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21 Apr 2009 : Column 60WH—continued
We must be careful not to jettison what works and is effective. We need to walk a fine line between there being sufficient regulation to safeguard the public interest, but not so much that we stem the flow of credit and stifle the innovation that can benefit us all. My hon. Friend has drawn attention to the proud record of the Halifax. It would be wrong to give the impression that
everything that was done in the past was wrong. By its nature, banking is about taking risks. We must manage that risk and ensure that the public interest is safeguarded. There is an unwritten compact between the banks and the public. Each needs the other. That relationship is important and it is important that we get it right.
Deregulation of global banking in the 1980s was followed by huge financial innovation in the 1990s. Combined with low interest rates around the world, particularly in the last 10 years, that set the scene for one of the biggest expansions of global credit ever seen. Banks everywhere took on too much risk and worse, they took on risk that many did not properly understand. The boards and shareholders of some banks believed it to be a one-way bet. Times were good and not enough questions were asked. There was no shortage of people who were happy to take advantage of the cheap credit on offer. At the same time, regulators around the world failed to keep up with the growing complexity in the system, which made it hard to spot the risks and harder still to deal with them.
Last autumn, following the collapse of Lehman Brothers and the realisation that some institutions could be allowed to fail, there was a complete breakdown in confidence in the global financial system. That had a big knock-on effect on many institutions, including HBOS. In response, some people have argued for a Glass-Steagall solution in the UK, which is named after the US legislation introduced in 1933 and repealed in 1999. That would divide investment banking from core deposit taking and lending. It would create a divide between what some have categorised as narrow and broad banks. Some have suggested limiting the scale and complexity of banks. I understand the arguments in favour of that approach, which focus on protecting the core banking system from risks to depositors, the taxpayer and wider financial stability.
The complexity of some institutions appears, in some cases, to have contributed to difficulties in the management of risk by banks and supervisors. Leaving aside concerns about competition, difficulties in smaller, simpler institutions can be tackled more easily than in larger, more complex ones, and the failure of a bigger firm is bound to be much more damaging. Those arguments, which have been marshalled by a number of people in recent months, are not without force.
In the past 18 months, we have seen that risks to the financial system no longer arise mainly through depositors. The channels of contagion are more varied and complex than they used to be. The failure of Lehman Brothers had a massive impact on markets even though it was not a significant deposit taker. The consequences of that collapse around the world were much more severe than was expected. Banks of all sizes have encountered difficulties, and it is not clear that larger banks are more likely to fail than small ones—or the other way around. Narrower banks have seen at least as many difficulties as broad ones, so dividing commercial and investment banks on the basis of ownership would not address counter-party risk exposures between banks, and therefore would not address the issues raised by the current disruption in the market. Neither would it insulate pure deposit-taking institutions from the failure of an investment bank.
I do not think that there is a simple solution. Resolving the tensions will, no doubt, be difficult, which is why there should be a new compact between people and
banks, particularly between banks and their customers. People need to have confidence that their savings will be safe when they deposit them in a bank, just as people always had confidence in the Halifax building society, as my hon. Friend has said. When banks use those deposits for loans to home buyers and businesses, they must ensure that the original depositors can be paid back.
The compact must be built on responsibility, fairness and choice. There must be shared responsibility between the banks, the regulators and the customers, and I join my hon. Friend in placing a great deal of emphasis on that responsibility aspect. Secondly, there must be fairness, with banks and financial institutions that operate to benefit customers, businesses and the wider economy, and not just their shareholders or even just their shareholders and employees. There must also be choice, with properly regulated banking markets founded on competition, openness and efficiency. Banks are commercial organisations, but they also provide an essential service. No Government should try to remove risk taking from the system, and we certainly would not wish to do that, but Governments must act to protect people when excessive risk taking threatens us all.
Banks, and particularly their boards, need to recognise that their duty to shareholders is best fulfilled by acting in the interests of their customers and, not just some, but all of their employees. Bank boards need to focus not on short-term profits, but on long-term wealth creation, which is best served by meeting the needs of all their customers. To do that properly, boards need the right information, skills and experience, and an ability to take a broader view. That is why we have asked David Walker to review banks’ corporate governance and to make recommendations to strengthen the oversight of bank boards. His interim report is due this summer.
The Government have also been focused on maintaining the flow of credit to the economy during the financial crisis. That is one of the most important aspects of the economy’s operation that needs to be safeguarded. In the pre-Budget report, before Christmas, we announced the creation of a new lending panel to monitor lending to businesses and households and to drive up standards of industry practice in taking decisions on lending. As part of that new monitoring task, the Bank of England is publishing a monthly “Trends in Lending” report, the first issue of which was published this morning. The report draws on a new collection of data, covering all the major UK lenders, and sets out, in the public domain, data on the extent of lending being achieved.
