Examination of Witnesses (Questions 440
- 459)
THURSDAY 20 JANUARY 2005
RT HON
JOHN HUTTON,
MP AND MR
JOHN BACON
Q440 Mr Liddell-Grainger: We went
to Bristol just over a year ago and we went to the Royal Victoria.
One of the things you point out is, if they cannot make it work,
we will try and get them to make it work and put in management
and so on, but one of the things which came out loud and clear
from down there were attempts to make people do what they could
not do, and this came from senior managers in that hospital. If
you cannot make it work, you are stuck, are you not? You can replace
management until you are blue in the face, but if it ain't going
to work, it ain't going to work. You then have a problem that
if you move people to another hospital because that department
is being shut down, it is not going to guarantee it will work
in another hospital no matter what part of the country you are.
So you could be going in a circle of inability to manage.
Mr Hutton: We will not be closing
surgical units down. It will be patient choices that decide the
future of these organisations. That I know is a completely different
mindset for us to think about when we envisage the NHS, but it
will not be the case. I can give you this assurance: I will not
be making a decision to close the local ophthalmic department
in your hospital because I do not think it is good enough. If
that unit faces those problems it will not be because of anything
I have done; it will be because the patients locally do not want
to go there. As I said, there are solutions available to local
commissions to try and make sure that that more local option continues
to be available to your constituents and, as I said, there are
a number of ways in which that can be done. Of course, with any
prospective payment system like PBR, attached to choice, which
it is designed to facilitate, yes, it could be that that happens
There could be circumstances where certain services fail and they
fail to the point where they cannot be rescued because no-one
wants to go there under any set of circumstances in a viable way.
For all of us in public life—and I know this is a completely
different set of disciplines; we are not used to applying this
in the context of public services—I do believe very strongly
that we face a pretty simple choice. If we sign up for choice,
if we think our constituents should have free choice across the
NHS about where they go, if we think that will help support quality
and drive up efficiency, this is the down side and I do not think
it serves the argument that somehow I can guarantee there will
be no service failure in the new world of choice; there will be.
As I said earlier, the most important thing here is to be very
clear about how we preserve access to crucial emergency care,
and there will be some surgical specialities, orthopaedics for
example, where locally the elective side of that service, which
roughly accounts for about 22% of the hospital income so a relatively
small part, is where choice will operate. It will not operate
in the field of emergency care for obvious reasons because patients
can go anywhere they want to now anyway. No-one is going to ask
you, "Who is your PCT?", when you turn up in an A&E
department; they just treat you on the spot. If there was a failure
in an elective orthopaedic service, for example, that could raise
quite difficult and different issues from a failure, for example,
in another speciality like dermatology which is not crucial in
terms of maintaining A&E capacity. If there is a service failure
in an area like trauma and orthopaedics I think it is going to
be necessary for the department to have a way of intervening in
those circumstances to make sure that the failure of the elective
component of orthopaedics in a local hospital does not have a
wash-over effect into the continued viability of the A&E department
because you cannot run modern A&E services without trauma
and orthopaedic surgical back-up; it is impossible. Obviously,
there is payment by results in the area of emergency care as well.
People will say, "Why should there be any wash-over? The
patients are still coming through the door in A&E. You are
getting paid on that basis". The problem could well be around
the rostering and staffing arrangements because clearly there
would be additional costs for that organisation if all of its
orthopaedic surgeons were only rostered to work in accident and
emergency as opposed to staffing elective and routine surgery
as well, so the cost clearly would rise and it would rise above
the tariff rate for emergency work. We would have to consider
in those circumstances precisely what we did to maintain access
to A&E, for example, in your constituency. I can just let
you into a little secret here. In this sense, fine, I might be
the minister today; I am a backbencher tomorrow. At the end of
the day we are all Members of Parliament. The one thing that would
get all of our goats going would be if our accident and emergency
department, which is absolutely essential, had to close down because
of some accounting problem. It is never going to happen. The responsibility
of us in government now with this new system is to construct an
effective financial mechanism for making sure that if a surgical
speciality and service is affected by a downturn in elective activity
and it is crucial for A&E, we find an effective tool, financial
if necessary, to make sure that that failure on the elective side
does not compromise A&E. To all those people who run around
saying that this just means that A&E departments are going
to close, I would say it is not going to happen and it has not
happened in any other country where they have moved towards prospective
payment systems for elective care—Australia, Canada, the
United States, other European countries and Germany. What is interesting
about the international experience is this, that in other countries
they have used payment by results as a way of managing out of
the system excess capacity. We are doing it in a totally different
way. We do not have any excess capacity, so alongside introducing
payment by results we are injecting more capacity into the system.
