There have been hidden underlying deficits for many years, but they were revealed by policy changes which increased transparency, in particular the switch in accounting procedures associated with the introduction of the Resource Accounting and Budgeting (RAB) regime. For example, as a result, it was no longer possible to underspend on capital expenditure and use the money to subsidise current spending.
Andy Burnham: If I may, I should like to come on to the points that my right hon. Friend the Member for Rother Valley raised. He commented on the effect of RAB on NHS trusts; in our reply to the Committees report, we said that we would look into the issue in detail. We said that, in principle, we accepted the logic of what the Audit Commissions report had to say about the effects of RAB as applied to national health service trusts. The resources needed to bring about a situation in which that issue could be addressed would have to be drawn from the NHS, but I can give him the assurance that, in principle, the Department accepts the logic of what he, the Committee, and the Audit Commission have said. We will say more in due course, as the financial year comes to a close.
My right hon. Friend asked about top-slicing. He asked how much money will be paid back, and what arrangements would be put in place to make sure that it was paid back. Of course, under the logic of the RAB system, the money can be paid back as soon as financial recovery allows. The issue is how quickly all organisations in a particular region come back into balance and tackle overspending; that will allow the resource in the region to be paid back more quickly.
I am grateful for that but the Minister has highlighted that after the fourth quarter there may be an underspend of £270 million. We do not know that yet; there are a few months to go before we get the figures for that quarter. However, the third quarter report suggests that there could effectively be £300 million of underspend nationally. I am trying to probe the Minister on whether that amount will go to PCTs such as my local PCT, which has been top-sliced because of overspending in other areas. How will the
money be redistributed, or will it be kept centrally, and then used to get rid of RAB?
Andy Burnham: I apologise, Mr. Deputy Speaker. I was about to say to my right hon. Friend that we made it clear in the operating framework for the coming financial year that strategic health authorities will not generally require contributions to the SHA reserves of the scale seen in 2006-07 because of the NHSs return to overall financial balance this year. It is because of the steps that we have taken to return the NHS to that balance that we will not require such a top slice to be taken next year.
David Taylor (North-West Leicestershire) (Lab/Co-op): Does the Minister accept that in pursuing a financial balance, decisions and actions can be taken that make perfect financial sense, but are economically illogical? For instance, if the mega-doughnut around the city of Leicester places a veto on a particular practice in the north of the county, and it prevents Derbyshire royal infirmary from receiving referrals for elective treatment for a two-month period towards the end of the financial year, the DRI, which would otherwise have provided that treatment, lies partly idle for want of those referrals. That is not economic sense, is it?
Andy Burnham: What makes sense for the NHS as a whole is to ensure that it does not have loose priorities. The hon. Member for Harrogate and Knaresborough (Mr. Willis), for whom I have great respect, said that we should aim to achieve a financial balance, but that it should not be the be all and end all. However, it is crucial for the future stability of the NHS that in the system there is rigour and discipline that perhaps have not been evident in the past.
Andy Burnham: I shall give way to the hon. Gentleman in a moment. That is the best way to serve all health economies in the long term. It does not help the NHS in the long term to take a lax or loose approach to those matters, because the problems will come back and hit either that health economy or a different one in years to come. One economy would have to put its plans on hold while another economy came back into balance.
I thank the Minister, and I shall not hold it against him that he has given way to his hon. Friends and colleagues, some of whom have not been present for the entire debate. He talked quite rightly about priorities in the funding stream. West Hertfordshire NHS Hospitals Trust has a brand new,
18-month-old birthing unit that taxpayers paid for. That important unit has been closed. We have an award-winning cardiac unitcardiac health is a Government prioritythat is going to close. There is a stroke unitstrokes are another priority for the Governmentthat is going to close. How does that bring health care to my constituents?
Andy Burnham: At the beginning of my contribution, I gave the figures on relative health improvement in the country, which has taken place in all constituencies. If the hon. Gentleman claims that that is not the case in his constituency, I can tell him that there has been huge improvement and that his constituents can look forward to a maximum 18-week wait from GP referral for treatment by the end of 2008. Decisions have to be taken to balance expenditure on the ground, which sometimes means that services have to be changed. If he considered the outcomes in his constituency, I hope he would agree that waiting lists are at their lowest-ever level, and that the NHSs service to patients is as good as it has ever been.
Andy Burnham: I should like to make progress, because there are some serious issues that my right hon. Friend the Member for Rother Valley and others have raised. I have accepted a number of interventions, and I wish to deal with education and training.
