Select Committee on Health Minutes of Evidence


Examination of Witnesses (Questions 280-299)

8 DECEMBER 2004

RT HON JOHN REID MP, MR RICHARD DOUGLAS AND MR JOHN BACON

  Q280 Dr Naysmith: I can see that!

  Dr Reid: Do you object to an offer being made to patients?

  Q281 Dr Naysmith: No, I do not.

  Dr Reid: We will have no problem then, because the patients need not choose the independent sector; they can choose the other four. Your objection appears to be that we have been heavy-handed in saying that the patient should have a choice which includes the private sector. We believe that patients should have that choice. It is not a legal requirement, but we are saying to the local authorities that their first priority is to put the patients first, and, in our view, if they are doing that, then one out of the five choices they offer to patients which patients can refuse should be an independent sector provider.

  Q282 Mrs Calton: My question is very much on the same theme as we have already been exploring, and I would like to explore it even further, and I think I would take extreme umbrage if there was any suggestion that the questions I am asking were on behalf of providers as opposed to patients. I think we are all concerned that patients should get the best service that they can possibly get and as quickly as possible. We have already explored Greater Manchester. My understanding that is PCTs are having their budgets top-sliced by 8% in Greater Manchester for work to be done in the private sector. Can I ask a more general question. How many Strategic Health Authorities are top-slicing PCTs budgets for funds to be spent in the private sector? We can call it top-slicing or we can call it encouragement; I think it probably comes down to much the same thing. How many Strategic Health Authorities? I am happy to be written to, because I would like to know which ones they are that are having this sort of encouragement and what percentage they are being encouraged to provide for this?

  Dr Reid: Patsy, I am sorry if you took umbrage at my comment.

  Q283 Mrs Calton: No, I said I will take umbrage?

  Dr Reid: But it was an accurate description of the questions I was being asked, and it is also an accurate description of the question you have just asked: because that is about provision again rather than about the patients' choice or the patients' power.

  Q284 Mrs Calton: Can I correct you, Secretary of State, because, seriously, that is not what I am about at all. I believe it is very important for patients—and we are their representatives here—that there is absolute transparency about what is going on, and it worries me that there are things going on at the moment which are not completely transparent, which we do not understand fully, and I think we have to be clear that the fund is being spent in the way we want?

  Dr Reid: I am doing my best to help you on that, obviously not entirely successfully, but there is no top-slicing on this—I will ask the Finance Director to deal with it—on the provision of services. There is no top-slicing. There is, however, an element of competition between the providers in the sense of diversity so that the patient can win out of this. The patient is clearly winning after only two years. The patient is getting more services more quickly and of more quality in more parts of the country since we started to introduce this than ever before, and it is an integral part of that that if the patient is going to exercise that information, power and choice that there is a diversity of provision. Having said that, would you like to deal with the question of top-slicing, Richard?

  Mr Douglas: We are not top-slicing any money from PCTs at all, so there is no departmental top-slicing of PCT money for independent sector provision.

  Q285 Mrs Calton: I think I said Strategic Health Authority top-slicing?

  Mr Douglas: What we have said, and Mr Bacon may want to add to this, is that we need to make some assumptions going forward on the capacity planning that, as we move to a position of having an independent sector provider as one of the providers on your choice menu, we have to make some assumptions within that about the level of spend you might expect to go to the independent sector. That is where the 8% comes from. I do not know whether John wants to add to that.

  Mr Bacon: The public statements we have made on this are quite clear, and we have already committed currently in our first wave about 250,000 FCs of activity in the private sector, and that is what we are pursuing through our first wave. We have also, through the Prime Minister, made a commitment to try and move up towards half a million. So, in addition to £250 million—

  Dr Reid: Which is about 7%.

  Mr Bacon: Which is about 7%. As we are doing our planning, we have advised the Strategic Health Authorities that that is the sort of number that we would like to see developed. We have not said everybody must do X or that we would ask them to top-slice; what we have said is, as you are thinking about developing your options for patients to choose and as you are thinking about how you offer private sector options on that menu, we would expect you to be thinking around the 7 to 8% of activity. If you come back and say, "Actually, we want more", fine, or if you say, "We want a little bit less", or, "It does not quite work in our area", then that is the sort of discussion we are prepared to have. This is about local health authorities and their PCTs on behalf of patients making choices about how they want to offer services.