I believe fundamentally that the best way to make sure we do not
run the risk of having large amounts of standby capacity sitting
there idle, whether it in the independent sector or in the NHS,
is to persevere with the reforms on payment by results. It is
the best way to make sure that the capacity that is needed is
used, because you are not going to get paid for having capacity
idle and therefore it is not economic for you as an NHS organisation
or an independent sector provider to have wards sitting there
empty. Payment by results will not support that. We need to get
this balance right between capacity and demand. It is a fiendishly
complicated equation to get right but I am absolutely sure, both
from the international experience and from our own testing of
PBR in the UK, that payment by results is the best way to do it.
Q441 Chairman: Precisely on this,
it is true the government has a fallback, has it not, on the amount
of funding that is going to come by the payment by results route
from April from 70% to 30%? Is this because, whatever system you
set up—and we found this when we did our report on targets—you
immediately get gaming, and are we not already saying that gaming
is going on, if I read the reports right, which is that hospitals,
foundation trusts, are taking short term people from A&E into
wards because they know they are going to get extra money that
way and have you not had to change the system because of this?
Does this in turn mean lots more monitoring, lots more regulation,
to make sure this does not happen?
Mr Hutton: You are quite right.
We have deferred the full implementation of payment by results
in relation to emergency work and outpatient activity. We have
not deferred it in relation to what we have spent the last hour
and a half talking about, which is elective care, the routine
operations that your and my constituents might choose that may
be necessary for them to use and they can choose from. We are
going ahead with full implementation of payment by results for
elective care for routine operations. It is true that we have
therefore delayed bringing in full PBR in relation to emergency
and outpatient activity, and we have done so for a number of reasons,
partly those that you have just described. Every system that has
moved to prospective payment financing for health care has faced
a similar set of problems. If you are coding particular activities
and applying for the first time a particular price tag to everything
that is coded, of course there are likely to be irregularities.
What is very important (and every other country has had to do
the same thing) is to introduce it gradually so that volatility
in the system is managed and, secondly, to have a clear set of
rules around which you regulate precisely that sort of perverse
incentive, if you like, that your financial system creates. That
is what we need to do. We need longer to do that. That is a fair
comment and I am not going to run away from that. We have got
more work to do on that. Secondly, I would say that the NHS itself
was very clear that, given the volatility, given some of the concerns
about the accuracy of the data (which is crucial here in terms
of fixing a price and so on), we need longer to get all of that
right and it is much better, I am sure, to get it right rather
than rush in and get it wrong because the consequences then would
be for your constituents and mine. Hospitals could run out of
money and that would be in no-one's interest, so it is perfectly
sensible to take that time to get it right. Having said all of
that, we are still introducing payment by results more quickly
in England than in any other country that has attempted these
financial reforms in the health care system. We need to do it
around elective care because otherwise the choice agenda simply
disappears in front of our faces. If you cannot have the money
following the patient there is no incentive for the hospital to
do the extra work. At the moment you might wait years to get funded
for operations that can be done from someone else's primary care
trust—hopeless. If there is going to be an incentive it
has got to be a real one. I would say we have focused PBR this
year on that part of the NHS where it really does need to start
to influence behaviour, which is around elective care, but we
have to take our time to get it right.
Q442 Mr Hopkins: A little bit of
clarification first of all—my father's name was Harold but
I do not think I inherited it. On Tuesday evening we saw in the
Evening Standard a photograph on the front page of a ward
in a London hospital empty with a chain round the handles because
for some reason or other patients had been forced into the private
sector. You were talking about providing extra capacity. This
was capacity that had been closed down and deliberately transferred
into the private sector, no doubt for ideological reasons, but
is that not stupid and scandalous?
Mr Hutton: If the worst thing
that you can say about the NHS in London is that it has now got
spare capacity for the first time—guilty. I have no problem
with that accusation. It is true: we have spare capacity in some
parts of the NHS.
Q443 Mr Hopkins: It has only got
spare capacity because we have forced people into the private
sector.
Mr Hutton: No, I do not think
that is an accurate reflection of what has happened, particularly
at Ravenscourt Park. Ravenscourt Park takes NHS patients from
a variety of PCTs in London and outside London. Every primary
care trust at the moment, sensibly so, is funded to make sure
that by the end of this year no patient waits more than six months.