My right hon. Friend the Member for Rother Valley asked what the service level agreement between strategic health authorities and the Department means. We believe that is right that at SHA level there should be flexibility to manage the future work force needs in any region, and that is precisely what the service level agreement will require. In making decisions about centrally allocated budgets, provision must be made to plan for the medium and long-term work force needs of that particular area. The hon. Member for South Cambridgeshire asked me whether I could confirm that there would not be any take from the 2007-08 education and training budget. I turn the question back on him: how will he square an independent NHS, where all supposed interference will allegedly disappear, with his plans to take all the decisions out of the hands of politicians? We will put decisions in the hands of the strategic health authority, but we will require it to plan for the medium and long term.
My right hon. Friend the Member for Rother Valley asked about vulnerable services. He is right that in the past, the casualty of NHS budgeting was more vulnerable services such as mental health [Interruption.]or learning disability services, as the Minister of State, Department of Health, my right hon. Friend the Member for Doncaster, Central (Ms Winterton) says. It is precisely because of the transparency of the regime that such a situation will not be tolerated in future. It will not be possible for the budgets for services to some of the most vulnerable people in our society to be raided to backfill deficits elsewhere. That is another virtue of the
I should like to do justice to some of the points that have been made in our debate. My right hon. Friend the Member for Rother Valley asked about planning for surplus. It is obviously better to plan for surplus than to plan for break-even and just miss, but we will soon provide more details about the issue that he raisedgiving people incentives to carry over budgets from one year to the nextand I hope that he will be reassured when we do so. I have taken more time than I planned, but it is important that I deal with a couple of points that several Opposition Members made. Many hon. Members raised the funding formula, and soughtI believeto attribute problems in some parts of the country to the issue. On several occasions, that conclusion was ascribed to the chief economist in his evidence to the Health Committee, but he did nothing of the sort. Indeed, backing up the Departments view, he said that there is no single simple cause of deficits in the health service, nor is there any single simple way of dealing with them.
As for the question of the funding formula, the hon. Member for South Cambridgeshire and his hon. Friends asked why we should have proxies for health care need, and suggested we use direct measures of health care need measures such as age, but why is age anything other
Andy Burnham: The hon. Gentleman should read the letter that his hon. Friend the Member for South Cambridgeshire sent me, in which he said that the Conservative position is to allocate resources in the health service according to burden of disease. A key driver would therefore be age. The hon. Member for Beverley and Holderness (Mr. Stuart) has just accepted that age is a proxy of need, not a real driver of need. On several occasions, I have put it to the hon. Member for South Cambridgeshire that there are much clearer measures of the burden of disease in the NHS, such as those that I listed at the beginning of the debate, including the mortality rate per 100,000 of the population under 75 from cancer, coronary heart disease and stroke, and the prevalence of diabetes in under-75s throughout the population. Those are measures of the burden of disease. [ Interruption. ]
Andy Burnham: When one questions, probes and pulls at Conservative party policy, it is interesting to see just how defensive Opposition Members become. They realise that the consequence of the policy of allocating resources according to the burden of disease, as stated in the policy document issued at last years Conservative party conference, if the hon. Member for Beverley and Holderness remembers that, is to take more money out of his hon. Friends constituencies. All the bleating that we hear about the funding formula does not fit with the Oppositions party policy on the allocation of health resources. On top of that, money will be taken from the health budget by pursuing the policy
Andy Burnham: I shall not give way, because I am about to finish my remarks. If we couple that policy with the effect of sharing the proceeds of growth [Interruption.] If the hon. Member for Hemel Hempstead (Mike Penning) believes that his constituency will be better off under that policy, I am afraid that he is sorely mistaken.
We have had a good debate. As I said at the outset, we accept much of the Select Committees logic and many of its recommendations, and it can take heart that the Department has taken action to address some of the matters raised by my right hon. Friend the Member for Rother Valley. As a result, the NHS is in a much firmer position from which to address the next two years so that, by the end of 2008, we will be on course to deliver a maximum 18-week wait for treatment after GP referral. That is a huge achievement, and it is a complete vindication of the changes that the Government have made to cut waiting lists and improve the service that the NHS offers not just to the constituents of Government Members but to the constituents of every single Opposition Member. The Opposition did not make any acknowledgement of the improvements in the health service in their constituencies, but we are proud of those improvements, and we will continue to invest in the NHS which, we can now say with absolute clarity, can proceed from a position of financial strength.
