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Mr. Barron: Yes, I agree entirely. A lot of NHS budgets are still historically based. I have looked at the issue over the years that I have been a Member. We still do not have budgets that reflect the activity needed to look after patients in different areas, and we never will if we do not know the costs of the NHS. There are some big issues.

Joan Walley (Stoke-on-Trent, North) (Lab): Does my right hon. Friend agree that there is a problem with payment by results? In north Staffordshire, we have a hospital on two different sites. Given the formula by which the hospital is paid by the PCT for the different procedures that are carried out, and if there is such an imbalance on top of all the other social inequalities, it stands to reason that we are heading for a deficit. Indeed, we have just reached that situation: we are looking at about 1,000 job losses.

Mr. Barron: Such job losses make it a difficult time for the NHS. The other Rotherham Members and I have been lobbied about that. The front page of the local weekly paper says that student nurses who are on secondment doing their practical work in Rotherham general hospital have been told that there are not necessarily jobs for them in the local foundation trust. The trust has had to take some tough decisions to avoid going into deficit this year. It has asked people to work differently and has left vacancies unfilled.

Last week, I received a letter from the chief executive of the Rotherham NHS foundation trusts who said:

"To achieve the efficiencies necessary whilst maintaining existing levels of patient service we need to restructure".

The letter gives a very honest answer about those student nurses, saying:

"the Trust cannot guarantee a job on completion of training to any student it takes on placement, but we do make students aware of vacancies for which they are eligible to apply."

I entirely agree with the chief executive. We must decide what the NHS is for: is it there to treat patients who are in need of it or as some sort of social employment that
 
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will employ people come what may? In those circumstances, like the rest of the public sector that has had to take such decisions occasionally, it is wholly right that my local NHS trust should not guarantee people jobs, as much as that is not liked by people. Its primary aim is to look after the patients who go to that hospital now and in the years to come. I hope that those students nurses will get work, but there should be no guarantee that that will come before the interests of looking after patients.

Mr. Graham Stuart (Beverley and Holderness) (Con): Does the right hon. Gentleman believe his colleagues are waking up to the calamity that is financial management of the NHS? Does he agree that it is not education that will bring about the removal of the Prime Minister from office, but the realisation that thousands of jobs in the NHS will go—we have seen only the tip of the iceberg—because nothing has been thought through by the Government, be it in relation to IT, payment by results, the tariff or GP and consultant contracts?

Mr. Barron: It is not a calamity at all. The only pressure on my annual home budget is that 0.7 per cent. is on the edge. We do not know whether it will be available for the rest of the year. That is not a calamity. It is just as well that we are going through the process of finding out what the NHS costs while we have a Government who have put so much extra money into the national health service. I have sat on the Opposition Benches when Governments have made real cuts in health expenditure and in other parts of the public sector, too.

When we get through the process, as we inevitably will, we must make sure that we know what the NHS costs. In future, annual budgets for hospitals and other parts of the health service must be based on their costs, not on what they would spend if they were given the money. That is crucial to the debate.

David Taylor: My right hon. Friend asked, perhaps rhetorically, what the NHS costs. The answer is about £200 million a day. Over the three hours of this debate, that works out to about £25 million. That is a vastly increased sum, compared with the tattered baton that was passed to us on 1 May 1997. Certainly, financial management needs to be improved. Does he agree that some parts of the NHS are under-managed, contrary to the stereotype often portrayed by the Opposition of an NHS groaning under bureaucracy? Some parts need better management, especially by accountants, and I declare an interest.

Mr. Barron: I can neither agree nor disagree. My hon. Friend is probably right. The NHS is not over-managed. That has been a political football across the Chamber for all the years that I have been in the House—managers in the NHS, not people on the front line. The Health Committee announced a few weeks ago that we would look into health care staffing. We will look at management, as opposed to clinical and other related grades in the NHS.

