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6.20 pm

Dr. Richard Taylor (Wyre Forest) (Ind): I feel that the gist of the Health Committee report was more critical than speeches so far have reflected. Not being a member of a major party, I can voice such criticisms more strongly, without being accused of political intent.

My first criticism is of the form of the Government’s response. On Sunday afternoon, I set about trying to make sense of it. I plead with the Minister at least to include some cross-referencing in his Department’s next response, so that we can see what number recommendation and paragraph the Government response is addressing. It is incredibly difficult to do that without cross-referencing.

I also make a plea for the Government response to be complete. There is no mention at all of several recommendations. Recommendations 3 and 4—the Minister will probably not know what they were, given the numbering system—refer to the underlying deficits and the large inherited deficits. I would like to have seen more about those in the response. A whole chunk is missing from recommendation 15 in its reprinted version in the response. The missing phrase is,

That strong point was agreed by the cross-party Committee. Many hon. Members have mentioned the double deficit, but the matter was not adequately addressed.

I shall abbreviate many of my comments, because lots of points have already been made.

In relation to education budgets, at least the Government have admitted the severity of the attack. They promise that the cuts will only be short-term. In paragraph 64 of their response, with regard to the transfer of the multi-professional education and training money to SHAs, the Government say:

It is a real worry that financial deficits, rather than clinical need, have almost become the first driver, as many Members have said. I absolutely support the aim for financial balance, but the speed with which it is apparently being pursued will cause disadvantages in terms of clinical need.

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There are real worries about the funding formula. Our recommendation 25 states:

In a recent article in the British Medical Journal, headed “Time to face up to ‘scandal’ of funding formula: The government is in denial about the effects of funding inequities on primary care trust deficits”, Nigel Hawkes writes that the Health Committee report

He also made a definite criticism:

Andy Burnham: I am trying to follow the logic of the hon. Gentleman’s comments. Over the next two years, however, the lowest-growth PCTs will receive a minimum of 16.8 per cent. under the formula, and the average growth for all PCTs will be 19.5 per cent. His argument would have more weight were it not for that hugely increasing tide of spending. Does he not accept that? How can he say that problems are linked to the formula when the evidence is that all PCTs in the country have enjoyed not just a significant but a generous increase under that formula over the past three years?

Dr. Taylor: That is why the Committee said in its inquiry that it could not come to a firm resolution. I welcome the reviews that other Members have mentioned, so that we can get at the truth. The funding for my county, however, is below the national average, and £13.6 million below even the capitation target. There must be some connection with the formula. I hope that the Minister will tell us when the Advisory Committee on Resource Allocation will report. Expressions of interest on the review of the need formula were supposed to be in by 8 March, so I hope that progress will be made.

Mr. Jenkin: Does not the hon. Gentleman’s concern have much more urgency, given that increases in NHS expenditure over the coming years are likely to be much tighter than in preceding years? The discrepancies in the formula allocation, if they exist, will therefore have a much more detrimental effect on underfunded authorities.

Dr. Taylor: That is why the inquiries instituted—one of which is supposed to report by autumn this year, and the tenders for the others are out—need to be completed as quickly as possible.

On staff costs and reductions, it is not surprising that the Department does not agree with the Health Committee about the role that the underestimated costs of contracts played in the deficits. Obviously, it minimised the figures that other sources have emphasised. The Department has a marvellous way of deflecting criticism. Paragraph 57 of the Government’s response states:

The only way in which to reduce spending in an NHS that is very labour-intensive is obviously to reduce staff. Paragraph 61 of the Government’s response states:

That does not take account of the fact that, although the number of redundancies is not very great, because of those effective vacancy factor measures, the reduction in staff numbers is really quite extensive.

A Health Service Journal survey of 100 chief executives, published a week or so ago, revealed that more than two thirds believed that patient care would suffer as a result of short-term financial decisions. My own trust has a freeze on about 10 per cent. of its staff, and it is hard to see how that will not affect the quality of care. It told the Health Committee, referring to staff cuts:

Important recommendations that have been rather brushed aside concern collective responsibility and value for money. In respect of collective responsibility, recommendation 22 speaks of the importance of including clinical staff, as spenders and as deciders of the way in which money is spent. The Government’s response to that is rather thin. In respect of value for money, recommendation 21 mentions a very good Department of Health paper, “Better Care, Better Value Indicators”; but I wonder what the Department is doing about recommendations that could, if publicised, produce dramatic savings.

