 represent a faster growth in resource allocation than ever before in the history of our NHS.

The distribution of those resources has had regard to four main principles under this Labour Government. The first is that the increase will allow the NHS to take significant strides in improving access to health services for everyone throughout the country. Secondly, places with greater need will receive an even greater allocation of resources. Thirdly, for the first time, this allocation will allow significant resources to be used for the prevention of ill health and for health improvement. Finally, there will be a floor to the allocation to each primary care trust today. No primary care trust will receive an increase in funding over the two years of less than 16.8 per cent. Not one primary care trust in England will receive less than a 16.8 per cent. increase over the two years.

For the five years between 2002–03 and 2007–08, allocations to primary care trusts will increase by more than 56 per cent. In terms of real people, by 2007–08, £1,388 will be allocated per head, compared with £907 in 2002–03—an increase of 53 per cent. in allocated resources for every single man, woman and child in England. We have done more than just increase our investment; we have made the distribution of resources more fair than ever before.

A key factor in distributing funding fairly is the count of the number of people served by each primary care trust. Since the last allocation round, the population
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data based on the 2001 census has been revised, so we now have a more accurate population count. In addition, the allocations that I am announcing today include projected increases in populations. That means that we are properly taking account of the challenges faced in areas of rapidly increasing populations.

If allocations are to be fair, they must also be based on need. Following advice from the independent Advisory Committee on Resource Allocation, I am making some improvements to the formula to provide the same access to health care where there is the same need, and to support the reduction in health inequalities. I have also changed the way in which funding for primary medical services is distributed to make that fairer. For the first time, the majority of funding for GP services will be allocated according to the relative need for primary care services. The formula that we are using reflects the most up-to-date and best measures of differences in need for those services. The House will be glad to hear—many hon. Members have made representations to me—that I have also tackled the unfairness inherent in some areas being significantly under target in terms of the previous resource allocation.

Following the introduction of the new formula in 2002, we realised that, despite progress, some areas were still not receiving their fair share of funding. At that time, some areas were more than 22 per cent. below their fair share. We made some progress in reducing that unfairness in the previous allocation round, but despite that, in 2005–06 some primary care trusts are more than 5 per cent. or 10 per cent., and in one case more than 15 per cent., beneath their fair share. Such a disparity is unfair and unacceptable, so I have decided in the 2006–07 and 2007–08 allocations to accelerate progress towards a fair-share distribution. To reach that outcome, primary care trusts at the greatest distance beneath their fair share will receive more than those who were already receiving their fair share or more.

With the allocations that I am announcing today, based on need and fairness, by 2007–08, no primary care trust in England will be 15, 10 or even 5 per cent. below target. Indeed, I am able to tell the House that under today's allocation no primary care trust will be more than 3.5 per cent. away from their optimum fair share of the allocation. That is as substantial a move as I can make commensurate with the stability of the whole system.

Our general approach, therefore, has been to balance a significant and substantial increase in resources for every area, and for the PCTs of every Member throughout the House, with an even greater improvement in funding where there is greater need. No primary care trust in England—north, south, east or west—will receive an average increase of less than 8.1 per cent. Over the two years, that is an average increase of 19.5 per cent. for every one in England. That will ensure that all parts of the country will receive sufficient funding to see considerable further improvements in their health services.

At the same time as providing a 19.5 per cent. average and an 8.1 per cent. a year minimum, the funding formula rightly moves more funding to where it is most needed. I have already identified 88 primary care trusts as those that need the most urgent action. Since those are the most needy areas, they will receive a higher level
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of funding than other areas. By 2007–08, the funding per person in a spearhead primary care trust will be £1,552, compared with a national average of £1,388.

I can also tell the House, however, that by 2007–08, as a result of the fairer distribution, the 5 per cent. most needy areas and those facing the greatest need for funding, in both the north and the south of the country, will receive an average of £1,710 per person. The 5 per cent. most well-off areas with less need for funding will receive an average of around £1,190. That means that I am putting additional funding where it is needed to reduce health inequalities. That should help to ensure that by 2010 there will be a 10 per cent. reduction in health inequalities, as measured by infant mortality and life expectancy at birth. We will also see further reductions in killer diseases. We have already reduced premature deaths from heart-related disease and from cancer by 27 per cent. and 12 per cent. respectively in the past six years. By 2010, there will be a fall of at least 40 per cent., from 1997 figures, in death rates from heart disease and stroke, and a 20 per cent. fall in death rates from cancer.

We also want to improve the experience throughout the NHS for all patients. By the end of 2008, for their planned hospital care, as a result of these allocations, all patients will be able to choose between a range of providers, including NHS foundation trusts and NHS and independent sector treatment centres. And because the investment announced today will be matched by the reform in working practices undertaken by staff, patients will be admitted for treatment in England within a maximum of 18 weeks from their first appointment with their GP to the door of the operating theatre, with no hidden waits. Having halved waiting times, we will halve them again and halve them once more for patients in England.

In addition, we can move away from treating illness and towards preventing it and encouraging health improvement. These resources will also allow us to make progress on prevention towards the original vision of the NHS as a true health service, rather than just a sickness service. Today's allocations include public health funding of £211 million in 2006–07 and £342 million in 2007–08 to help make that happen. All areas will receive their share of this funding, but again, a higher proportion will go to the most deprived areas, including the spearhead PCTs.

Of course, this is not all the funding available to deliver the health improvement agenda, but it is a significant proportion of it. It is being allocated directly to front-line PCTs to allow them to implement key initiatives such as improved school health and improved sexual health services. For example, we are providing funding so that by 2010, every PCT in England will be resourced to have at least one full-time, year-round qualified school nurse working with each cluster or group of primary schools and related secondary schools. And not before time.

Our public services must respond to what the public want by giving quality care at the public's convenience. Under this Government, the NHS's founding principles will remain firmly in place and will be enhanced by today's investment, thus giving equal access free at the point of need. But the way in which the services are
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organised is being transformed, giving patients a more convenient, personalised and responsive service within a system that is not only fair to all, but personal to each of us. That is a key aim for today's NHS.

The biggest ever investment in our national health service, the fairest ever distribution of resources and a massive programme of continued reform by staff will together give the increased capacity and diversity of provision that will offer patients faster access to better quality health services than ever before, all free at the point of need under a Labour Government. All those improvements are opposed by the Conservatives, who plan to divert money away from the NHS and to introduce for the first time into NHS commissioning charges for operations. Let the people make the comparison between the two offers and let them make their choice. I commend the statement to the House.

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