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14 July 2009 : Column 18WH—continued
Will the Minister reassure us that there will be no more reorganisation of services in the lifetime of this Government? As he is new to his brief, I refer him to the Health Committee's report on reorganisation, which makes it clear that reorganisation causes chaos, a fall in due diligence-we heard about the chief executive who got his job with a fake CV-loss of focus and management failures. Moreover, will the Minister explain the deficits and what attempts the Government are making to ensure that we know exactly where such deficits lie?
My hon. Friend also raised the issue of demographics and our increasingly older population. Again, as the Minister is new to his brief, I refer him to an excellent Health Committee report, in which I was involved, about financial deficits and to the work of Professor Sheila Asantha, who considered the issue of funding. In particular, she examined whether rural areas were getting sufficient funding to deliver the required services, particularly as they tend to be more difficult and expensive to provide in those areas.
My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) spoke in glowing terms about the expertise in Oswestry and the need to harness and invest in that expertise. We have pockets of superb practice in this country. We must ensure that we do not have clumsy funding formulae and tariffs that put such services under threat. He also eloquently described the anger that many GPs feel over the dispensing problems in rural areas. In this debate, we have had a run around every single issue relating to NHS services that faces many hon. Members. I know that my hon. Friend is not alone in his concern about GP dispensing.
The hon. Member for Montgomeryshire (Lembit Öpik) and my hon. Friend the Member for North Shropshire (Mr. Paterson) praised the Royal Shrewsbury hospital. My hon. Friend always describes his local services and workers in glowing terms. As someone who worked in the NHS for 25 years, I can say how much staff appreciate being mentioned in such terms. He also mentioned some very complex cross-border issues, such as waiting times and availability of drugs. Even in this Chamber today, we saw the issue bubble up as the heat began to rise. I dare say that my hon. Friend and the hon. Gentleman could have gone on for some time and taken the complex issue further.
I recently spoke at a league of friends conference. There is no doubt that the organisation does a tremendous job in raising money. Sometimes it helps to fund equipment and services, which are right on the border of what the state and chargeable provision should provide.
The Government are publishing a Green Paper on social care and long-term care. I do not want to take up any more of the Minister's time, because there are a number of points on which we should like to hear some clarity. Moreover, I should like to give my hon. Friends and other hon. Members the opportunity to intervene on the Minister if they do not get the full clarity that they would like.
As I said, I have worked in the NHS for 25 years, and I came to the House because I did not think that enough people with front-line experience of the NHS were working in Parliament. There is no doubt in my mind that there is a disconnect between what the Government believe is happening and what is actually
happening on the ground. So often, we see the frustration of hon. Members as they try to describe what is happening in their constituencies. They often say that what the Government say is happening is just not taking place. There is a yawning gap between some of the modelling behind the Department of Health and what works on the ground. We saw that in the White Paper, which explicitly says that changes should not be made because of short-term budgetary pressures, but that is exactly why changes are made.
The Government cannot make grand statements and get press coverage for the £750 million that they are spending on the community hospital fund only for it to disappear before our eyes. We do not see the withdrawal of such funds plastered all over the press, but we see the announcement of them everywhere. We need clarity on the matter. Although the Minister intervened on me, I still do not believe that we have that clarity. I look forward to the Minister's comments and to him being able to reassure my hon. Friends that health services, particularly those in rural areas, are safe in the Government's hands.
10.49 am
The Minister of State, Department of Health (Mr. Mike O'Brien): I have 10 minutes left in which to reply. The hon. Member for Guildford (Anne Milton) said that she was going to give me some of her time, but she has given me only about 30 seconds.
Mr. O'Brien: I have 10 minutes overall in which to reply, and the hon. Lady took nine minutes and 30 seconds to respond. She is entitled to that time, but she should not then say that she is allocating some of her time to allow me to respond more fully. The hon. Member for Ludlow (Mr. Dunne), whom I congratulate on securing this debate, took 35 minutes to set out his case, and the hon. Members for North Shropshire (Mr. Paterson) and for Shrewsbury and Atcham (Daniel Kawczynski) raised a series of important issues on which I should have liked more time to respond, but they will have to forgive me if I am unable to do so in detail on some of them. I am happy to respond to the gestures of the hon. Member for North Shropshire and write to the hon. Gentlemen.