Notwithstanding the Government’s response, my overall view remains that the Department of Health is largely responsible for the deficits. Following its interviews with health service chief executives, the Health Service Journal came up with some pretty strong quotations. One chief executive said of Ministers

Another spoke of

I absolve this Minister, because I know that he was not around at the time. The chief executive went on:

I believe, and the Health Committee report emphasises, that the Department of Health must bear much of the blame for the state we are in.

6.35 pm

Mike Penning (Hemel Hempstead) (Con): I congratulate Members on both sides of the House on their contributions to the debate on a report by a
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Committee of which I had the honour of being a member. In particular, I congratulate other members of the Committee.

It was slightly disturbing to note that some Labour speakers had obviously not read the report. One Member, who is no longer present, asked “Where are these job losses?” Had he read the report he would have seen evidence given by Mr. David Law, chief executive of West Hertfordshire Hospitals NHS Trust in my constituency. He admitted—although he did not want to do so, probably because he was worried for his staff and for his own position—that 750 jobs in the trust would go. The evidence is in the report, and it is a shame that Members should make such comments without reading it.

On a lighter note, I can tell the House that Sir Humphrey is alive and kicking in the Department of Health, because he is clearly responsible for the Government’s response to the report. I agree with my hon. Friend the Member for Wyre Forest (Dr. Taylor) that half the response is gobbledegook: anyone who can make sense of it must work in the Department of Health. It gives no cross-references, and does not refer to half the conclusions of the report. That too is a shame, because it is a very good report, and it is not a minority report. Members did not drop out, feeling that they could not put their names to it; everyone worked hard to establish a consensus that would help the NHS to make progress. The House has already heard about the quality of the evidence that we received, and the Minister is well aware of some of it. It is a pity that the Secretary of State is not present so that the Minister need not take the flak for her, as he often does. Certainly she would have had some flak from me had she been present, as she probably knows.

Many of the comments that I was going to make have been made by other Members, but I want to say something about the funding formula. That will not surprise the Minister, because—over many years, to be fair—it has had a hugely adverse effect in my constituency, and on the future of the acute hospital trust there. That is why I was so proud of the chief executive when he gave evidence to the Committee.

Some trusts are in such a difficult position that documents are being leaked to Members under threat. As I have said to the Minister before, it cannot be right that NHS staff are scared to blow the whistle on what is going on in the NHS. They are in the NHS because they care for their patients and for the community, and they should not have to worry about their jobs and look over their shoulders every five minutes. In the West Hertfordshire trust, notes are being issued telling all staff that it is a disciplinary offence to order temporary staff, or to order non-pay items.

The fact that the PCT and the acute hospital trust in my constituency are in such a terrible state has a great deal to do with the funding formula. I raised the issue in the Select Committee when the Secretary of State was giving evidence, and I have raised it in the House, but I am not ashamed to raise it again. In my constituency, the acute trust and the PCT receive about £970 a year to look after the health care of my constituents. The Secretary of State’s constituency receives roughly £400 a year more. I am not saying that every constituency in the country should receive exactly the same under the funding formula, because there are
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clearly areas of social deprivation, but the deficits in my constituency could be wiped out, not with £400—or £300, or £200—but with £100.

Members have asked why the discrepancy is so great. The position is particularly bad in constituencies such as mine. My constituency was a new town: indeed, we still call it a new town, although it was built in the 1950s. At that time, a huge amount of the work force left north London and other London areas, and went to work in the new towns. There were hardly any members of the older generation in the towns, because very few retired people went there. Now all the working people have retired, and we have a huge pensioner population. It is fantastic news for my family and those of my constituents that people are living longer, but the burden on the NHS is phenomenal. The formula does not address that.

The Secretary of State told the Committee many times, as the Minister has told us today—and I accept it entirely—that a huge amount of money has been invested in the NHS. That is taxpayers’ money: not the Government’s personal money, but revenue raised with promises that the NHS would improve. The state of my constituency, and other constituencies mentioned in the Committee’s report, clearly shows that it has improved in some areas and worsened in others.

When I asked the Secretary of State to explain why my acute trust was suffering so much in comparison with her constituency, she said “Your constituents are healthier than mine.” I raised that in a debate the other day. I had much less time to speak in it—I was restricted to six minutes—than I do today, so I have a little longer to elaborate. The Secretary of State said, “Your constituents are healthier than mine; that’s why I get £400 a year more than you do.” However, we are talking about an acute trust with an accident and emergency department, a cardiac unit, a stroke unit, and until recently a brand new birthing unit, which is now being used as offices because we cannot pay for any midwives to staff it. The Secretary of State completely misses the point.