  Q286 Mrs Calton: So we are agreed that there is encouragement going on and that certainly in Greater Manchester, as I understand, all the PCTs have agreed to put forward 8%. So whether you call it top-slicing, they have been encouraged, they have agreed to it?

  Dr Reid: No, sorry. It is quite important. Top-slicing implies, in fact it does not imply, it is explicit that we are taking 8% off the budget and we are allocating it. We are not doing that, and that has been made absolutely clear. You can call it top-slicing if you like—you can look at a giraffe and say it is an elephant—but it does not make it top-slicing.

  Q287 Mrs Calton: Can I ask what scrutiny of the process is taking place? I think Keith has already asked by what process this 8% was coming off. We have had an answer to that. What I am concerned about is what planning is going into where this 8% is going to be spent. How does anyone who is a representative know how the decisions are being made about where the 8% is being spent?

  Dr Reid: I can tell you where we are going to. We are going to a position where this decisions will be made locally. That is where I want to get to. I do not want the Health Service run and micro-managed from the Department of Health and, with great respect, the Health Select Committee. I unashamedly say that to you. That is what we are going to go to.

  Mr Bacon: Let me try and explain the planning process, which may be helpful to you. We are now actively engaged throughout the NHS on the planning process for the three years from April 2005, and we are dealing with the entirety of the NHS activity, we are not just dealing with elected activity in this planning process. We are looking at how we plan to spend what will be the best part of £200 billion over a three-year run. So this is a massive planning exercise engaged at all levels of the service. One element of that is how you plan to meet the elective targets that the Secretary of State has set out for 2008, the 18-week maximum wait from point of referral to treatment, and what we have said in that process is: "Would you look at options around the private sector to do that?" We oversee that process, but it is essentially a PCT driven process, and the decisions that are made will be made through public board meetings at the point at which those plans are put together and then submitted through the SHAs to ourselves. Obviously you would expect in a national health service that we would want to look at those plans to ensure they met the aspirations we have set for the NHS, and, if they do not, we might well engage in discussions with them, but essentially these are local plans by the PCTs overseen by the Health Authority.

  Q288 Mrs Calton: So if I read my local PCT's board papers I can expect to see the planning process that has gone on as far as the current 8% is concerned?

  Dr Reid: Subject always to commercial confidentiality. We want a degree of accountability locally and less interference in micro-managing centrally, but the driver and the navigator of this will not be the local providers, it will be the patients—and that is the simultaneous transfer of the systems that is going on—and I do not hide the difficulties in doing that. If I have been blunt about my intention, it has not been in any way to be destructive but to be honest with the Committee and say that is where I want this to go to. I want the patients' power and choice to be the biggest driver and navigator of this system and, therefore, if we are going to do that, we have to pass power to the front-line services in order to respond to that, because it would not be fair to say the patient is going to have the ability to move away from you but you will not have ability to respond to the patient because I will hamper you from the centre by giving you those directions. That is roughly where we want to go to.

  Q289 Mrs Calton: Can I go back to my previous question? I said it would be helpful to me and I think to the Committee to know which Strategic Health Authorities are engaged in this sort of process. Is this all of the Strategic Health Authorities?

  Dr Reid: All of them.

  Q290 Mrs Calton: And they have all had the same sort of encouragement process and they have all come up with the same result?

  Dr Reid: No, they have not all come up with the same results. They have gone at different speeds, different levels of reluctance or keenness, different ideas, and the position is constantly changing. The Foundation Trusts that have been established are talking about whether or not they can provide primary care. The NHS Elect, which is the NHS treatment centres, are talking about whether they are getting a level playing field. The independent providers in Britain who started off by not really wanting to compete for the bulk provision now want to be part of it. It is a hugely dynamic situation, but we know exactly where we want to go to, the strategic terms, but not in every detail. We will be prepared to shift things as we go along, and part of that shifting is in consultation with local Strategic Health Authorities.

