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Mr. Philip Hollobone (Kettering) (Con): Is the hon. Lady aware that pressures on local health services are particularly acute in areas with rapidly growing populations? Is she aware that in the Secretary of State's    local health authority—the Leicestershire, Northamptonshire and Rutland strategic health
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authority—the PCTs are underfunded by £88 million below the national capitation fund? It is the worst funded strategic health authority in the country.

Sandra Gidley: I was always under the impression that Hampshire was the worst funded health authority. It is certainly the case that the funding formula is not fair and does not create a fair distribution. While there is a case for giving more funding to areas with higher health inequalities, such as the north-east, the spread of funding causes particular pressures on those at the bottom end of the funding scale. A slight narrowing of the scale would make a great difference, especially to authorities in the south-east which are more likely to be in deficit. It is interesting to look at a map of the strategic health authorities in deficit, because it shows that the problem is weighted towards the south-east.

Richard Younger-Ross: In the south-west, the number of PCTs in deficit is greater than one in six, although my own PCT team has done exceedingly well. One of the reasons cited by the strategic health authority, which has lobbied us on the issue on many occasions, is that the funding does not take account of sparsity or the coastline effect, which make the costs higher than average.

Sandra Gidley: We could probably have a separate debate on the special factors that could be taken into account in the funding formula, but I take my hon. Friend's point.

Twelve NHS trusts reported a deficit of more than £5 million in 2003–04. The King's Fund has pointed out that NHS productivity has fallen, according to the official measure, but it also acknowledges that that is not necessarily a measure of quality. How should we measure quality in the NHS? In recent years, we had the star ratings—now largely discredited—and the trusts learnt to play the game. Resources were put into areas that had targets associated with star ratings. Not only did that sometimes cause trusts to spend money that they could ill afford, but health services not associated with the targets became easy options for savings.

A particular example of that tendency is specialist services, such as renal and dialysis services, which are especially vulnerable. They are expensive and affect relatively few patients, and the same provider often services several PCTs. They are easy targets but patients diagnosed with one of the specialist diseases—there are 34, but I shall not list them all—should not suffer as a result of the historical financial health of local NHS organisations. When payment by results is introduced, some of those existing inequalities could be exacerbated.

It would be bad enough if that were the whole story. However, the British Medical Association has pointed out that cash shortages in the NHS contrast dramatically with the generous terms negotiated with some private sector providers—as Conservative Members have pointed out. The BMA makes the point that it is cause for even greater concern when the contracts agreed with such companies allow payments to continue, despite significant underperformance. Examples include the orthopaedic contracts in south Yorkshire and Trent and some MRI and eye contracts. It would be useful if the Secretary of State could explain what sanctions are in place for when private providers do not deliver the services for which they are contracted.
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In many cases, the cuts have taken place with little or no clinical engagement and—unfortunately—even less public engagement. In September, the BMA conducted a survey of trusts that revealed that one in three planned to reduce services. Intended reductions included bed closures, staff redundancies and a freeze on recruitment, reduced elective services, ward closures, cuts in training and a reduction in patient transport services. Three quarters of respondents reported that their trust faced a financial shortfall in the current financial year and more than a third reported that funding agreements with PCTs had been changed at short notice.

The Government cannot have it all ways. Financial instability is an inevitable consequence of reintroducing the internal market. In any market, there are winners and losers and rushed reforms tend to exacerbate existing inequalities. Does the Secretary of State think it wise to introduce a system that sets hospitals against each other, rather than encouraging them to work as partners in providing the best possible overall service for patients? The market mechanism depends on successful trusts gaining patients while others lose out.

Some people have asked what will happen to spreading best practice. If one trust is doing particularly well and attracting many patients, there is not much incentive for it to spread the secret of its success. The hospital losers will face bigger deficits; they will have to make more cuts as a consequence and the downward spiral will increase. The real losers will be the patients, although that might not be the case if local accountability was improved.

At present, the accountability of senior officers in primary care trusts or acute hospital trusts is to politicians at Whitehall. The focus is very much on delivering the targets that the Government want. That may be fine but sometimes it does not take into account local needs and local decision making. Perhaps we should move towards a system with more accountability to local people.

It seems slightly ironic that the Government are engaging in a large-scale listening-to-Britain exercise and are making knee-jerk announcement after knee-jerk announcement, yet the public feel increasingly that consultations at local level are tokenistic, decisions have already been made and local health managers are not listening.

Mr. Mark Hoban (Fareham) (Con): I am grateful to the hon. Lady for raising the issue of public consultation. Does she share my disappointment that mothers in my constituency were told only 14 days before it took place of the closure of the Blackbrook birthing centre? That closure was made as a result of financial and staffing problems in Hampshire PCTs and hospital trusts.

Sandra Gidley: I share the hon. Gentleman's disappointment and shall return to that point briefly later in my speech.

Nowhere is the problem more apparent than in the many closures of community hospital beds throughout the country—90 examples have been mentioned. In many cases, local communities raised significant amounts of private money to invest in their community hospital so there is a growing sense of anger.
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Mark Simmonds (Boston and Skegness) (Con): The hon. Lady is making a pertinent point. In my constituency, it is proposed to close one ward of the Skegness and district general hospital, which is 50 per cent. of the hospital. East Lindsey district council, the local authority, offered the primary care trust £90,000 to allow the ward to reopen immediately, but I understand that the Government blocked that offer. Does the hon. Lady agree that that is an absolute disgrace?

Sandra Gidley: I do not know the details, but it is clearly disappointing that blocks are put in the way when someone has come up with a creative solution to a problem. I have been working with the hon. Members for New Forest, West (Mr. Swayne) and for New Forest, East (Dr. Lewis) on a similar problem, and the hon. Member for New Forest, East came up with a similar idea. It has not been developed, although not for the same reasons. I hate to think that we could have developed our project to an advanced stage only for it to be scuppered at the last moment.

In many communities, there is a growing sense of anger that health organisations are trying to take away something that belongs to, and is very much part of, the community. In south-west Hampshire, some of us have been working together against the proposed closure of community beds in hospitals in the New Forest and Romsey. We work across the political divide, which has gone down well with the public who regard it as unusual for politicians of different parties to work together. We tried to present a united front to the local PCT alliance to persuade it to rethink the ill-thought-through proposals to close hospital beds.

One option—described by someone as the nuclear option—was to close all community hospital beds in the area. That proposal completely ignored a bed survey that showed a great need for patients to move out of the acute hospital trust and into the cheaper, and some would say friendlier and more homely, community hospital beds. So huge amounts of money are being wasted in the local health economy by keeping people in acute hospitals inappropriately. The scandal is that the managers have not got their heads around moving people more effectively through the system and that the knee-jerk reaction has been to cut the number of beds at one end of the scale.

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