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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