Examination of Witnesses (Quesitons 240-259)|
MP, MR DAVID
NICHOLSON CBE AND
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 devolutionand
I have always been in support of itif 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
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
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
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 askedis a surplus
of around 2% reasonableand 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
Alan Johnson: Part of the problem
beforeand we found this in education as wellis 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
Alan Johnson: I just heard the
word "spin" and it worried me! Yes, this wheel is on
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 retrospectit is always good with the
benefit of hindsightwas 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
Alan Johnson: Unequivocally no.
I am a great supporter of both of those deals. The trouble isand
this happens in lots of thingsthat 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 timewhich was never monitoredto 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 isnot from youthis 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 probablyand I am not speaking from
any great knowledge of how the deal was negotiatedthat
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 NHSthis
is the whole point of the next stage reviewthat 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 holidayand Ben Bradshaw
tells me about the Mayor of Exeter who particularly wanted to
put off an operation until he had completed his year as Mayorif
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.