  Mrs Calton: Chairman, can I ask that we do have the percentages that each Strategic Heath Authority has reached agreement with its PCTs on?

  Q291 Chairman: Is it possible for you to follow up?

  Mr Bacon: We are in an iterative process at the moment agreeing that, so it is not currently available.

  Q292 Chairman: When it is you can let us have it.

  Mr Bacon: All of this process will be tied down by March, and at that point it will be public domain information anyway.

  Q293 Mrs Calton: So this is something that will take place from March/April then?

  Dr Reid: We think it will be concluded by then, and it will be put in the public domain at that stage, as most of this stuff is.

  Q294 Chairman: Can I move on briefly. You referred a moment ago to Foundation Trusts. I have had representations, as you might expect, within West Yorkshire from patients, and I emphasise from patients, about the situation in Bradford which has caused some concern locally. I appreciate that you have given a parliamentary answer recently indicating that you are no longer in a position to comment or provide information about the operational management within Foundation Trusts. My question in a sense is about the manner in which the financial performance at the time of authorisation was evaluated in the Bradford case. Can you comment on that at all, because it seems to be fairly important in view of the discussions that we have had locally?

  Dr Reid: I would make, Chairman, a general statement without going into the Bradford thing, just by saying that when something like this is discovered it is not an indication of the failure of the system but rather of the success in the system, because things which could have gone on for years previously are now being identified relatively quickly, and, you are absolutely right, I have tried not to comment specifically on the case of Bradford, for reasons that will be obvious to you, but let me say a couple of things general. You mentioned your constituents, quite correctly safeguarding their interests. My understanding, although you can never make a complete separation between these two things, is that the problem here is connected with financial management and not the provision of NHS services directly, and that is still the position, as I understand it. Therefore, there are not the grounds and no reason for me, as Secretary of State, to intervene because I believe that there is an imminent threat to the provision of services. I hope that is some reassurance. The second piece of reassurance is that, although I will not comment publicly and directly on this because it is a Foundation Trust and Monitor is now looking at this, obviously I will maintain a dialogue with the West Yorkshire Strategic Health Authority and the Regulator in relation to the provision of NHS services in Bradford and will monitor this situation closely.

  Q295 Chairman: I appreciate the difficulties in going into detail. I am concerned about what we learn from what has happened, because obviously Bradford was the flagship Foundation Trust for West Yorkshire, so other people are looking very carefully at what has happened. I was interested in the Regulator Bill Moyes's comments about the internal cost controls and disputes with PCTs when he said, "I am deeply unimpressed by the purchasing at least to the same extent as I am unimpressed by the acute trusts' failure to identify the problem." His concern related not just the Foundation Trusts but to the wider involvement with the PCTs. My question to you is in the context of what has happened in Bradford are you satisfied that the procedures in terms of authorisation sufficiently take account of the relationship between the acute trust and the purchasers in any local area regardless of Bradford, or wherever?

  Dr Reid: I will perhaps ask my officials to make a specific comment on that. Before they do I would make one brief and general one. I think it is fair to say—I hope this is not unfair on anyone in the health service—that up until relatively recently large dollops of money have been handed out for large providers of services without a lot of transparency about what we are purchasing and what they are actually doing, and at some stage handed out a lump sum to a hospital and they would say, "We have now run out of that. We need extra money to pay for Saturday morning operations", or whatever. As I look back over the history of this, it has always amazed me that nobody in the past 50 years has said, "What is it we are paying for? How many operations are we buying?" All of that is changing, Chairman, not least because we want the money to follow the patients' choice. Payment by result is coming in. As Patsy Calton said, she demands, quite correctly, transparency on a lot of these things, and this is a relatively recent culture, so it perhaps should not surprise us that, when a light has been shone and is particularly being shone on those who want more freedoms than they previously had, the Foundation Trusts, and we want everybody to get there but at the moment they are a relatively small number, then we should not be picking up things like this that perhaps would have gone hidden for years in the past.

