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Mr. John Denham (Southampton, Itchen) (Lab): It has been a privilege to listen to a string of such extraordinarily good maiden speeches this evening.
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Whatever people say about the decline of public speaking as an art, the new intake of Members on both sides suggests that it has not deteriorated as much as people say.

I want to pick up on one point made by my hon. Friend the Member for West Lancashire (Rosie Cooper), who spoke of the expertise that she hopes to bring to health service debates in this House. In some ways, she echoed a comment about the Government's health policy made to me in an e-mail by a local general practitioner, who said:

I look forward to the implementation of our Government's manifesto and the health service measures in the Queen's Speech, but I want to raise a few concerns about how they might be implemented in relation to the health service in Southampton.

I am in favour of choice; public services should offer choice. We want our local services to be good, but that is no reason why we should not have a choice of service to fit our lifestyle, working arrangements, family patterns and personal preferences. However, there is sometimes a sense from the Government's agenda that there is a more profound set of beliefs on choice and a set of tenets of faith. The suggestion seems to be that choice will be the major driver of improvement in public services, that a quasi-market in which the public, as consumers, exercise their choice and switch money from hospital to hospital or school to school is the best way to make choice a reality, that the same quasi-market has enough power to make providers provide a better standard of service, that providers have sufficient ability to respond to those markets to provide a better service, and that those ideas are all better than alternative ways to improve public services. Those ideas are not stated in our manifesto, but they come across in some current thinking, and I want to raise concerns about that.

First, it must be acknowledged that there is no published body of evidence to justify that series of claims. I hope that the Government will be more transparent on this area of policy making in the future. We know, for example, that the NHS pays over the odds for private sector operations to build up the capacity of the private sector so that there will be greater future efficiencies from more contestability. The Government should publish the evidence on which their current investment is judged so that we know what we will get for the money that goes in.

My second concern is that in the pursuit of that series of quasi-market changes, the immediate danger is that we end up with a mish-mash and hotch-potch of market and non-market approaches to public sector management—a bit of socialist planning, a bit of state capitalism and a bit of liberal markets. That makes it hard to work out how it all fits together.

Mr. Kevan Jones (North Durham) (Lab): Does my right hon. Friend agree that that system also leads to inefficiency? In my local hospital there is a brand new £97 million magnetic resonance imaging scanner, of
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which we are very proud. It is not being used, yet the private sector is bringing a van into the car park of a neighbouring hospital to carry out scanning. If that money was directed to the new capacity at my local hospital, it would be far more efficient than trying to generate the so-called market to which my right hon. Friend refers.

Mr. Denham: I was going to make the observation that we know that expanding private sector capacity works in particular circumstances. For example, there is no doubt that the development of a direct treatment centre in the private sector in Salisbury has cut orthopaedic waiting times in Southampton. However, we cannot generalise that experience to say that investing in private sector capacity will always produce benefits.

I want to address the dilemma that we face in Southampton. I shall not go into great detail, but I hope that the House will take it that there has been a huge amount of good news. Long waits have been slashed, the great majority of clinical targets have been met, there has been expansion and innovation in primary care, and there have been good public health gains such as falls in teenage pregnancy. However, the current challenges are huge. The combined deficit of the local health economy—the main hospital trust and the three primary care trusts—is £30 million, which puts the issues of the Blackwater valley into perspective. That figure will rise; it is only that low because of one-off financial savings.

There is a consensus in the area that the problem is not overall NHS underfunding, but that investment has come in and the reforms necessary to use it efficiently have not been made. In other words, only half of the message of investment and reform was carried out. There is broad agreement on what needs to be done: we need to make more efficient use of beds in the hospitals. However, it is challenging to build up the community care capacity in the face of those deficits. We need better co-ordination of services between Southampton and Winchester—two major hospital trusts. That is not easy politically, perhaps less so for the residents of Winchester than those of Southampton because the former may have to travel further for some services. We need improved commissioning of primary care and further improvements in the capacity of primary care trusts to plan and develop new services in new ways. That is happening, but probably not fast enough.

We must deal with those problems in the next three years, before the pace of NHS expansion slows. They can be dealt with, but the process will be fairly painful and will require exceptional leadership. I am particularly pleased that Sir Ian Carruthers, who was the head of the Dorset strategic health authority, has been seconded to our area to assist.

The challenge for this Labour Government, whom I support wholeheartedly, is to manage their new reforms without making the challenges in the Southampton area more difficult than necessary. Some individual reforms are going well. Practice-based commissioning seems to be going well within the overall PCT approach. Targets, which are much maligned—I have maligned them myself sometimes—have driven some real improvements in the quality of service. As I mentioned earlier, the use of private sector capacity in Salisbury has helped. However, it is
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brave to make the leap from those individual success stories in reform to assume that the whole picture is as coherent as it needs to be. We must remember that the health economy needs to make a reduction in its overall costs of at least £30 million a year, while not only protecting but improving patient services. That will mean a massive change in the organisation of services.

The people who have to deal with the problem not only have to deal with central targets and PCT commissioning, they have to work with the commissioning of new capacity in independent surgical treatment centres, with payment by results, and with patient choice. The rules for each are different. The independent sector gets money under different rules, without competition, and at a higher cost than NHS hospitals. The way that NHS hospitals get money depends on whether they are foundation trusts. Payment by results and patient choice leads to a bewildering range of possible outcomes depending on the effectiveness of PCTs, the choices made by patients, the cost-effectiveness of hospitals, and the extent of gaming and dysfunctional activity in the new market. Tertiary care—the world-class services that the university hospital trust offers to patients from all over the country—is inadequately and unpredictably funded under the current regime.

In a steady state, those different elements might not be a problem, and market signals alone might produce a more effective configuration of services. However, the bewildering range of outcomes that one can envisage over the next three years will directly affect the confidence of the system to make much-needed investment, for example, in better community facilities for the elderly. It also brings the danger that areas not as subject to market forces, particularly mental health services, will be stripped out to make up the shortage of money in other areas.

Much as I support the broad thrust of everything that the Government are doing on the NHS, I fear that we may end up with a curious mixture of the worst of the old and the new. The old central planning mechanisms, with all their flaws, may have been sufficiently weakened to prevent the necessary radical changes, and the new flows of money may create instability when long-term certainty is needed. Many individual reforms are working well. However, pushing market reforms blindly, without looking at the capacity of the local NHS to accommodate those changes, may overload the system and the decision makers in it.

I finish with a plea to Ministers to examine carefully areas such as Southampton and the challenges that we face, and to bring in the new reforms and greater patient choice at the right pace and with sensitivity to challenges on the ground. Let us make sure that the underlying structural changes are in place before expecting patient choice to work fully. If we do not, I fear that there may be some perverse outcomes that we will find difficult to defend. We could experience difficulties—not in the short term but in the longer term—if operations in private hospitals cost more than in NHS hospitals and the latter are closing their own wards. We could experience problems if there are conflicts between care trusts and providers as deficits are pushed from one to the other, along with the possible undermining of long-term investment in the management of chronic disease.
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I have raised these points in a fairly straightforward way this evening. Much of what the Government have done in the NHS has been tremendous. My worry is that we are pushing untested policies into the system so fast that in areas such as mine, which face critical challenges, it may prove more than the system can take.

7.21 pm

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