Select Committee on Health Minutes of Evidence

Examination of Witnesses (Quesitons 240-259)


29 NOVEMBER 2007

  Q240  Dr Taylor: I am sure you will be talking to the Royal Colleges about this because I think some of them may have some ideas to help.

  Alan Johnson: We will indeed and they have been extremely helpful this year. We hope that there will be no people left without jobs this year. There will be people without training places but they will have jobs in the NHS. The reason we have got to this position is because of the co-operation and the assistance we have had from the Royal Colleges.

  Q241  Charlotte Atkins: There is quite a wide discrepancy in spending on health between England and Scotland. We inherited it in 1997 and we have continued with that policy. How can we justify that?

  Alan Johnson: We justify it because of devolution. I have to say we inherited it, yes, but we inherited a 21% funding gap between England and Scotland, it is now 14% so it has been reduced by a third. Scotland is free to make its own decisions. There are issues around waiting times where there is a bigger problem in Scotland than we have in this country. There are issues around cardiovascular disease where we have a better record in reducing deaths, so it is not as if the difference in the investment is mirrored in poorer outcomes. I think we could make a very good case on outcomes but I would not want to get into that kind of argument simply because when you agree devolution—and I have always been in support of it—if that is a devolved issue, it is a matter for Scotland to make their decisions on how much they spend.

  Q242  Charlotte Atkins: Very often English patients feel that they get a raw deal by comparison with Scotland. For instance, that gives Scotland the flexibility to offer free care for elderly people and that is used often as an example of inequality between England and Scotland. How can we justify that? Of course they can make their own decisions but clearly you have very emotive issues like the care of our elderly and most vulnerable people, where it is being offered free in Scotland and not in England and we have this big discrepancy which appears to be unfair?

  Alan Johnson: I think the point to make there is that we had the Royal Commission and we accepted every recommendation bar one. Scotland decided to go down that route. Scotland under a Labour administration went down the route of free care. We did not decide not to do that because we did not have the money or we would have liked to do it but, unfortunately, wait another 10 years and we might get round to it. We did not do that because we thought it was the wrong thing to do. I still think it is the wrong thing to do. If you read Wanless's Report for the King's Fund, one of his numerous reports but the one on adult social care he makes the point firstly that it is not free in Scotland. The average cost is 400-and-odd pounds and there is a cap on the money the state pays of about £200, so it is not free. He also makes the point that given the demographic change and given the challenges that we face with an ageing population, whether this is progressive universalism, and it is not. He comes out with three proposed options none of which is the Scottish system. It is not an argument about the funding gap with Scotland. It is that we fundamentally disagree with the route that they are taking. I would not go down the free prescriptions route, as I would not in a previous life go down the free higher education route. I think there are better things you can do with your money to ensure that you target the people who need it the most.

  Q243  Charlotte Atkins: We will not get into a discussion about higher education, as much as we might want to, but you said earlier on that the funding gap between England and Scotland had come down substantially, so is your aim to equalise that funding and, if so, when?

  Alan Johnson: No, we do not have a particular aim to equalise funding with Scotland; we have an aim of matching the European Union average, that is the original EU 15 before enlargement, and this Spending Review settlement will bring us to 9% of GDP which is within touching distance of the European average, although that average of course keeps moving away. Scotland of course is part of that because it is in Europe but that is the only link between our targets and Scotland.

  Q244  Charlotte Atkins: So you have no objective to narrow the gap between England and Scotland?

  Alan Johnson: No, we have no objective specifically to narrow the gap between England and Scotland. As I say, what Scotland spends is a matter for their devolved administration. I cannot see a reasonable case for saying that we should hitch our wagon to Scotland.

  Q245  Dr Stoate: I was going to say "this wheel's on fire" but of course it is not. Nevertheless, what I wanted to point out is that "times they are a-changin'" in the NHS and I am pleased that we are no longer in such a deficit situation, in fact we are in a position of surplus, which I think is very welcome news for everybody. However, I want to talk about efficiency savings which do seem to be very challenging this year. I think you have already mentioned the 2.5% efficiency savings this year, going up to 3% next year, which is considerably higher than 2004 and tougher because they will need to be cashable. Are you confident that you can make those efficiency savings?