Let me say that I am concerned about the representations that were made in respect of Ludlow community hospital. Before I respond specifically to those, I pay tribute, as Ministers always should, to the hard work and dedication shown by health service staff throughout Shropshire in providing a high-quality health service for patients.
Funding overall for the NHS has tripled since 1997. Between 2004 and 2010-11, funding to Shropshire County PCT will increase from £230.5 million to £436.6 million. That represents an increase of more than £200 million in only seven years. Back in 1997, it was not uncommon for people to have to wait 18 months or even two years for an operation in the NHS. However, because of our reforms and increased investment in the Shropshire County PCT area, 92 per cent. of admitted patients and 98 per cent. of non-admitted patients are currently seen and begin their treatment within 18 weeks of referral. That demonstrates the dramatic effect that the Government's policies have had on waiting times.
In addition, we are establishing new GP health centres in Shropshire, which will be based in Shrewsbury. They will open in September and can be used by some of the hon. Members' constituents. The Market Drayton primary care centre, which opened in 2005, provides GP services for some 15,000 patients and other health services for the wider community. The hon. Member for Ludlow mentioned Bridgnorth hospital, which has been transformed, and the new services coming from the £1.2 million spent at Bishops Castle. Those are just a few examples of how the extra funding provided by the Government, combined with the dedication of health service staff, have made some real improvements for the local population.
However, the hon. Gentleman also spoke about the local financial deficit. The financial situation is indeed challenging, but the SHA and the PCT have assured us that they are confident that a balanced financial position will be achieved by the year's end. Revenue allocations for 2009 to 2011 are based on, and calculated using, the most up-to-date population data from the Office for National Statistics. There is always a lag of a few years, but that is not all that long. Allocations seek to reflect the Department for Communities and Local Government's growth areas and growth points and the increasing numbers of retirees. Shropshire County PCT will receive a revenue allocation of £412.6 million in 2009-10 and £436.6 million in 2010-11. As I said, that represents an increase of £45.6 million or 11.7 per cent. in funding.
In the time I have left, I shall turn to Ludlow community hospital. I appreciate how important the issue is to the hon. Member for Ludlow and his constituents, and I am aware of the petition on the No. 10 website posted by Friends of Ludlow Hospital. Community services provide essential care to many vulnerable people, families and communities, from health promotion to end-of-life care. Such care is often provided by community nurses and therapists and in local centres and community hospitals, and it accounts for a substantial part of NHS funding-approximately £10 billion annually. The Government have developed a strategy for transforming community services, which has involved hundreds of clinicians and other stakeholders. The strategy will reduce inequalities, secure high-quality care and promote productivity and innovation.
The Government continue to ensure that we provide support for the community hospital programme. Investment in community services remains a high priority for us. The Government programme consists of two elements: £500 million for conventional infrastructure investment, which relates to proposals for new buildings, and £250 million for community ventures. We intended the latter to be innovative joint ventures with the private sector, involving many services and some infrastructure. Let me be clear: that funding was there if projects were proposed. That has happened in some years and 28 projects have secured elements of the funding.
The money has contributed to a range of services, including community hospitals, and more generally to other important and welcome community projects. I
can confirm that the Department of Health will continue to consider schemes for community hospitals. They will be subject to the same approval process as all capital investment, thus ensuring that any further spending is affordable and that it provides value for money. For projects due to start in 2010-11, decisions will be subject to the strategies that PCTs produce for the development of their estates and the outcomes of the next spending review.
I appreciate the concerns about Ludlow community hospital. In 2007, Shropshire County PCT proposed a scheme for consideration as a community venture, requesting £20 million in capital investment. That was fine, but when it was examined, it was determined that the scheme would not stand up as a community venture project. The PCT worked to develop the scope of the venture but seems to have concluded eventually that staff conditions, particularly pensions, made the scheme impractical. The project therefore did not go ahead in the form that was originally proposed.
