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NHS Finance

3. Stephen Hammond (Wimbledon) (Con): If she will make a statement on the financial position of the NHS. [20907]

The Secretary of State for Health (Ms Patricia Hewitt): The national health service has achieved overall financial balance in each of the past four years up to 2004–05. The audited accounts show that the NHS as a whole ended 2004–05 with an overall deficit of around £250 million. That represents about 0.4 per cent. of total NHS resources, which are of course bigger than ever before.

Stephen Hammond: There is no doubt that the Government have been spending billions on the NHS, but have they been spending it wisely and does the position that the right hon. Lady described apply all over the country? The reality for my constituents in Wimbledon is that our primary care trust is forecast to be £5.2 million in debt this year. Even after an
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emergency recovery plan, our major accident and emergency resource at St. George's hospital is forecast to be £10.2 million in debt. Its management say that there will be no effect on health care, but clinicians privately disagree. The reality in most constituencies is that the NHS is in debt and in crisis.

Ms Hewitt: Eight years ago, three quarters of NHS organisations were in deficit. The overall deficit was nearly 1.5 per cent. of a total that was a great deal smaller—about half what it is today. The NHS had been starved of funds for years. Thanks to our investment, which the Conservatives opposed, and our reforms, the NHS is employing more staff, treating more patients and saving more lives than ever before. Yes, we do expect NHS organisations to live within their very substantially increased means and, where necessary, to deliver on the financial recovery plans that they have agreed, but we would never be able to achieve such results if we were to take £1.5 billion out of the NHS and put it into a patient's passport to subsidise private health care. We will never do that.

Mr. Andrew Smith (Oxford, East) (Lab): Will my right hon. Friend urgently investigate the financial deficits affecting health care trusts in Oxfordshire? Will she take action to safeguard patient care, including at the mental health care trust, which was heading for financial balance this year and has gone from one star to three stars in as many years, yet has seen that good performance and care rewarded by £1.65 million of cuts that are as damaging as they are unfair?

Ms Hewitt: I have indeed looked with some concern at the position in Oxfordshire and the Thames valley, where there have been deep-seated problems of financial management despite the fact that, in line with other parts of the country, they have had more investment than ever before. My noble Friend Lord Warner has already undertaken to meet my right hon. Friend. We and the strategic health authority will do everything possible to ensure that Oxfordshire comes back into financial balance, which it needs to do, while continuing to deliver a very high quality of care to the patients in his constituency and in others in that area.

Ann Winterton (Congleton) (Con): Notwithstanding the right hon. Lady's previous replies, is she aware that vital services, including accident and emergency, maternity services and children's services, are being threatened at the East Cheshire NHS Trust district general hospital at Macclesfield? All three Members of Parliament representing the area—my hon. Friends the Members for Macclesfield (Sir Nicholas Winterton) and for Tatton (Mr. Osborne) and myself—are completely opposed to what might happen, which would mean that our constituents might have to travel for at least an hour to get to emergency services. Will the Secretary of State look into that issue and agree to see all three of us to discuss it?

Ms Hewitt: My hon. Friends and I are always willing to see Members of Parliament to discuss those constituency issues. However, I stress that, as well as giving both the NHS as a whole and each primary care trust more money than ever, we have devolved
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80 per cent. of the budget and the responsibility for it to the NHS locally. Decisions—sometimes difficult decisions—need to be made to ensure that the best services are provided to patients and the public, and that taxpayers get best value for money.

Mr. Lindsay Hoyle (Chorley) (Lab): All hon. Members welcome the extra resources for the NHS and we must not forget that. However, we must also be careful when considering mergers, which may save money, of primary care trusts. In the case of Chorley and South Ribble, a leading primary care trust in best practice should not be forced into a merger with all of Lancashire because, although it may mean saving money, it will lead to a poorer service for the people who matter—those who use the service.

Ms Hewitt: The overriding issue is the best possible services for patients and users in each local community. I am sure that my hon. Friend agrees that it is also desirable to continue to reduce unnecessary administrative costs, especially in the light of our commitment in the manifesto on which he and I and were elected to take a further £250 million of administrative costs from unnecessary management overheads and put it into front-line services, where we all want it to be. That, too, is a way of continuing to get improved services for our constituents.