Let me pick up on my hon. Friend’s points about mortgage lending before I finish. The Government put in place statutory regulation of first charge mortgages by the Financial Services Authority in 2004. The regime requires lenders to lend responsibly, treat their customers fairly and regard repossession as a last resort. To pick up on her point about a practice that developed in the industry before problems arose, the Government have asked the FSA to consider how new mortgages for more than 100 per cent. of house value should now be treated. The FSA has stated that it will publish, in September, a paper on mortgage regulation that will consider product regulation, including maximum loan-to-value and loan-to-income caps. However, the steps that we took to regulate the mortgage market have undoubtedly averted a still greater problem than would otherwise have arisen. That action has certainly been vindicated by events.
We must all work together to ensure that we learn lessons from what has become apparent over the past 18 months. We need to ensure that the regulatory framework protects taxpayers and others from excessive risk taking, while promoting growth and innovation that are in the interests of consumers. We also need to look at where improvements can be made to banks’ corporate governance—the Walker review will make recommendations on that. We need to do all that in a way that supports the flow of credit to consumers and businesses.
I am grateful to my hon. Friend for raising these important issues in this debate. There is undoubtedly more work and more thinking to be done, but she is right to pay tribute to the work of those living in her constituency, and I hope that they will be able to serve not only their immediate area, but the whole country, in the years ahead, as they have done with such success in the past.
Cross-border Health Services (England/Wales)
1.27 pm
Mr. Mark Harper (Forest of Dean) (Con): It is a great pleasure to serve under your chairmanship, Mr. Hood. The purpose of the debate, which I have been fortunate to secure, is to raise ongoing concerns about the quality of health service provision for my constituents who live in Gloucestershire, in England—that is important—but who have general practitioners who are registered in Wales. The primary care trust has estimated that about 8,000 people in my constituency—a significant number—are affected by this issue. Devolution has created differences in the health care available in England and Wales. I shall not go into issues of devolution itself, but I shall argue that the Government have failed to think through how to implement devolution properly and the effect of that on constituents such as mine regarding health care.
As a result of devolution, there is no national health service any more. We have health services in England, Wales, Scotland and Northern Ireland that have different policies, which, in the English and Welsh services, are decided by English and Welsh Health Ministers. The 8,000 constituents whom I have mentioned are effectively forced to use health services over which they have no democratic control because they cannot influence the policies of the Welsh Assembly Government and they have no vote in Wales. I do not think it is right that they are forced to use some of those services, and that is primarily what I want to address.
The Department of Health—I think that the Minister himself has said this—has stated:
“The border between England and Wales does not represent a barrier to the provision of health care”.
That is true, but it went on to say:
“Patients will not be disadvantaged as a result of any of the differences in the two systems”.
My contention is that that is not true, and that there are disadvantages for my constituents, who do not have the sort of access that they should.
Let me give an example. A constituent recently wrote to me about his case. He had been in hospital, and had received excellent care, and the hospital had expected to discharge him into the care of community nurses working under the direction of his GP. He lives in Gloucestershire, but his local surgery is part of a practice that is registered in Wales, and there is no available funding. His GP could not get funding, so he is having to go all the way into Gloucester—25 miles from his home—two or three times a week to have some basic dressings changed and things done that should, frankly, be done by his GP. That is a direct result of the differences and the lack of a joined-up service health service in England and Wales.
Following devolution, the legislation did not make it entirely clear who was responsible for providing health care for people who live in England but who have a GP registered in Wales. A statutory instrument passed in 2003 made it clear that primary care trusts in England are responsible for delivering care for everyone who lives in England. However, that proved too complex to implement straight away in border areas, where lots of people live in one country but have GPs registered in another. I understand that that was complicated by the
different funding arrangements in England, where there is a payment by results system, compared with Wales, where there is a block contract system.
In 2005, a supposedly temporary protocol was put in place to address the issue. The protocol slightly altered the residence-based criteria and meant that commissioning was based on GP registration, rather than residence. The protocol applies only to primary care trusts along the England-Wales border, which, in England, includes Gloucestershire, Herefordshire, Shropshire and West Cheshire. As I said, the protocol was introduced in 2005 and was supposed to be temporary while the details were ironed out. Ministers have just announced that the protocol will be rolled forward to 2011, which is past the date of the next general election.
I have been raising this issue with Ministers since I was first elected. In 2006, the then Health Minister, Lord Warner, said that officials in the Department were working together with their colleagues in Wales to ensure that appropriate arrangements were in place when the interim protocol expired in March 2007. As recently as January this year, the Government said:
“It is anticipated that a more permanent and sustainable protocol will be agreed shortly”.