Subsequently, last May, a new idea was proposed. I have no problem with that. The new idea appears to be valued at around £30.4 million and the PCT has submitted the strategic outline to the SHA. The most important thing is to ensure that the Ludlow scheme is assessed and prioritised appropriately in the context of the regional health economy. The local NHS needs to compare the costs of, and benefits that will be delivered by, a proposed scheme against its other priorities. If the local NHS is to make the right decisions, the PCT will need to develop an outline business case, the purpose of which is to identify in more detail the preferred option for the delivery of the scheme.
There are a number of funding options-it is not true that the community hospitals scheme is the only option. The PCT needs to negotiate with the SHA about the priority that the latter has within its regional formulae.
Mr. Dunne: I should point out to the Minister that the SHA had determined that the scheme was its No. 1 priority for the fund. That is what it wants help with.
Mr. O'Brien: The hon. Gentleman says, "for the fund," but I must tell him that there are a number of potential sources of funding. Frankly, on the face it, the project looks good, but it needs to be within the overall allocations for the SHA. I was interested to note that Elisabeth Buggins, the chair of the SHA, gave active encouragement for the project, but I would also be interested to know where it stands in the SHA's overall plans for the region. At the moment, if the project is asking for funding under only one category and does not have wider potential sources of funding, it stands less chance of going ahead.
We will see how the project develops. I hope that it progresses, that it gets into the SHA's regional plans and that it is given the priority that the hon. Gentleman would like. It appears that Mrs. Buggins also wants that to happen. Let us wait and see whether the SHA gives it that priority.
East Coast Main Line
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Hugh Bayley (City of York) (Lab): I consulted as widely as I could in the time available about what the future of the east coast main line service should look like. I spoke to National Express East Coast, of course; to Ministers; to former managing directors of the east coast main line, from both the time when British Rail managed the service and the Great North Eastern Railway period; to trade unions; to transport consultants and to journalists. I spoke to Yorkshire Forward about the business implications of the disruption to the franchise, and, with the help of my local daily paper, The Press, I consulted the public and received a lot of interesting comments from people inside the rail industry and service users.
The east coast main line is the most strategically important railway, in economic terms, within the UK. It delivers more passenger kilometres than the west coast main line. The service is economically vital to the whole east of the country, especially the east midlands, Yorkshire and the Humber, the north-east and Scotland. In 2002, Halcrow conducted a study to examine the economic value of the east coast main line to Yorkshire and the Humber. Halcrow believes that it added £100 million to the local economy in 2002, that it directly sustains 11,000 jobs, primarily in transport and tourism, and that it indirectly contributes far more to the region. Businesses locate in Yorkshire because they can depend on a fast and reliable train service that gets businessmen and women from Leeds or York to London in two hours and from Doncaster to London in an hour and a half. That is vital to business location decisions. A loss of confidence in the quality or reliability of the service would result in a fall in inward investment, as businesses would not risk basing themselves 200 miles away from such an important market as London.
When the figures are updated from 2002 to the present and the other regions are added, it is clear that hundreds of millions of pounds of economic activity depend on this railway. In the short term, therefore, the Government must safeguard the quality, frequency and punctuality of services. I believe that the Secretary of State was right to intervene as he did on 1 July when National Express made its statement to the stock exchange. Ironically, National Express East Coast has reduced train cancellations and improved punctuality while it has been running the service, but the Government must ensure that those service improvements do not slip, which is a danger at the tail end of a franchise. It is what happened while GNER was running the service after it lost the franchise.
Mr. Mike Weir (Angus) (SNP): I agree with what the hon. Gentleman is saying, particularly about maintaining the current service, but does he share my concerns about the report in The Sunday Telegraph that, before the removal of the franchise, National Express and the Government discussed reducing services on the line as a cost-cutting measure? That would be disastrous to my constituency and many other areas served by the line.
Hugh Bayley:
I have consulted widely and have no evidence that the company considered that. In my conversations with National Express about the current circumstances, it said that the one thing that it wanted
to avoid at all cost was making savage cuts to balance its budget, which is why it made the statement on 1 July about its financial position. It is right that the Government responded as they did, because cutting services is not the answer. It would be economically damaging to Scotland and economically disastrous for the east of England.