What will happen to those who are in most desperate need? One of the most dangerous parts of the M1 runs through my constituency—it is to be hoped that the road-widening project will reduce the number of fatalities. All the people who are involved in road crashes and other road traffic accidents on that stretch of the M1 come to Hemel Hempstead’s accident and emergency department, which is now to close. It will therefore be necessary for every single one of them to be driven past my hospital—if anything is left of it—and to be taken to Watford up the A41, which will cause huge delays. I am afraid that people will die. There is no argument about that—all the experts agree that will happen. That is why local GPs in my area have sent a letter of no confidence in the Government’s proposals.

Mr. Graham Stuart: Does my hon. Friend agree that in respect of funding we are currently using proxies of health need rather than health need itself? Does he also agree that if we are to use a crude proxy, the most accurate crude proxy of health need is age, not prosperity? This Government are deliberately using
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deprivation as the key determinant of health need, whereas if a crude proxy is wanted, age is a better one. The most important thing that the Government can do is to take lessons from this cross-party report, which says that we must get rid of proxies of need and use actual health need as the future funding determinant. I hope that we shall hear that that is the case from the Minister today. [Interruption.] If that were to happen, instead of mere barracking from those on the Labour Benches, positive steps would be taken as real health need would be made the basis of the funding formula for health care in the future.

Mike Penning: My hon. Friend makes a good point. Evidence to our inquiry brought to light the fact that my constituency is in an interesting situation because it has not only a very large pensioner and retired population, but two of the most deprived estates in south-east England. Therefore, it meets the funding criteria in terms of both age and deprivation, so, in theory, we should benefit as a result, but we do not.

The Government’s decision to spearhead—to borrow the terminology that is used—money into areas of social deprivation has not been addressed much in our debate. I could not find any reference in the Government response to how those amounts of money are calculated. Their response suggests why that happens, and I understand it—although I do not agree. How is each individual pound calculated in respect of the money that goes into those spearhead areas? It is worth noting that there are few spearhead areas in the south-east where most of the deficits occur, which is a surprise.

The hon. Member for Staffordshire, Moorlands (Charlotte Atkins), who is no longer present, said that when the financial crisis in her area was exposed, the board concerned resigned en bloc. I wish that that was the case in my constituency, because perhaps we would then get to the bottom of why we have such a bad management structure in my area, and why we are in our current position. I say that because, although I am critical of the Government on account of the deficits that have been caused by the funding formula, there has also been acute bad management, as the report highlights. We cannot just blame local management: the Secretary of State is responsible for appointments—for signing off the appointments of chairs and chief executives of all health trusts in this country. That is her responsibility. I intend shortly to ask how on earth the Government failed to notice some of the problems that arose.

It is true that the Government ploughed huge amounts of money in, but they set narrow targets for how the money could be spent. That was highlighted in detail in evidence to the Committee. What clearly happened is that the targets were set—“You must reduce this, or else”—and the money was spent willy-nilly. As has been said, no other organisation would be allowed to get away with that. No other organisation would be allowed to have an open cheque book and to spend money, and just carry on spending it—taxpayers’ money—in that manner. I am particularly concerned about something that is not mentioned in the report: not only did the strategic health authorities not realise what was going on, nor did the Department of Health and its Ministers. On
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this occasion, I am not blaming the Minister, he will be pleased to know, because he was not around when most of that was going on, but the Secretary of State and some of the other current Ministers most certainly were.

There have been huge increases in taxpayers’ expenditure on the NHS. The relevant sum is £100 billion—we have almost reached that amount this year. How on earth have we got into what is probably the biggest financial crisis since the NHS was established? In evidence, the Government were continually dismissive. The problem is not that bad, they said. I think that the phrase that the Secretary of State used was that it was merely a pebble in the pool. “This is just a tiny ripple of a problem,” they said, but every Committee member agreed that it was not a tiny problem, but a huge one.

It is a problem that has arisen for lots of different reasons, not least inept financial management throughout the NHS, including right at the very top. How can one day the head economist of the Department of Health say in evidence that the funding formula is a major contributor to the deficits, and, at the following evidence session, the Secretary of State say, “No, it’s not”? When I pointed out to the Secretary of State that her own economist had given evidence to the contrary to the Committee, she fobbed us off. Evidence to support my point is in the report. [Interruption.] Is the Minister agreeing with me from a sedentary position? If he is, he should have addressed that issue in the Government’s response to the report.

The report is important, and the Government response does not do it justice. If Sir Humphrey is still wandering the corridors of the Department of Health when the current Conservative leadership is elected to government, he will get the bullet.

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