I want to deal with two further points: how the Government are responding to the situation and what they are asking the NHS to do. It may not be difficult for
 
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people to come to terms with the actions that the Government are taking in the short term. My primary care trust is in south Yorkshire. I understand that in next year's budget the Yorkshire strategic health authorities have been asked to place 2.5 per cent. of their overall budget in reserve because of the need to balance the books nationally in light of the current overspend. That means that my PCT will not get £7.5 million of its growth money. There is still a lot more growth money going in, but it is still a difficult decision for the PCT to accept. There was a board meeting this afternoon at which it was accepted.

The rest of south Yorkshire will also have to put 2.5 per cent. of the budget in reserve, because four of the PCTs in south Yorkshire have overspent—the exact figure is not known. Together with other south Yorkshire Members, I had a meeting last week with the SHA, which thought initially that there would be a £20 million overspend in those four PCTs. That figure is more likely to be between £14 million and £16 million. Everything has been honest and open. We are not hiding anything. Does my PCT like the idea of £7.5 million of its growth money coming out of next year's budget? Absolutely not. Nor do I, or anybody who works in local health care.

Michael Jabez Foster (Hastings and Rye) (Lab): Can my right hon. Friend work out why, if £7.5 million is overspent, there is a requirement that some trusts should offer up 2 per cent. over a number of years and some even more?

Mr. Barron: As I understand it, the calculation is made on an SHA basis. To achieve national balancing, a sum equivalent to the overspend is being held in reserve. The amount will differ in different regions. In south Yorkshire we are told it will be 2.5 per cent. I hope it is no more. When one looks at the communities for which our PCT provides services, and the high levels of health inequality, £7.5 million is no mean sum.

Given that the sum going into reserve equates to this year's overspend, even though we do not know what the overspend is and probably will not know until the middle or end of next month, is the same thing likely to happen again in 2006–07? Everyone talks about the fact that PCTs—and presumably hospital trusts—that have run up large overspends, perhaps over years or perhaps over the past 12 months, will not be able to pay off their overspends over the next 12 months. Even if they incur no more extra spending in the next financial year, we will be debating estimates this time next year and observing that, although the overspend is down, it has not gone away. What worries me, and probably worries my primary care trust, is that, if the same situation occurs next year, it will not be a case of keeping money in reserve to balance the books. It will bite into the growth money that has been so vital to turning health care around in my area.

Mr. Lansley: In the context of the point made by the hon. Member for Hastings and Rye (Michael Jabez Foster), the right hon. Gentleman may wish to know that Surrey and Sussex SHA has called for a 3 per cent. top-slicing on its PCT allocations. John Bacon, the transitional lead for London, is taking 3 per cent top-slicing. Thames Valley SHA is taking 2.5 per cent. Why
 
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are they doing it? Because they anticipate deficits in their SHAs of more than 1 per cent. this year and probably the same next year. They are proposing, in effect, to renationalise all the growth money in those SHAs in order to start baling out deficits across the system.

Mr. Barron: I do not know exactly what is happening down here, but taking £7.5 million off Rotherham and putting it in reserve—I ought to add that the PCT has been told that it will get the money back at some stage—has not taken away all the growth money. Far from it. My right hon. Friend the Minister knows, and it is probably the same for her constituents, that we are still below the national target for PCT expenditure. We still have room for growth and we will get additional money because we are below the national PCT level.

I discussed with Ministers what the turnaround teams are doing in the PCTs that have problems of overspend. I am led to believe, and my right hon. Friend may want to correct me, that they are not just looking at the current overspend and what to do about it—we are all interested in that—but at how it came about. How did some trusts overspend as much as £10 million, £20 million or £30 million, whereas other trusts close by are nowhere near those levels? That will be crucial for learning the lesson from the present problem.

The Health Committee will want to study the evidence presented by the turnaround teams to find out what happened. We may want to instigate a debate at some stage about why the problems arose in different ways in different parts of the country, and to find out how we can avoid a situation in which some primary care trusts—it may be a minority—will go through some difficult times in the next few months and years. I am just pleased that we have a Government who have taken on their responsibility and funded expanding health care as they have, so that these difficult problems are not as difficult as they could be.

7.30 pm

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