That is what they are all going to deliver. Ravenscourt Park could
certainly take more patients if NHS trusts were being funded and
told that the waiting times had to be four months this year rather
than six months, but they are not. It is true that there is spare
capacity at Ravenscourt Park, as I said, but I do not think that
is a sign of crisis or turmoil, as the Evening Standard
presented it. As evidence of excess capacity it is by no means
a bad thing; it is something that many of us, and I suspect maybe
you, would like to see the NHS have. It has got that capacity
now for a variety of reasons. It is far too simplistic to say
that the reason why there are not patients being treated in that
ward at Ravenscourt Park is that those patients have been diverted
into the independent sector. I think that would simply not be
the case. Those patients might be treated in other NHS treatment
centres or they might be treated in other NHS hospitals that had
contracts to do that work. Ravenscourt Park currently works at
an occupancy rate of about 70%. It is not bad.
Q444 Mr Hopkins: Some six months
ago The Times undertook a review of ordinary people and
71% of the interviewees said that the taxpayer should fund public
services such as health, and that they should be provided by the
government, not private companies, because that is the best way
to ensure that everyone experiences the same standard of provision.
Is that not completely at odds with what the government is doing
in trying to form a market and a hierarchy of provision?
Mr Hutton: No. All of these providers,
whether they are NHS or independent sector providers, are providing
care according to NHS standards and principles, and they are providing
care therefore free at the point of use. If you were to talk to
patients who had been to these independent sector providers I
think you would get a very different sense of what they felt about
the care and service that they had been provided. They have been
universally provided to a very high standard and have been greatly
appreciated by the patients who have used them. I think there
is a danger of ideology creeping into this debate and it has done
so in the past to the point that, for example, Labour governments
have simply not countenanced using private sector capacity for
ideological reasons and that has resulted in patients waiting
far longer than they need to for treatment on the NHS. That is
not an acceptable state of affairs.
Q445 Mr Hopkins: Was not one of the
problems with using the private sector that it is more expensive
than the public sector and if the government had spent more money
investing in the public sector the private sector would disappear?
Mr Hutton: That has been true
historically but that is not the case today. We are finding, for
example, in some of the independent sector treatment centre contracts
that we have run that the independent sector is able to provide
procedures at a cost that is less than that provided by the National
Health Service. As I suspect we are all interested in value for
money it would also be fairly stupid to turn round and say, "I
am sorry. We are going to pay more for that in the National Health
Service" for equally ideological reasons. I think we have
to continue these reforms for one very simple reason, that if
we stop now all of the value for money benefits that we are gaining
would be reversed. We would recreate another monopoly on the part
of the established incumbent private sector providers and that
would ultimately be at a very significant cost to the NHS and
to taxpayers. I understand precisely your objection to the use
of the private sector under any circumstances whatsoever irrespective
of any potential gain for patients. It is not a view that I share.
I think it puts ideology ahead of the needs of patients and for
that reason the government has decided not to pursue that particular
path.
Q446 Mr Hopkins: I assure you that
if the private sector could provide good, equitable health care
at a cheaper cost I would support the private sector.
Mr Hutton: That is what it is
doing.
Q447 Mr Hopkins: Let us take a comparison:
a country where overwhelmingly health care is provided privately
and one where it is provided largely publicly—America. Is
the government not setting a course en-route towards the American
system? It is a piecemeal route. In America health care as a proportion
of GDP costs twice as much as our health care does. It is bloated,
inefficient and serves only a proportion of the population with
a large number of the poor having inadequate health treatment,
if any health treatment at all.
Mr Hutton: Again, with respect,
I think you are confusing two totally different arguments. There
is the argument about who provides and there is the argument about
who pays. In the United States the patient pays and then there
is a range of not-for-profit and for-profit providers that provide
the service. In England we have taken the view that there will
be a diversity of providers but the patient will not pay; the
government will continue to fund health care free at the point
of use through general taxation. You can preserve that principle
while having a diversity of different providers, as in fact every
other social democracy in Europe does. It is not the case, I would
say as strongly as I can, that you can only have free at the point
of use services if they are provided by publicly owned services.
We know that is simply not true. We know it is not true in a number
of different areas. If you look at private nursing homes, 83%
of nursing care is provided by independent for-profit providers
and three-quarters of the people who stay in those nursing homes
get some or all of their care costs met by the state. It is to
confuse providers with funding principles to assume that because
we are now introducing independent sector providers in the UK
it means that we are going to start charging people for their
health care or make them take out private insurance. We are not
doing that.
Q448 Mr Hopkins: If I read that in
Downing Street and other circles papers on co-financing have been
circulated, which suggest part-payment by patients, would it not
be that if you have a competitive market and different providers
(some known to be better than others) eventually you start to
say, "The better providers will perhaps ration by price and
we will have a little bit of a charge", so that the middle
class buy the best health care and the devil take the hindmost:
the poor finish up in what will become sink hospitals? Is that
not what we are looking at?