  Q296 Chairman: On that, very briefly, what I read from what you are saying is that you are commending the Regulator in picking up on this particular problem. You are not being critical of the Regulator in the Bradford context?

  Dr Reid: I do not have grounds for doing that at present. There are two ways of looking at this—it is the old half-full and half-empty glass, is it not? One is saying, "Why did we not pick this up in the run up to Foundation Status?"—I do not know the answer to that—but the other one is saying, "Look, this is working the way it should do because we are giving more freedom to people at the front-line, for all the reasons I unashamedly defended earlier on, and I know they are not all popular and to some extent the proof of the pudding will be in the eating and it will be with hindsight where I will be proved to be over-confident, but I think we are right. You give more power to the front-line, but, on the other hand, we have set up a Regulator who we hope will be looking at these things even more closely than my people did in London, or we did, and therefore he has picked this up much more quickly than it would have been picked up under normal circumstances. I think that is my view. Richard, you are Director of Finance, you comment.

  Mr Douglas: In terms of lessons learned from this, I think both the Department and the Regulator are learning lessons from Bradford. They are partly about the assessment process itself, partly about the financial assessment process, but also about the issue of relationships as well, and I think we all accept that is the important issue here. Also the firms that made the assessment, the Audit Commission, a number of us are picking up the lessons from that together. In terms of the other general point on this, without going into the situation in Bradford, because I have not got all the details of Bradford, there is an assumption that there was something wrong at the start. What we all know in the NHS is that things can go wrong financially quite quickly in organisations, and we have seen it in a couple that this Committee has raised with me in the last couple of years. What has happened in this situation is something has been picked up very quickly and responded to very quickly. I think that is the issue about the regime really working.

  Q297 Mr Bradley: Could I clarify what the criteria would be for future applications for foundation hospital status? Currently three star is the passport through. There has been some comment that that might be lowered to two star, and some concern has been expressed about that by the Chairman of Monitor. Now we have the Health Care Commission looking at a new system of evaluating hospitals. Could you give your current thinking about what the bases of foundation hospitals are?

  Dr Reid: I did not have any plans to change the two star. There are always discussions, because it is, as we were saying earlier, a process where we try and learn as we go through and people argue, if you have been consistently two star and so on, that you should be given the chance. We had no plans to do this, but in the interim, as you correctly pointed out, the Healthcare Commission has decided that they want to bring a new system with five stars. My only comment on that is that in general I very much welcome that. It maintains assessment, it maintains transparency, it maintains publication of details and it maintains simplicity. So from the patient's point of view, from the public's point of view, it maintains everything I want maintained, and it was always the idea that the Healthcare Commission would develop their own independent one. So some of the press reports saying I was not pleased with this, or whatever, are absolute nonsense. I am more than happy with what we have ended up with. I have not yet decided how that will effect NHS Foundation Trust application and status, not least because we did promise when it went through Parliament that we would have a review of the workings of this, and that review is now underway and it will be some time. I have no doubt now, since it has been conducted largely by the person who heads up the Healthcare Commission, that he will be able to juggle these two things, his new standards and how that should apply to Foundation Trusts.

  Q298 Mr Bradley: A quick second question. In the winter supplementary estimates the budget for the independent regulator has gone up from five million to 16 million on the back of clarifying the changing role of the Regulator. Could you give some indication of what that clarification has been and therefore what the increased costs are for?

  Dr Reid: Of course we could, Mr Bradley. Director of Finance?

  Mr Douglas: When the budget was originally set for the Office of the Independent Regulator this was before we had established the person, the process or the Board, frankly. In the light of the responsibilities that the Board have now taken on, in the light of the number of assessments that they are having to do with Foundation Trusts, we reassessed the budget with them; so it really is a clarification of the role having established Monitor itself.

  Q299 Mr Bradley: Those changing functions and responsibilities are all documented, are they?

  Mr Douglas: It is a clarification of the roles, and we would not expect to see that number changing significantly for the future.


 
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