  Alan Johnson: Yes, as I "look all along the watchtower" I see possible savings! I am confident that we can and this is something that most organisations, particularly large organisations, would do as second nature. You look for efficiency savings all the time on a regular basis. We met the 2.5% Gershon savings. If we look at spreading best practice, if we look at better procurement, we have re-opened negotiations with the pharmaceutical industry on PPRS, and that is a very big and important part of achieving these flexibilities and achieving these efficiencies. I think community-based services will be another way that we can do this, so it is challenging, yes, and I am not saying it is going to be easy, but I think it is absolutely right for the Government to say that you should do this, recognising of course that the money they save does not go back to the Treasury, does not come up to Whitehall; it stays within the NHS for use in front-line services.

  Q246  Dr Stoate: I am glad you have put that on the record that the money is not going to go back to the Treasury, the money will be kept in the NHS and I am sure that will be very welcome. Is this not increased pressure on cutting back through efficiency savings just another way of clawing back the money or could it not be seen that way?

  Alan Johnson: No, it is not. We go from day-to-day. One day we may be criticised because the NHS is not as productive as it should be, and maybe it is something that you are concerned about as well, but we get told that lots of pay has gone in and lots of money has gone in but productivity has not gone up. When you talk about productivity measures, which is basically efficiency, efficiency measures have been introduced to get us into the happy position we are now of a £1.8 billion surplus which shows that it can be done when people put their minds to it. I do not want this to be an onerous process of people sitting down and looking at the things they can cut. It is saying we have extra money coming into the system, we have new ways of working, we have new technologies, we have modern sciences, we have better ways of procurement. The NHS has never been very good at spreading best practice. There are bits of best practice you stumble across and you think this is extraordinary, why are we not doing that everywhere? If we can help different organisations of the NHS to know and learn about that best practice I think we can do this and I think this is something that people will generally engage in.

  Q247  Dr Stoate: Are there any areas you are particularly targeting for savings?

  Alan Johnson: Those three things actually: best practice; community services; better procurement as well as the PPRS negotiations

  Chairman: I think we have a couple of supplementaries on this.

  Q248  Dr Naysmith: Yes, Secretary of State, you talk about efficiency savings but we have a 4% increase in real terms, as you said in answer to an earlier question, a £1.8 billion surplus sitting in strategic health authorities and hopefully some PCTs. There is a huge amount of pressure building up because all of these PCTs have little schemes that they want to put into effect themselves. They have held back on and have even top-sliced in previous years and have had to postpone things, so there is that pressure. You mentioned earlier on stroke services which, as you know, I am very interested in and I know there are plans to announce national things for stroke and that is really very welcome because there are only a handful of places in the country that really deliver proper stroke services. Finally there is cardiac services as well. The National Service Framework for cardiac has seven chapters. The seventh one has not even been implemented in many places. That is the rehabilitation side and that fits in with exactly what you have said about community services. There are huge dangers that some these important things will be cut instead of being implemented. I do not know if you have any observations.

  Alan Johnson: I think you will be reassured. We are going to publish a document round about the end of December about how we intend to tackle efficiencies, and you will see from that it is not about cutting back on stroke services, et cetera. On all of that I think you will see very good news.

  Q249  Dr Naysmith: It is not cutting back on it. You really need the money to expand on it and some of that money has got to be used for that.

  Alan Johnson: We have got the money to do that and over this Spending Review period we have an extra £80 billion by 2010 to spend on top of the £92 billion we are spending already, and if we get the efficiency savings we have another £8.2 billion we can put into patient care as well, so it would be ridiculous to say that as part of efficiency savings we are going to cut back on an important priority like stroke in order that we can have more money available to spend on stroke, which is one of our priorities. I think you will be reassured when you see the nature of the document that we are going to publish to get everybody engaged in this and to ensure that people do not believe that it is about cutting back in services to the patient.

  Q250  Jim Dowd: Alan, just on the question of the surplus, I asked your two colleagues about this last week and I just want to try and get a sense. The NHS is not a commercial organisation so it does not need to generate a surplus as such. We are not meeting all the health demands there are upon the Health Service as things stand. How then can you have a year-on-year surplus as projected by the operating framework document? Is it not a recognition that we are not meeting unmet needs, we are not treating everybody we possibly could or we are not treating them as quickly as we could. How can we have a surplus when we still have unmet need?

