Examination of Witnesses (Questions 140-159)
NATIONAL HEALTH
SERVICE AND
DEPARTMENT OF
HEALTH
16 OCTOBER 2006
Q140 Mr Touhig: You are about £300
million overspent on that one particular contract. Were Ministers
involved in the negotiations on the contract?
Mr Nicholson: I have to say that
I do not know.
Mr Touhig: Can you find out?
Mr Nicholson: I can. Yes, they
would have been.
Mr Douglas: An agreement or contract
of that nature must involve Ministers.
Q141 Mr Touhig: Yes, right. So what
was said when Ministers realised that you were going to be £300
million short? The Ministers had you in, I suppose, and interrogated
you and asked, "Why are we in this position?"
Mr Douglas: The issue around the
GMS contract has been primarily but not entirely about over-achievement
against the targets that were built into the contract. Advice
was taken on what level of achievement we could have expected
from GPs. We worked with the NHS Confederation, with NHS Employers,
and took the best evidence we could about how people would respond
to the incentives. They responded better to the incentives than
we had anticipated.
Q142 Mr Touhig: Anecdotally, I pick
up that consultants are laughing all the way to the bank as a
result of your settlement with them.
Mr Nicholson: In terms of the
consultants, the two issues that caused the problem in relation
to the amount of money it was going to cost were, first, the on-call
arrangements for consultants, when the assumption was that the
vast majority of consultants could be on call by telephone and
have lower payments. In fact, in the vast majority of the arrangements
they come into the hospital, which seems to me a reasonable thing
to do. Secondly, there is the number of PAs that they have and
the number of sessions that they work. There is some evidence
that this year, through negotiation, there has been a reduction
in the number of PAs overall for consultants, as we have appointed
more.
Q143 Mr Touhig: You are going to
provide us with figures on the amount you have spent on extra
salaries and so forth, but would you accept—I think the
Report indicates this—that one reason why you have the difficulties
is that the way you handled the contract negotiations has cost
you much more?
Mr Nicholson: Most of the money
that we spend in the NHS is on pay, so inevitably when we have
deficits pay is an element of it.
Q144 Mr Touhig: Page 4.9 of the Report
tells us that "a small number of NHS bodies considered deferring
payment of tax and social security costs to HM Revenue & Customs,
with a handful even struggling to pay staff wages." Did you
not get them into a hell of a mess if they could not pay their
own staff?
Mr Nicholson: But they did, and
the NHS as a whole worked with those organisations and enabled
them to do that.
Q145 Mr Touhig: How did they overcome
that problem?
Mr Douglas: By moving money round
the system in the way we have just described.
Mr Touhig: Something went; something
had to give. Something was not funded in order to—
Mr Douglas: Surpluses and cash
had to be moved in order to do it, that is true. But that only
reinforces our need to ensure that we get ourselves into balance
so that we do not get into that position again.
Q146 Mr Touhig: I think that is important;
it is right. On sharing good practice, you indicated earlier that
you have all sorts of initiatives for sending out information.
Do you have a must-do approach to sharing good practice? Do you
have a lessons-learned approach, and do you ensure that it goes
right through the whole health service? Do the two thirds of PCTs
that you said are doing okay in respect of their financial balances
share good practice with those that are having difficulties?
Mr Nicholson: Yes, and the Audit
Commission helpfully put together some useful stuff that we have
used in the NHS. Overall, that is true.
Q147 Mr Touhig: Yes, but is it a
must-do, or is it, "Oh, I think that I will tell old Bob
about this"? Is that how it goes?
Mr Nicholson: No.
Q148 Mr Touhig: Do trust chairmen
bump into each other and say, "We did rather well,"
and, "How did you do that?" over a cup of tea or a gin
and tonic?
Mr Nicholson: No. Richard works
with each strategic health authority finance director, and they
work with all the finance directors in their patch to ensure that
lessons are absolutely learned.
Q149 Mr Touhig: To what extent are
Ministers advised of the trusts that are having difficulties?
Mr Nicholson: Ministers see the
financial information that I see in the submissions that are made.
They are well aware of the organisations that have financial difficulties.
Q150 Mr Touhig: Yes, and what happens
then?
Mr Nicholson: We tell them what
we are doing about it, and that is it.
Mr Touhig: That is it?
Mr Nicholson: They ask for further
information and test us as to whether we are taking appropriate
action or whatever, but that is what happens.
Q151 Mr Touhig: Health in Wales is
devolved, as you know, Chairman. When I was a Wales Minister and
spoke to a Health Minister in Wales about a trust chairman whom
I had some concerns about, the shoulders were shrugged, but trust
chairmen are appointed by Ministers.
Mr Nicholson: They are appointed
by the Appointments Commission.
Mr Touhig: By the Appointments Commission?
Mr Nicholson: Yes, it is an independent
organisation.
Q152 Mr Touhig: What do Ministers
do if a trust fails and concerns are expressed about the management,
control, direction and leadership given by a chairman? Do Ministers
get involved at all?
Mr Nicholson: Not in my experience.
The chairman of the strategic health authority would deal with
the situation in conjunction with the Appointments Commission.
Q153 Mr Touhig: So nobody gets blamed
or sorts out the problem?
Mr Nicholson: Yes, of course they
do. In my experience, chairmen have been dealt with in that way.
A statement by the strategic health authority chairman setting
out its assessment of the performance of the chairman goes to
the Appointments Commission, and it makes a judgment as to whether
to remove the chairman or ask for their resignation. That happens.
Q154 Mr Touhig: Do you think that
that is the best way of doing it?
Mr Nicholson: It is the most effective
way of doing it.
Q155 Mr Touhig: You think that it
is effective. You do not think that Ministers have a role to play.
Mr Nicholson: I do not think that
Ministers have a role to play.
Q156 Mr Touhig: Not in putting on
pressure?
Mr Nicholson: No, it is up to
the Appointments Commission, which is an independent organisation.
Q157 Mr Touhig: My right hon Friend
Mr Williams and I have certain views about devolution, but I remember
that in pre-devolution days the Health Minister in Wales would
ring up a trust chairman on the weekend if there was something
wrong.
I shall leave my questioning there, Chairman.
Mr Douglas: I should add that
at the end of the last financial year, the Secretary of State
personally wrote to all chairmen of organisations with large deficits.
At the same time that the chief executive wrote and expressed
concerns, the Secretary of State did so as well.
Q158 Mr Touhig: And how many chairmen
were removed as a result? Were any removed for failing? We have
all sorts of failing things—failing schools, failing this,
failing that—but we let the chairmen of failing trusts carry
on, do we? They pick up £15,000 a year or more—nice
work if you can get it.
Mr Nicholson: I know of examples
where chairmen were removed as part of the process.
Q159 Mr Mitchell: Mr Douglas, why
is the deficit problem worse in the south than in the north? You
said that you had considered all the possible correlations but
the only one that you could find was that if there was a deficit
one year, there would be a deficit the next year. That says that
once you are in a hole, you do not get out of it.
Mr Douglas: It says that once
you are in a hole, it is very difficult to get out of it.
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