Mr Hutton: You can cut it any
way you like. The government is not going to introduce charges
for NHS care. We have made that absolutely clear. We made it clear
in our last manifesto and I am pretty sure it will be in the next
manifesto, and people can then decide how they want to proceed
and how they want to cast their vote. Of course, if you wanted
to introduce co-payment into the NHS you could. You could do that
even if all of the care was provided by NHS providers, but we
are not introducing charges for treatment at this stage, no.
Q449 Mr Hopkins: The whole argument
is built on a myth, is it not, that the NHS is actually inefficient
when the NHS by international standards is actually extraordinarily
efficient? The problem with the NHS is, is it not, that it has
been desperately under-resourced and in terms of bang for your
buck you get much more from the National Health Service than,
at the other extreme, from the American Health Service. In fact,
the Health Service, like the railways before privatisation, worked
miracles on a pittance. The problem is that it has not been properly
resourced until recently. Is that not the case?
Mr Hutton: The NHS is an extremely
efficient provider of health care, of course, by any international
yardstick—
Q450 Mr Hopkins: So why are we moving
towards privatisation?
Mr Hutton:— and it stands
head and shoulders above international comparisons in terms of
value for money, but clearly it is simply not accurate or true
to say that it is not possible for the NHS to be more efficient;
it is. It is not true to say that we cannot make greater use of
our resources; we can. It is certainly not true to say that we
should not therefore be pursuing choice for NHS patients because
the alternative is what? No choice? You are told where you want
to go? I really do not think that that is an ambitious enough
proposal or set of ideas for reform of the public services. We
have got a simple choice. I believe that if we continue with a
public service that says to patients, "We will decide where
you go", in stark contrast to every other service that we
consume now as citizens, then I think that is going to undermine
support for public services. People want choice. We know this
because we have asked them and they have exercised it. The challenge
for us is to make the NHS more efficient, not say that it cannot
be more efficient; it can be, and to use a variety of different
ways to do that. If there is going to be choice in the service,
as I think there should be, for reasons that we have gone over
extensively today and which you may not agree with, then we need
more capacity. I think it helps the NHS to improve its efficiency
to have a diversity of providers because, remember, they are all
going to be paid at the NHS tariff rate. Everyone is going to
be paid exactly the same by 2008 for the services they provide,
whether they are an NHS trust, a foundation trust or an independent
sector provider. It certainly is not the case that by introducing
independent sector providers we are somehow going to make the
service less efficient—absolutely not. Any organisation—and
again this is my experience as a minister—needs the discipline
and the reform that choice with a good set of rewards and incentives
would introduce in terms of improving the quality of that service
for the public. I could be wrong, of course I could. We could
continue in the way I think you are suggesting, which is simply
to give the NHS all the money it wants, and then say, "Right:
we have solved every problem". I do not believe that the
problems of the NHS are simply to do with resources; it is how
those resources are used. If it were simply about resources, if
you go back over time and look at what we are doing now, I think
you could say that that is a problem solved. We know perfectly
well that this extra investment on its own is not going to solve
all these problems that the NHS faces.
Q451 Mr Hopkins: The independent
sector, as you politely call it; I call it the private sector,
is driven by profit; that is its motive, shareholders, and the
NHS is driven by patient care, by the public service ethos and
by democratic government. Will the private sector in health care
value cash over caring and will that not lead to terrible consequences?
Mr Hutton: No, it will not do
that. If it is going to prosper and survive as an NHS provider
it has to be producing quality of care. If it does not produce
a quality service patients are not going to go there. They are
not going to be forced there; I am not going to tell them they
have to go to an independent sector provider. Anyone who wants
to make a sustainable, long term commitment to health care in
the NHS at the moment has only one way to do that, which is to
provide a quality service. If they do not they are finished.
Q452 Mr Hopkins: So you reject what
71% of the population are saying in a survey, that they want all
hospitals to be guaranteed to be equal in the public sector, providing
an equal public service for everyone? You want a market where
there will be winners and losers, where we will have to develop
a fear—you will have to engender a fear amongst patients
that one hospital is worse than another and that we ought to be
dreadfully fearful of our local hospital because it is not good
and we should wish to choose another one. At a time when people
are often in a state of injury do you really want to have them
fearful about their particular local hospital?
Mr Hutton: Everything we know
about patient choice confirms the fact that patients are quite
happy to go to an independent sector provider. They have chosen
independent sector providers; they like the choice being available
to them. We are not forcing anyone to use any particular provider.
It will be their choice and they can vote with their feet. If
they want to go to an independent sector provider they should
have the opportunity to do so. Care is free at the point of use,
it is funded through general taxation; there are no losers in
that sense. You can caricature this in the way that you have done.
