Examination of Witnesses (Questions 240-259)
RT HON
TONY BLAIR
MP
7 FEBRUARY 2006
Q240 Mr Leigh: Well, you are. It is a
concession you made last night. He has fought a court case and
he has won his court case. The concessions made last night are
going to ban this man from running the school in this way. You
know about the Phoenix School down the road. No middle class person
wants to go to that school; they want to go to The London Oratory.
It is hugely over-subscribed. Why can he not run his school in
his own way?
Mr Blair: What you are saying
is entirely incorrect. We are not stopping Catholic schools having
a Catholic ethos. The vast bulk of Catholic schools do not use
interviews as a method of selection. I am not entering into whether
The Oratory do or do not. It is already made bad practice in the
Code. The Churches themselves have said they do not approve of
it. It would be absurd to say, when the Code of Practice already
says that it should not and when the Church schools themselves
say that it should not, that is destroying the religious ethos
of the school.
Q241 Mr Leigh: Where under the concessions
made last night are you going to allow Hammersmith Council to
challenge any expansion plans that John McIntosh has?
Mr Blair: It is already the case
that if the local authority wants to challenge a school expansion
scheme it can do so. The difference is the school now as of right
can expand and the local authority have an appeal, whereas at
the moment it goes to the school organisation committee and unless
the school organisation committee agree the school cannot expand.
Q242 Mr Leigh: The fact of the matter
is that after these great reforms, this lion has roared and a
mouse has appeared. John McIntosh will have considerably less
independence in the way he is running his school than before because
he cannot interview any more and his expansion plans can be challenged.
Mr Blair: The expansion plans
always could be challenged and that is there in the White Paper,
but the difference is schools are entitled to expand as of right
with an appeal by the local authority. On the interviews, I think
it is absurd to say that that is the difference between a good
school and a bad school. There are only a handful of schools in
the entire country that do interviews as a method of selection
and the Churches have already indicated that that is bad practice.
The freedoms that will remain are precisely the freedoms set out
in the White Paper. Schools will have the freedom as a right to
become self-governing trusts, they will be able to own their own
assets, manage their own staff, develop their own independent
sense of freedom and culture and that is the heart of the reform
and that remains in full.
Q243 Mr Beith: Prime Minister, you have
said that parental choice is an essential means of driving up
high standards. So what is the means of promoting high standards
in those areas, rural areas and small towns, where there can only
be one secondary school and the nearest alternative is 20 or 30
miles away?
Mr Blair: It is worth pointing
out that the vast bulk of the population do live within quite
a short distance of more than one school.
Q244 Mr Beith: Some of us represent the
rest though.
Mr Blair: Exactly so. There are
those who do not. In those circumstances, of course, it means
less than it does in circumstances where you are living in a city
with a plethora of different schools. I have got a rural constituency
myself. We are already looking at what external partners we can
bring in and how we can develop the school. For example, a school
like Sedgefield Comprehensive is already looking at the possibilities
of federating with other schools. The fact that you do not have
a mass of schools all clumped together does not mean to say the
White Paper cannot still bring real benefits.
Q245 Mr Beith: When you cannot provide
parental choice there are alternative means of driving up standards.
Mr Blair: Exactly, yes. I cannot
force there to be more than one school in an area. Obviously in
some of the rural areas there will be one key school. I think
the ability to bring in external partners is something that will
be very important and very helpful. If we look at the evidence
of what has happened in specialist schools—and remember,
the majority of comprehensives are now specialist schools—they
already have some external link with local business people or
others within the community, and I think most of the schools think
that works very well.
Q246 Dr Starkey: Prime Minister, you
spoke very passionately about improving education for members
of disadvantaged groups. At our last meeting in November I raised
with you the gap in outcome for the black and minority ethic population
with the majority population in both education and employment.
Since then, the ODPM Autumn Performance Report for 2005 has shown
that the gap in employment rates between black and minority ethnic
groups and the rest of the population has widened. What is the
point in measuring the gap if the Government does not also have
targets for improving employment in education amongst black and
minority ethnic children and adults?
Mr Blair: You can always argue
about whether it is wise to have a target or not. With a lot of
the programmes that we have got they are specifically geared to
helping particularly those ethnic minorities that traditionally
have had real problems with employment and with living standards.
Q247 Dr Starkey: It has not worked in
employment.
Mr Blair: The levels of employment
have increased for everyone. I think this is one of the reasons
why we are looking through Jobcentre Plus and the New Deal at
focusing specific help on certain groups of people. There are
difficulties and some of those difficulties can be to do with
language and to do sometimes with culture as well. The one thing
I would say is that it is important in relation to the schooling
to recognise that there again, as Trevor Phillips was saying the
other day, there is the possibility that by bringing in external
partners and by giving a school a greater sense of independence
we can help kids in some of those most deprived areas from ethnic
minority backgrounds.
Dr Wright: Prime Minister, we would like
to turn the focus to health for a few minutes.