  Alan Johnson: I think this relates back to the first question which you asked—is a surplus of around 2% reasonable—and I think it is. If you ask me whether a surplus of 5% or 10% was reasonable it would be a completely different argument, that would not be reasonable.

  Q251  Jim Dowd: Parliament does not allocate money so that any government entity can be left with a surplus. Parliament will ultimately decide if we do this year-on-year and there is a surplus every year we just will not give them as much money.

  Alan Johnson: Part of the problem before—and we found this in education as well—is that you will not get people to run their organisations properly. In the old days people were selling off bits of capital and using it as revenue. There were a lot of things going on out there that were done on the basis of "we are not an organisation that is meant to make profit; we are a public service" but it was actually wasteful for public money and actually was not good for patient care, so having a system where, as I say, Patricia and people like David and company did all the heavy lifting on, so that you move people away from this mindset that it does not matter if they run at a deficit because they will get the money from somewhere else in the organisation. Having them home to say it is reasonable to come down with a surplus as long as that surplus is kept by us and as long as it is not going to go back to the Treasury, it creates a discipline in finance that has an impact on patient care, because you usually find that if people are focused on what is the best way to provide patient care they actually come up with an efficient way as well as a good way for better care. I have not got those fears about this and I do think that it is important in a big government department to be focused on making a reasonable surplus and, as I say, 2% is reasonable. Above that you get into more problematic areas.

  Q252  Jim Dowd: I was not advocating deficits at all; what I am talking about is a recurrent surplus in such an important activity as the NHS when there is still a lot of unmet need out there.

  Alan Johnson: The other thing I would say, I was in Barking and Dagenham yesterday, one of the most deprived areas and an under-doctored area as well, with half the number of GPs they have in Northumberland, on this estate which has never had much help in the past, and the PCT were telling me there that the fact that they had got this surplus and were allowed to keep it, they had deliberately gone for that because they are thinking next years things they could not have done this year but they can do for next year they want to have a good launch pad for it. The PCTs are not just saying, "We want to keep this money because we want something in the piggy bank." Most of them are focused on actually what they want to spend it on next year and perhaps the year after. I get a feeling that this is not a problem out there amongst PCTs and trusts and that they actually prefer this system to the old cash brokerage system.

  Q253  Jim Dowd: The wheel is still in spin basically?

  Alan Johnson: Pardon?

  Q254  Jim Dowd: The wheel is still in spin.

  Alan Johnson: I just heard the word "spin" and it worried me! Yes, this wheel is on fire, absolutely.

  Q255  Sandra Gidley: Turning to the consultant contracts, last week David Nicolson acknowledged that the consultant contracts had not yet delivered the hoped for improvements in productivity. In retrospect—it is always good with the benefit of hindsight—was it a mistake of your predecessor to give consultants extra pay before they had made changes to their way of working rather than wait until your aims had been achieved?

  Alan Johnson: Unequivocally no. I am a great supporter of both of those deals. The trouble is—and this happens in lots of things—that people forget what life was like before that contract. I think consultants ought to get decent pay, so should GPs and so should nurses. I think they should get a good level of income; they do an important job. For consultants of course the position we were in prior to that contract was a world in which, as I understand it, trusts did not really know what consultants were doing. There was no monitoring of what consultants did. There was also a system where consultants would do work at weekends for the NHS on premium rates that lots of people in the NHS felt could have been done during the week. Consultants would be offended by this and say it never happened but there was a problem that the Department wanted to crack. In terms of what we have gained from the contract, we have an average annual growth in NHS productivity and when it is adjusted for quality, which is a very important adjustment, which the NAO did, it gave a 1.6% increase in annual growth, with an increased proportion of consultant time spent on direct clinical care. This is crucial because it is an almost 5% increase in the time they actually spend with patients caring for them. You have got an increased number of consultant hours devoted to direct clinical care up by something like 3,000 hours over the course of this contract. We are on track to achieve the Gershon savings. There is a significant reduction in waiting times which that contract has helped with. The other thing is about private practice. It was permissible in the consultants' own time—which was never monitored—to actually work in the private sector. Now consultants have to offer extra work to their NHS employers at single plain time rates, rather than demand private sector rates for doing extra lists at the weekend, so that particular problem has gone. What they are doing is monitored very closely now. They are much more likely to work in teams now and be part of the whole team effort whereas previously they tended to drift along as individuals. All of that was achieved because of the changes in that contract and I think it was a contract worth negotiating and worth signing.