Fine, it is easy to do, but this is not about engendering fear
in anyone. This is giving to patients the power to decide where
and when and how they are going to be treated. What is wrong with
that?
Q453 Mr Hopkins: I only wish Nye
Bevan was here to put that question to him, but I think I have
had more than my fair share of—
Mr Hutton: Nye Bevan was in favour
of patient choice; he was not against it.
Q454 Mr Prentice: If there are all
these benefits of private sector involvement why has the Secretary
of State seemingly capped that involvement at 15%?
Mr Hutton: For very sensible reasons.
Many people—and maybe Kelvin is one of them -would like
to run around saying that the whole NHS is going to be privatised.
That is one way of dealing with that argument, is it not?
Q455 Mr Prentice: So it is to do
with the idealogues?
Mr Hutton: It is partly to do
with that but it is also partly to set the right context for planners
and policy makers in the NHS to understand what the future is
going to be. The NHS is going to be the predominant provider of
NHS health care for the foreseeable future; I do not think there
is any question about that, because it is where 95% of all the
capacity is. That is the reality. The Secretary of State was simply
trying to show people exactly what the terms of this debate and
the terms of this engagement will be between the public sector
and the independent sector.
Q456 Mr Prentice: The only thing
that concerns me is this. I talked about the GPs and their views,
the NHS professionals and the articles in the Health Service journal,
the BMA, which is quite critical of the government's choice agenda,
and I was reminded of the Joni Mitchell song, Big Yellow Taxi.
It goes, "You don't know what you've got till it's gone".
In experimenting on this scale is there not a problem that you
may fragment and completely destabilise such an important national
institution as the NHS?
Mr Hutton: Joni Mitchell was before
my time, so I am not going to get into that.
Q457 Mr Prentice: Oh no, she was
not!
Mr Hutton: Actually, I went to
see her. She was very good. We are not going to destabilise the
National Health Service. It is a cherished public service; it
is going to stay in that position. I know there are some people
who want to make the argument that that is what we are trying
to do. It is nonsense. The Chairman asked me a minute ago about
the delayed introduction of some of these financial reforms. We
are doing it in order to avoid precisely that danger. We are clear
about how we are trying to manage this process of reform and we
are determined to go down that route. In relation to this issue
about the independent sector, about for-profit, because Kelvin
raised it earlier, in the context of this debate it is very important
that we realise the nature of the NHS as it currently is. Virtually
all of our primary care in the NHS is provided by small businessmen
who make a profit. They are the GPs. I do not hear anyone saying
what a disgrace that is. The GPs remain the most supported part
of the NHS in the service they provide, but they are small business
people, rightly so. I have no problem whatsoever with people providing
a quality public service and making a reasonable profit. I think
it is a good discipline to improve the quality of care and we
see the evidence for that in primary care where we have operated
a for-profit principle ever since Nye Bevan established the NHS
in 1948. No-one on the Labour side of the argument has said we
must nationalise all the GPs. I have not heard it. It would be
quite the wrong argument to make.
Q458 Mr Prentice: I know you do not
have ministerial responsibility for NHS dentistry, but let me
just ask you one or two questions about that—
Mr Hutton: That is one of the
joys of this job.
Q459 Mr Prentice:— because
we are exploring the philosophy of all this. What would you do
if a person's NHS dentist decided to go private and the only NHS
dentist with an open list—and this is not fanciful, as you
know—was 25 miles away and that person was forced to take
out private dental insurance, Denplan? Should the state be responsible
for the cost of that insurance in any way, perhaps by allowing
it to be offset against tax because the private dentist is a little
business, just like the GP? Is there a read-across, that is what
I am saying, between the general practitioner and what is happening
in another bit of the NHS, NHS dentistry?
Mr Hutton: I do not think there
is and we are certainly not saying that people will be charged
to go and see their GP or will need to take out insurance to see
their GP. I think the responsibility of government, when there
are problems around accessing NHS dentistry, is to invest more
in NHS dentistry, and that is precisely what we are doing. Rosie
Winterton, as you know, is overseeing these reforms and is working
very hard to ensure, for example, that if that were to happen
that the primary care trust would be able, as it now is with the
new powers that it has to commission primary care dental services,
to employ salaried dentists to come in and run a service. We are
doing that increasingly across the country. We are looking to
employ hundreds more dentists who will work either as salaried
dentists or in personal dental pilot schemes. In my own constituency
(I do not know about yours) I have got a dental access centre
funded by the NHS that provides emergency dental care, and very
necessary too, on a drop-in basis for people who cannot see an
NHS dentist.
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