Steve Webb (Northavon) (LD): I have received a copy of a memo from a Lincolnshire PCT about how it plans to tackle its deficit. On in-patients, it states:

On out-patients, it states:

Does not it take incredible mismanagement of the NHS to combine spending record sums of money with cuts across the board in front-line services?

Ms Hewitt: We are not only providing record sums of money to the NHS but treating more patients faster than ever. As the hon. Gentleman knows, by the end of 2008, we will abolish waiting times for most procedures. We will have reached an absolute maximum of 18 weeks from GP referral through diagnostic tests and out-patients to the operating theatre. That has never been achieved previously but it cannot all be done this year because there is more additional money to come into the service next year and the year after. Along with our reforms, that will enable us to fulfil the enormously ambitious 18-week target.

Rosie Cooper (West Lancashire) (Lab): In the light of the financial position of hospitals and the strategic health authority in the Cheshire and Merseyside area, does the Secretary of State know of any plans by the strategic health authority for a hospital reorganisation across Greater Merseyside, which would include Liverpool hospitals and Southport and Ormskirk in my constituency? What is her opinion of huge super-trusts that are multi-sited in a large area—in this case, across a city and two towns?
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Ms Hewitt: I am afraid that I shall decline my hon. Friend's invitation to make an immediate comment. I am not aware of any such proposals. If she will permit me, I shall get more information about what, if anything, is being proposed. As part of the normal course of improving hospital and community services, health authorities and PCTs will want to continue to reconfigure services, especially to take advantage of medical technology and to take more care out of acute hospitals and bring it closer to home. However, I will examine the proposals in my hon. Friend's area and write to her.

Mr. Andrew Lansley (South Cambridgeshire) (Con): When we met at the previous Health Question Time in July, the Secretary of State disputed my suggestion that aggregate overspends on the NHS were nearly £800 million. She said that the net deficit was £140 million. Will she now admit that the overspend exceeded £700 million and that the net deficit is now double what she claimed? Why does not she know what is going on in the NHS? Why has she lost control of NHS costs?

Ms Hewitt: As I said several minutes ago, the audited accounts, which were not available at the time of our last encounter at Health questions, do indeed show that the overall deficit at the end of the last financial year was around £250 million, which is less than 0.5 percent. of total NHS resources. We are now about halfway through the current financial year, and trusts are beginning to forecast their end-of-year position. That has wrongly been described in many quarters as a new and much larger deficit, but it simply illustrates the fact that a number of trusts—a minority—have deficits from last year and financial recovery plans for this year that they must deliver on. The vast majority of the NHS across our country is improving services and living within its means, and that is what we expect all the NHS to do.

Mr. Lansley: The Secretary of State may not appreciate that, while Norfolk, Suffolk and Cambridgeshire strategic health authority's own internal audit showed that it was £43 million in debt, the external auditors found that it was £68 million in debt. I have no doubt that the figures that she is giving the House will be overtaken as a result of external auditing.

Two years ago, seven strategic health authorities were in overall deficit; last year, the figure was 12 out of 28. At the moment, 19 out of 28 are predicting deficits approaching a total of £1 billion. The Royal College of Nursing is predicting 3,000 job losses. I have a list here of 71 community hospitals that are specifically at risk as a result of these deficits. The Government cannot wash their hands of this matter, as it is they who have imposed the costs on the NHS that are resulting in the deficits. Will the Secretary of State tell the House what level of overall deficit she regards as acceptable for this financial year?

Ms Hewitt: We expect every NHS organisation to do what the majority of NHS organisations already do, which is to deliver improved patient services and live within their very substantially increased means. As the hon. Gentleman's question suggests, there are issues of
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inadequate financial management in some NHS trusts. That position is unacceptable, and we are taking steps to strengthen it. A minority of NHS trusts were in deficit not only last year but for many years, and they have been bailed out by other trusts and other parts of the NHS that were in surplus. Generally, the trusts that were doing the bailing out were in the poorer parts of the country that have greater health needs. That is unacceptable, and the trusts that have been living beyond their means now need to deliver on the financial recovery plans that each of them agreed with its strategic health authority at the beginning of the year.

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