Greg Mulholland (Leeds, North-West) (LD): I congratulate the hon. Gentleman on securing this important debate. Does he agree that we must look again at the award of the franchise to National Express? Concerns were raised at the time, and the rival bids from GNER and Virgin had many merits that were overlooked for financial reasons. Does he also agree that we need to consider a longer period of public ownership to ensure stability, which is what all of us here crave?
Hugh Bayley: I obviously made a mistake in giving way to the hon. Gentleman. It is so obvious that I sought this debate in order to raise those questions that he might have had the patience to wait to hear what I have to say. He will have his own opportunity to contribute.
This is the second time within three years that the franchise has gone belly up. It is not a quirk or a technical problem; I believe that it is a signal that the franchising model is not robust enough and not fit for purpose for a railway of such great strategic and economic importance. Franchising is supposed to transfer risk to the private sector, but twice in three years the Government have been left to pick up the pieces.
Since 1999, National Express's UK rail business has made a profit of £491 million, but because National Express was allowed to create a special purpose company, it appears to have limited its corporate liability for the east coast main line business to a £40 million bond. I do not believe that that is a satisfactory transfer of risk to the private sector. The franchising model appears to allow train operating companies to make money in good times and leave the taxpayer to pick up the tab in bad times.
Mr. Stewart Jackson (Peterborough) (Con): I, too, congratulate the hon. Gentleman on securing the debate. Is he not being slightly disingenuous by not putting fully into context the fact that the franchise system will always involve revenue payments made directly from the taxpayer over time? Some train operating companies have been paid the revenue payments earlier than others. There was always going to be some support. It is not simply a question of making profits in good times and the taxpayer picking up the tab in bad times.
Hugh Bayley: Again, I hope that the hon. Gentleman will listen to the argument that I am making. He might then rise to say that he agrees with me, but if he disagrees, he will of course have the opportunity to state his case.
I turn to the railway business itself. Apart from the top, board-level franchise managers, the staff who run the railway-the managers, engineers, drivers, train crews, ticket office staff, station staff and telesales staff-are all the same people, whoever runs the franchise. The question is therefore whether franchising is a good way of choosing that top management. I doubt that it is,
because so many of the train operating company's costs are fixed by others, such as track access charges and rolling stock leasing costs. Many of the other costs faced by operating companies are pretty inflexible. The premiums paid to the Government are agreed years in advance. Staff costs are not flexible either.
The only major variable available to a train operating company is passenger numbers and the resulting revenue. It is clear from the GNER collapse and the National Express East Coast situation that it is impossible to predict accurately passenger numbers and revenue seven years ahead. If a bidder overestimates the growth in passenger numbers and revenue, as GNER and National Express East Coast did, they will default on their obligations to the Government and the public. If they underestimate such growth and display a lack of ambition in their business plan, they will make windfall profits, although they may have to share those with the Government under cap and collar arrangements. There must be a better way to determine who manages a service such as the east coast main line.
I applaud the Government's decision to set up a publicly owned company to run the east coast main line in the likely event that National Express East Coast defaults. The cost of setting up that company will be the same whether it runs the service for one year, three years or a longer period. I urge the Government to use a period of public ownership to rebuild business confidence in the service, restore staff morale and create a better business model for the running of the service.
I have spoken to a director of the publicly owned company that took over the Connex franchise after it collapsed. He served on the board of that public sector company for three years. The company ran the railway in the public sector for two and a half years. I believe that the Government will need at least a similar period to consolidate and stabilise the east coast main line. I say to the Government: please do not rush into refranchising. They should take sufficient time to work out what went wrong and should change the system to make the business model fit for purpose.
Some people say that they know the answers already, but I believe that they have sectional and vested interests. Plenty of people in the private sector are calling for longer franchises. They say rightly that that would encourage higher levels of investment. However, GNER and National Express East Coast did not fail because their franchises were too short. Both came to grief because they miscalculated the revenue growth. Longer franchises would make the risk of such miscalculations greater.
The Conservative party says that the Department for Transport has been greedy and that it charged too much for the franchise.
Sir Alan Beith (Berwick-upon-Tweed) (LD): Over a longer franchise period, there is the prospect of revenue growth recovering, which does not exist over a shorter franchise period.
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