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Does the Minister accept that the three PCTs in Cornwall have an exceptional deficit in comparison with those in the rest of the country? Is he saying that that is a result of financial mismanagement and incompetence, or is he prepared to accept that it is worth reviewing whether the funding formula in the
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past, and the proposals for the future, are adequate for the circumstances, which, as he admits, he does not properly comprehend?
Dr. Ladyman: There are all sorts of reasons why some PCTs have built up deficits, such as structural reasons. I would hesitate to suggest that incompetence is ever such a reason because if incompetence is suspected, the chief executive usually gets fired and someone who knows what they are doing is brought in. PCTs are relatively new organisations, so they are going through a learning curve. They are learning how to balance budgets and achieve the financial stability that they need. The deficits that are constantly reported in the newspapers represent a tiny proportion of PCTs' budgets. Indeed, most private companies would give their right arm to have the sort of financial management of most PCTs by ending up with a balanced budget at the end of the year.
I am certainly not accusing the hon. Gentleman's local PCTs of incompetence, but neither am I going to leap immediately to the conclusion that the formula allocation is wrong. The fact is that prior to 1997, the health service was dramatically under-funded, so a huge range of pressures subsequently had to be addressed. It is rather like the pothole in the road syndrome: one
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cannot start to invest in new roads until the potholes caused by a lack of maintenance for years have been fixed. That is the situation in the national health service. The new investment that we have been putting in has met the ever-building pressure in the system. Of course the situation has been difficult, but as more money goes in during the coming years, it will become easier to manage the budgets.
Dr. Ladyman: Labour Members are reasonable men and women, so if it is clear that the formula allocation is not working for some reason, it will be reviewed. The Secretary of State has already demonstrated a great degree of flexibility through the way in which he has been prepared to examine such issues and the way in which the recent PCT allocations have been made