Q248 Mr Barron: I want to raise the issue
of NHS expenditure. In the year 2004-05 the total net expenditure
for the NHS was £69.38 billion. That rose from the year before
by £6.7 billion. If you look at it in terms of total expenditure
since 1997, it has doubled since 1997. The deficit for 2004-05
was over £250 million. I think most taxpayers would want
to know why that is the case when such massive increases are taking
place in terms of the NHS?
Mr Blair: I think the first thing
to say is that as a result of the additional capacity and also
the changes of course the National Health Service is delivering
more than ever before. There are more operations than ever before
and waiting time lists have come down dramatically. For certain
operations, like cardiac or cataract operations, people are being
seen now within months whereas they used to wait years. All of
that has happened. Why are the deficits in certain of the hospital
trusts? I think there are two reasons. First of all, we have now
got far greater financial transparency and with payment by results
coming in across the whole of the system hospitals are now gearing
up for what will be a different financial accounting system. Secondly,
and it is incredibly important people understand this, 10% of
the trusts account for 75% of the deficit. In other words, this
is not a generalised deficit across the board. The majority of
hospital organisations are breaking even or are in surplus. It
is within certain of these trusts and indeed some of them have
been recurrently, over a number of years, in difficulty. There
are good reasons and bad reasons for that, but what we are doing
is looking specifically at each one of them.
Q249 Mr Barron: In the December figures
for this financial year that were published the actual deficit
is somewhere in the region of about £620 million. Whilst
you say that 10% of trusts have created this deficit, it is actually
growing in terms of the number of trusts that are now in deficit.
Under those circumstances it seems difficult to understand if
we will learn anything from the changes that took place in 2004-05
about not letting trusts roll on deficits year-on-year now. What
action are we going to take now that is going to stop this, or
are we likely to see a situation where we could have a deficit
in the next financial year twice as high as the one that we had
two years ago?
Mr Blair: That is a very good
point. What we are actually seeing for the first time is a proper
system of financial accountability where trusts are expected to
live within the allocation and where they have got to make sure
that they do that. As I say to people when I am answering questions
in the Commons, there is a limit to what any government can put
in in terms of money. We believe we are putting in very substantial
additional sums of investment, they are yielding results within
the system, but hospital trusts and others have got to live within
their means.
Q250 Mr Barron: Is it the case that the
management is not capable of managing budgets in this way? It
is not the culture of the NHS of 10 years ago that they would
be taking the decisions they are today. Is there a deficiency
in terms of the quality of management?
Mr Blair: When I said there were
good and bad reasons, there are two different types of situation.
One is where you have had poor financial management. I think it
is important we realise that to an extent—and I choose my
words carefully—any public service is a business to this
extent. How they manage their affairs, procure equipment and so
on is very much a business function and that has got to be performed
to the highest possible standards and we probably need more of
that expertise in the public service. There are issues to do with
financial management. On the other hand, to be fair, I think there
are hospitals, for example, where they have got split sites and
where it really is not cost-effective to maintain the services
in the configuration they have got them. They are trying to go
through difficult reorganisations and no one ever likes that,
you always get huge complaint about it and if we are not careful
we end up in a situation where we are both attacking change within
the National Health Service and attacking them for not doing their
job properly at the same time. One of the things these chief executives
often say to me is if you want us to sort out our financial problems
that means change in the way that we run our services and we need
your backing on that rather than every time there is a problem
the finger is pointed at us, and I think that is a fair point.
Q251 Mr Barron: Is that likely to be
assisted by the implication of these turnaround teams that we
have heard about in the last few weeks that are going to go into
these trusts that have got the deficits? Do you think that will
happen?
Mr Blair: We did something very
similar with accident and emergency departments. You have to be
very careful about this because whenever you say this somebody
turns up who has just had a bad experience in accident and emergency.
So apologies to anyone around the table who has just had it! I
think most people would recognise that accident and emergency
departments are a lot better today than they were a few years
ago. That was done in part not just through extra money but through
a specific dedicated team led by experts who went in to each and
every accident and emergency department and said, "This is
how you are going to organise it, this is how you can make changes."
The turnaround teams will go in and work with the hospitals, particularly
those with the worst financial deficits because it is a small
number that account for the bulk of the deficit and help them.
Because the figures of money we are talking about are very large,
the total deficit, even if it is at the end of the year £600
million, that is less than 1% of the NHS budget, which in most
organisations would not be considered extraordinary.
Q252 Mr Beith: Prime Minister, you believe
that patient choice is essential and needs to be widened, but
you also believe in the Private Finance Initiative as the best
mechanism for hospital building. The PFI means that the taxpayer
has to go on paying for a hospital for decades even if patients
have chosen in quite large numbers to go elsewhere. It is not
an asset you can sell. It is a commitment to continue paying that
charge. What are you going to give up, patient choice or the Private
Finance Initiative?
