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Norman Lamb: Is there not something of a contradiction in what the Minister says? He has already conceded that the area has not had its fair share of funding and that the Government intend to bridge that gap, yet he is now saying that that deficit is not the Government's fault. Surely there is a connection between the two.

Mr. Byrne: I am grateful to the hon. Gentleman for that intervention because we must separate two points: the total money available in the local health economy and the efficacy of the management of local hospital organisations. Sometimes, those two things are not exactly the same, as I hope to underline in the following remarks.

A range of measures show that it is possible to pay back the deficit without having an impact on quality care. In passing, I would tell Swaffham and district pensioners association that plans are in place to ensure that quality care not only continues at its current level but continues to improve.
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Queen Elizabeth hospital management have now introduced a number of commonsense measures to meet their financial targets for this year. The hon. Member for North-West Norfolk mentioned changes to some of the wards. Patients discharged from Dereham ward, as part of a service reconfiguration, are now successfully cared for by far closer partnership working with other agencies, such as social services. There have been no readmissions of those patients, who are now cared for in a far more appropriate way. The hospital has achieved more than £2 million in savings this year from initiatives such as better bed management and discharge processes that lead to a reduction in the number of bed days. It has opened a new operations room to monitor bed management and emergency care that is linked to other rehabilitation and community beds and the East Anglian ambulance trust network, so patients receive far more appropriate care and the discharge process is much faster.

The whole discharge process has been reviewed. Significant work has been undertaken, with the aim of taking inefficiencies out of the current process and reducing the lengths of stay where it is safe to do so. The hon. Members who have taken part in the debate will know that, when compared with other hospitals in the region, elective lengths of stay are about half a day longer and that non-elective stays are about one and a half to two days longer. Of course that will be influenced by the higher than national average proportion of older people in their constituencies, but the number of bed days is greater none the less. In fact, a detailed investigation across all specialties has been produced recently that identifies a number of initiatives that can safely reduce the number of bed days required to almost 20,000 per annum.

On further reducing the rate of sickness, last year sickness cost the trust about £4.5 million, and there is a   continuation of existing initiatives to reduce that. Out-patient follow-ups still require attention. Changing practices surrounding follow-ups to reduce out-patient attendances is important because rates of follow-ups for new appointments are higher than average. The introduction of digital imaging will help to save money. At the moment, the trust spends almost £250,000 on film for X-rays. Distributing X-rays electronically will save money. Savings are possible in respect of operations on acute wards because lengths of stay will reduce as a result of more appropriate discharge activities. Finally—although this is not the entire list—payment by results, which is an important reform designed to build on the changes already in place, will help Queen Elizabeth hospital because its reference costs are good.

The hon. Member for North Norfolk mentioned Wells hospital and intermediate beds. If he will permit me, I will look into that because I do not have chapter and verse in front of me. In the meantime, I can tell him that the forthcoming White Paper on primary care will put a much stronger emphasis on care closer to home and very much recognise that such things are often important sources of local pride.

Before I conclude my remarks, I want to deal head-on with the charge that has been levied. Gone are the days when we can simply write off debt. The Department of Health has ensured that there is a great deal of time to allow the trust—in conjunction with the NHS bank and, ultimately, with the Department—to agree a plan to
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manage the cash position for the remainder of the year. The fact is that similar agreements must be reached with other parts of the NHS because solutions to cash problems in local trusts can be managed only by securing cash underspends in other organisations. Overspending must be matched by underspends elsewhere in the NHS. The arrangements we are discussing are intended to provide a strong incentive for the NHS to avoid deficits. The rules have been in place for several years and NHS trusts are well aware of the consequences of running up a deficit.

The administrative device in question is called the surplus incentive scheme. It was introduced in September 2005 and is managed by the NHS bank. Arrangements with NHS trusts or primary care trusts are for individual strategic health authorities to manage. The hon. Member for North-West Norfolk was an adviser to business in a former life, so he understands the concept of the cost of capital well and will, I suspect, have advised people on it. I disagree with his analysis that the rate charged is penal. He will know that the cost of lending reflects the cost of capital, and in this case the charge reflects the cost of capital from within the system. A new management team can rarely quite wipe a slate clean and nor should it be allowed to wipe a balance sheet. A team should be given time to make good a situation that it has been hired to fix, which is why the trust has been given until 2007 to repay the specific part of the deficit.

Norman Lamb: Will the Minister indicate whether the rate of charge is the same in all such circumstances, or whether there is discretion? In other words, would it
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have been possible for the strategic health authority to have approved a lower rate than that which was imposed?

Mr. Byrne: The hon. Gentleman raises an extremely important point. If I may, I will look into it to ensure that he gets a full reply. I understand that his question is significant locally.

The Government believe that with the level of investment going into the national health service, all NHS bodies should be able to plan for and achieve financial balance each and every year. The NHS is a big organisation and although it has been said that bringing its budget in on balance is the equivalent of landing a jumbo jet on a postage stamp, three quarters of trusts are able to do so, and we expect all trusts to be able to do so.

Mr. Fraser: Will the Minister address directly the issues that I raised regarding Thetford cottage hospital and Swaffham community hospital by way of communication to me after the debate?

Mr. Byrne: I am grateful to the hon. Gentleman for reminding me of those points. I will indeed write to him   about both matters, which are important locally. I   understand that a community facility recently opened in Swaffham, so I realise that he asks an important question at a time when investment is going into the front line.

Our policy is clear: advances to cut waiting times and advances in clinical excellence in care that are put in reach of not just a privileged few, but every community in this country, and that are free at the point of need for everyone who needs them.

Question put and agreed to.

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