Mr. Barron: With the leave of the House, I thank Members in all parts of the House who have taken part in the debate, particularly the five members of the Health Committeeor rather, four members; the hon. Member for Peterborough (Mr. Jackson) was not with us when we agreed the report on the national health service deficits. Their work over the weeks and months has contributed to todays debate. Although it got rather noisy towards the end, as debates tend to do, it was a welcome attempt to explain what has happened in the funding of the national health service and why, over the past 18 months, the overspend has been greater than in the preceding 50 years. The transparency of the examination of NHS expenditure has highlighted that.
I told the hon. Member for South Cambridgeshire (Mr. Lansley) that the criticism of the report explaining the NHS deficit was not fair. The document is available on the web and the six points by the Governments main adviser in the executive summary are worth reading. It goes much further than the Health Committee did in examining the current deficit, as it was written by people inside the institution who have access to more information and more time than we had.
The document highlights problems in many areas, such as productivity issues. Because there is extra money coming into the system, more people can carry on with what they are doing, as opposed to being asked to get more out of the available funding or to achieve better outputs from increased funding. Anybody who is interested in NHS deficits should read it.
In their response, the Government take into account some of the blindingly obvious problems that we
identified in the NHS. I hope the service level agreement in relation to education and training will be published, so that everyone, including strategic health authorities, understands what is expected. I should warn my hon. Friend the Minister that later this week we hope to agree a report on work force planning, so we may return to several of the matters that were covered in the debate.
My hon. Friend said that it was likely that third quarter publications would not reveal the overspend predicted at the beginning of the financial year, and consequently that there would be some moneys in the system that are not needed to match the overspend. I, together with other members of the Committee and other Members of the House, will be watching carefully what happens to that money between now, the end of the financial year and the beginning of the next financial year.
I am pleased to hear my hon. Friend say that he does not expect the top-slicing exercise to be as large as it has been in this financial year. I hope not. In my constituency top-slicing has not taken up the growth money that was put into the system, so it has not hurt services at this stage. The reason for budgets of the level that we get in south Yorkshire is the health inequalities that we face, so it is important that that is recognised.
I welcome the Governments attitude to the funding formula. In autumn this year we should find out whether rurality is a big issue and whether it should be addressed. I look forward to a debate on estimates that covers the wider issues of our work as a Committee and the work of the national health service.
[Relevant Documents: The Twelfth Report from the Transport Committee, Session 2005-06, Local Transport Planning and Funding, HC 1120, and the Governments response thereto, Fourth Special Report, Session 2006-07, HC 334.]
That, for the year ending with 31st March 2007, for expenditure by the Department for Transport
(1) further resources, not exceeding £849,010,000, be authorised for use as set out in HC 293,
(2) a further sum, not exceeding £533,764,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
(3) limits as so set out be set on appropriations in aid. [Claire Ward.]
Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab): The best kind of partnerships, whether they are social, sexual, economic or political, are those in which people talk to one another, and occasionally listen to the response. Considering how many millions of people there are in the world, these partnerships are not easily found, and not usually in politics. My Committee felt that it was time that we looked carefully at the partnership between the two groups of people who have to develop and deliver transport policy.
It is important to say at the outset that the Government are one of the first for a very long time who have committed themselves to developing a transport policy. They have put large sums of money into various aspects of transport. If I am not always pleased with the result, that is because, unlike the pope, my Government do not seem to be infallible. When one looks at the work of our Committee, it is essential to understand what we are saying. Governments can set transport strategies, and indeed they do. Governments can provide the budgets, and indeed they do. What Governments cannot do is deliver. The people who deliver the local transport plans are, by definition, local. It is not exactly a difficult thing to understand, but it is crucial.
Our Committee decided to look at the way that the local transport plan framework had been introduced, and we decided that it was an improvement on the former system. We said that it had achieved quite a lot. However, because local authorities have to deliver many of the targets, it is essential to examine the performance. It does not matter how good the intentionwhere is the performance?
We decided that there is always a particular tension between central and local government. The Department for Transport looks to local authorities to implement improvements butlet us be straightforward about thisit does not have a hands-off attitude. It sets the national priorities, it reviews and it scores, because that is the modern way of government. We all have to have our report cards, Mr. Deputy Speaker, even you or I. The Department awards capital funding for the integrated transport bloc and it decides on the balance between capital and revenue funding. It then decides which major transport schemes will be funded by central Government.