In a recent answer to a parliamentary question, the Minister stated that
“the Government expects to agree a protocol with the Welsh Assembly Government as part of the finalisation of NHS business plans for 2009-10”.—[Official Report, 23 February 2009; Vol. 488, c. 218W.]
Time and again the Government have promised to sort the issue out.
The recent report of the Select Committee on Welsh Affairs on cross-border services states:
“We are very disappointed that a permanent protocol on cross-border health services has not been agreed between the Department of Health and the Welsh Assembly Government.”
The Committee also states that it was
“disturbed by the fact that this has not even been published in draft for consultation”
“interim report concluded that this was a critical issue in need of urgent consideration. The lack of a permanent protocol leaves clinicians and administrators in a strained position and risks adversely affecting patients as a result of cross-border commissioning and funding problems.”
Given those commitments, I had expected that we would have a permanent solution in place by this financial year, which started a couple of weeks ago. I was disappointed to see the letter from the Welsh Assembly Government Health Minister that was sent to Welsh local boards on 1 April. The letter states that
“the principles set out in the revised protocol remain unchanged from the previous interim agreements.”
This morning, I received a timely answer to a parliamentary question, which stated that a “revised protocol” is now in effect to replace the interim one. I am at a loss to see any significant differences between the new protocol and the previous one. As far as I can tell, the revised protocol is the previous one rolled over, with the one difference that it is now a two-year interim temporary protocol that runs through to March 2011. That is not a permanent solution, but it does take us past the next general election. Only a Labour Government could
think that “revised” and “unchanged” are the same things. The Government have flunked dealing with the issue again.
Will the Minister explain why the interim protocol has been rolled over yet again despite everyone, including the Government, agreeing that it is not sustainable? Why have the Government not put in place a permanent solution and why, in the words of the Select Committee, does the issue appear to be “too hard” for Ministers to tackle. The Government have effectively said that they will not tackle the issue until 2011, so it will be the next Government, which I hope will be Conservative, who will have to sort this out.
The real issue is that a significant number of my constituents are forced to use health services in a system that they have no ability to influence. Health policies are set by Ministers in the Welsh Assembly Government and Edwina Hart, the Welsh Assembly Government Minister, has said:
“The Welsh Assembly government is responsible for securing health services for the people of Wales...Responsibility for English patients sits with the Department of Health in London.”
If someone lives in England, they can vote on and influence only English health service policies, as my constituents can. However, a number of them are forced—they do not have any choice about it because they have no ability to use a GP registered in England—to use and are dependent on services provided by the Welsh Assembly Government.
A further twist to the problem is the issue of screening services, for example, in relation to bowel cancer. That is an appropriate example because April is bowel cancer awareness month. The issue was raised with me by a local GP, Dr. Alasdair Jacks of the Vauxhall practice, who is concerned about the risk to which his patients are exposed. Bowel cancer is one of the most common forms of cancer and it develops over a number of years but, if it is caught early, it can be cured.
In England, screening for bowel cancer is carried out according to someone’s GP registration, but in Wales, it is done by residence. So if someone is one of the 8,000 people who live in Gloucestershire but have a GP registered in Wales, they do not get screened in England and they do not get screened in Wales. That means such people fall through the system and that their lives are effectively put at risk because they are not called in for screening. In a recent letter to me, the Welsh Health Minister Edwina Hart said that my constituents were not entitled to the Welsh service, that the Government in England were aware of the problem and that she thought they were dealing with it. I would be grateful if the Minister could say what Ministers will do urgently to make sure that my constituents have access to that screening service.
I understand that the same problem occurs in relation to the cervical cancer screening service, which works in the same way. Hon. Members will have seen the publicity surrounding the tragic death of Jade Goody and her attempt to secure a review of cervical cancer screening in England. That will be of little comfort to the thousands of my constituents who do not get any cancer screening at all based on the current system because they fall between England and Wales. What do Ministers plan to do to resolve that problem?
Another specific example is provided by a local case. A local care home based close to the border requested an ambulance and was given a number by its GP. The care home ended up speaking to the Rhondda Cynon
Taf booking centre via the Welsh local health board. The booking was passed to the Welsh ambulance service, but because the care home is in England, which is outside the contractual area, no booking number was created and no booking made. As a result, a number of my constituents from that care home missed hospital appointments and the care home had to book taxis at its own cost. Again, my constituents were put at a significant disadvantage.
A further issue is that performance management also fails because in Wales it is based on residency, but in England it is based on the commissioner. That means that the treatment of around 8,000 people will not be monitored by any of the organisations that monitor the quality and performance of health services. The obvious response to all this is to say to my constituents, “You can choose a GP registered in England if you want to.” Indeed, when the Minister wrote to me on 16 January, he told me:
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