  Q256  Sandra Gidley: Why is it that others have come to an opposite conclusion? The Public Accounts Committee published a report stating the "productivity of consultants has decreased, consultants are working fewer hours than they did under the old contract, activity per consultant has reduced." It is all very well saying we have extra patient hours and extra patients treated but you have also got more consultants.

  Alan Johnson: That is true but there are two things about that. First of all, their hours have decreased and I am glad they have decreased and I am amazed that there is—not from you—this view that somehow the Working Time Directive was a bad thing. It was part of the British system to have junior doctors in a sort of Carry on up the Hospital Ward where they did 110 hours a week; it was a crazy system. It was a crazy system that GPs were called out at 6 o'clock in the morning and were then expected to treat you properly at 9 o'clock the next morning. I think the Working Time Directive is absolutely a good thing and it means consultants are working fewer hours. That is the first thing. They are spending more of that time in direct patient care. The second thing is I do not think that that report was right to monitor consultant activity because if you measure consultant activity you will get all kinds of distortions in this. It is a very crude measure of performance. Just looking at activities does not take into account the fact that they have got an increased complexity in their workload. It does not take into account the improved quality. It does not take into account the extra time they are spending with the patients. It does not take into account the Working Time Directive. It does not take into account the fact that we have employed 11,000 new consultants and it takes them a time obviously to get up to speed, so none of those things are measured in that crude measure of consultant activity. I do not want particularly to be a spokesperson for the consultants. It is just that this idea that those deals were bad, whoever negotiated them, and John Reid had the wool pulled over his eyes, is wrong. We had very specific aims and we met those aims. I think it was a job well done.

  Q257  Sandra Gidley: Would it not have done even better if you had waited a year and monitored consultant activity so you had a bit more of an idea what they were doing? I think it was a shock in some trusts to find out that consultants were doing a lot of work unpaid. I am not against anybody having a fair pay deal at all, but is it not the case that the Department and the trusts did not really know what the consultants were delivering?

  Alan Johnson: That is absolutely the case but the opportunity comes up one time to grasp this and do a deal, and I think probably—and I am not speaking from any great knowledge of how the deal was negotiated—that if you had said let us leave it a year but monitor consultants very closely, you would have had a bit of a job monitoring the consultants because once the deal was done the monitoring arrangements came in as part of the deal and perhaps the monitoring arrangements just would not have been effective before the deal was signed.

  Q258  Sandra Gidley: Changing tack slightly, we are also told that the jury is still out on whether the NHS will be consultant-led or consultant-delivered but the NHS plan in 2000 clearly stated that the NHS should be consultant-delivered. Why the change of view on this?

  Alan Johnson: I do not know whether there has been a change of view since 2000. I do not know if David or Richard know anything about that. We are looking for an NHS—this is the whole point of the next stage review—that is clinician-led and locally driven, and part of this exercise is to get more clinicians to go into managerial posts as well. In America there is a very high percentage but a very low percentage in this country, but really that is by the bye. The main aim is to ensure that clinicians are at the heart of everything we do and they are doing it locally and not taking top-down instructions from Whitehall. Whether that has been a change since 2000 I do not know.

  Q259  Dr Naysmith: If we can move to waiting times and access, Secretary of State. Can you confirm that with 12 months still to go there will be no further changes to the 18-week period for referral to treatment time for patients?

  Alan Johnson: There have been no changes anywhere. We just announced a target. We said that we were going to get to 18 weeks by the end of December 2008. We said we would eventually publish how that would look as a target, so we published recently the fact that we think given that there are people who do not want their operations at the time when the clinician is ready to do it, either because their kids are getting married or they want to go away on holiday—and Ben Bradshaw tells me about the Mayor of Exeter who particularly wanted to put off an operation until he had completed his year as Mayor—if you take that together with people not turning up for clinical appointments and then you get a problem of clinicians saying that until this person has been on a certain drug for a while I cannot carry out the operation, all those things together means there is a 10% barrier there. We just published that; it is not a change and we are confident that we will make it.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2008
Prepared 4 November 2008