Mr Blair: The reason for the PFI
is that it was the way of spreading the cost over a significant
period and also tying in commercial contractors to a better system
of financial management. It always amuses me over this PFI debate
that it is almost as if in the old days the surgeons and the nurses
would go and build the hospital. Hospitals have always been built
by the private sector. The question is what the terms are upon
which it is built. By having to spend the money upfront as a capital
spend, the truth is, that was such a large expenditure governments
were not doing it. As I was saying the other day, over half of
the hospital stock was built before the NHS existed. Now there
is the biggest hospital building programme the country has ever
seen going on and it would not happen without the PFI. Of course
there are issues going forward with how you spread the cost over
a period of time, but let us be clear, the PFI contracts on the
whole have been on budget and on time which the other ones were
not and we would never have got the hospital building programme
underway and all the new facilities that I can see just outside
my own constituency unless we had done that.
Q253 Mr Beith: What the contracts do
is require the taxpayer to go on paying even if at some point
you decide that it is too costly an asset, you can do the job
in some other way. You have just likened the NHS to a business,
but here you have locked that business in to something which is
creating deficits in some instances and that destroys any flexibility
that the health managers ought to have.
Mr Blair: You have got to achieve
a balance here. It is true that there is a further financial obligation
on the particular sector of the Health Service to do well and
that is an issue for them as they carry the costs forward. On
the other hand, I think if you talk to most chief executives about
the benefits that PFI have brought you will find that those outweigh
the deficits.
Q254 Mr Beith: It was the only show in
town, was it not? It was the only way they were going to get a
hospital.
Mr Blair: I think that was the
realistic truth. Before the PFI it was not happening. I know everyone
always says but you could have put in all the money upfront as
a capital investment. Well, you could have but no one had.
Q255 Mr Beith: You could have borrowed
it at more favourable rates because you are the Government.
Mr Blair: You still have to pay
it back on the borrowing. The question is would you get the most
effective deal to get the private sector involved and in the end
we believe that PFI is the best way to do it. I do not doubt the
argument will go on for years about that. If you look around the
world, most people are looking at this type of public-private
finance initiative to get money into their private services.
Dr Wright: What Alan is suggesting to
you is that all that was true, but then the introduction of patient
choice and payment by results has put a spanner in the works as
far as the PFI is concerned, and I think this is something that
Andrew Dismore wants to take further.
Q256 Mr Dismore: I have got a PFI hospital
in my patch. It is a nice new hospital although there are some
problems with the design, particularly of the A&E department.
The cost in terms of capital charges to the local trust is £5.7
million. Until recently that was being covered by the Department
of Health and now that has been tapered off. By the next financial
year, after the forthcoming one, they will have to find that £5.7
million themselves. It is one of those that you have put a turnaround
team into because it is already struggling with its deficit. They
have made a lot of progress in trying to deal with that deficit
but it is simply being dragged down and increasingly so by the
impact of the PFI charges. I am not going to get into an argument
about whether the PFI is a good thing or a bad thing because we
would not have a hospital without it. My concern is how the financing
of that is going to become a burden increasingly on a trust that
is trying to deliver services in such a difficult financial situation.
Mr Blair: The cost is a burden
on somebody no matter where it falls. In other words, if you end
up financing it, for example through borrowing, then the state
has to carry those borrowing costs. I think we are moving to a
public service system which is far more devolved down and it is
true, obviously with choice and payment by results the hospital
is going to have to keep up its revenue stream by operating effectively.
Whatever system you have, you have got to have a system of financial
management and the whole purpose of the combination of practice-based
commissioning, payment by results and choice is to push power
down to the front line and say, "Look, you are going to operate
within a system now where the better you do the higher your income
stream will be, but that is important because the better do you
is being driven by the choice of the patient".
Q257 Mr Dismore: I would like to come
back to how the cost of the PFI is met. If you are telling my
trust you have got to have a turnaround team to try and sort your
finances, despite what they have been able to do, with the existing
management who I think are doing the best they can in the face
of dramatically increasing demand from the wider population, the
problem for them is the Department of Health has moved the goalposts.
Whereas before the capital charge was met by the Department of
Health, now it is something for the trust itself to meet. It is
an additional burden beyond what they would have had before the
PFI.
Mr Blair: Was that not always
foreseen?
Q258 Mr Dismore: No, I do not think it
was.
Mr Blair: Let me come back to
you about that.[2]
Q259 Mr Dismore: Let me go on to the
point that you make about patient choice. One of the answers that
you gave to the previous question was the problems facing hospitals
with a split site and the need to reorganise. That again is our
trust, that is one of the problems. They are trying to reconvene
the services as the Department of Health want. The trouble is
the local community do not want it, there has been massive opposition
and for good reason, because you cannot physically get from one
to the other hospital except within an hour or a two-hour public
transport journey which is not achievable. What they have factored
in, in accordance with the guidance policy of the strategic health
authority, is a drop of 5% in elective surgery which will impact
on their income again. How does the trust cope with a dramatically
changing client base, doing fewer operations with the money at
the same time as trying to maintain this fixed cost of the PFI?
Mr Blair: I agree it is a very
difficult situation for those trusts that are having to undergo
substantial reorganisation and change. My point is this—and
maybe I could come back to you on the detail of your particular
hospital—[3]
2 See Ev 54 Back
3
Ibid Back
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