Session 2010-11
Publications on the internet

To be published as HC 796-iv

House of COMMONS



Health Committee


Tuesday 15 March 2011

John Black, Alwen Williams CBE, Dr Paul Hobday and SeÁn Boyle

Suzanne Tracey, Noel Plumridge, Andy McKeon and Professor Margaret Whitehead

Evidence heard in Public Questions 334 - 432



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Oral Evidence

Taken before the Health Committee

on Tuesday 15 March 2011

Members present:

Mr Stephen Dorrell (Chair)

Rosie Cooper

Nadine Dorries

Yvonne Fovargue

Andrew George

Mr Virendra Sharma

Chris Skidmore

David Tredinnick

Valerie Vaz

Dr Sarah Wollaston


Examination of Witnesses

Witnesses: John Black, President, Royal College of Surgeons of England, Alwen Williams CBE, Chief Executive, East London and the City Alliance PCT cluster, Dr Paul Hobday, Kent Local Medical Committee Spokesperson and ex-chair, BMA Maidstone Branch, and Seán Boyle, Senior Research Fellow, London School of Economics, gave evidence.

Q334 Chair: Good morning. Thank you for coming to the Committee. In the first half of this morning’s session, we want to focus on the effect of the changes proposed by the Government in the Health and Social Care Bill on the management of reconfiguration of services within the NHS. That is the main focus of this session. Could I ask the witnesses to introduce themselves, briefly?

Alwen Williams: Shall I start?

Chair: Yes. Thank you very much.

Alwen Williams: I am Alwen Williams. I am the Chief Executive for the inner north-east London cluster of PCTs.

John Black: John Black, President, Royal College of Surgeons.

Dr Hobday: Paul Hobday. I have been a full-time GP in Kent for 30 years and-a slight correction to the order-I am an ex-chair of the local BMA.

Seán Boyle: I am Seán Boyle. I am a Senior Research Fellow in LSE Health at London School of Economics.

Q335 Chair: Thank you very much. Could I ask you to begin the session by setting out for the Committee, in general terms, your view, first, about the importance, or lack of importance, possibly, if that is the case you wish to argue-the relative importance-of reconfiguration of services in delivering good value and high quality health care? Is that something that ought to be a priority? Secondly, whether or not it is a priority, what do you think is the impact of the changes currently going through Parliament on the ability and the methods the Health Service will use to manage the reconfiguration of health care delivery? Shall we move from left to right and start with Alwen Williams? Thank you.

Alwen Williams: Thank you. My personal view, and very much from personal experience, is that the reconfiguration of services is a priority. It is a priority for a number of reasons, but principally to ensure the delivery of effective clinical outcomes, good quality patient experience and, in some cases, that NHS resources are used optimally. In north-east London we have a number of examples where we have transacted a reconfiguration of some specialised services, for example, a heart attack centre, hyper acute stroke services and trauma services. There is a clear evidence base in relation to the impact of that reconfiguration in terms of patient outcomes.

In terms of the impact of the reforms, there will be an issue as to how the functions of GP commissioning consortia are transacted collectively around reconfiguration issues. Often they are issues that require very close collaboration and partnership across a range of commissioners. That depends on the nature of the services being addressed, but one of the issues will be the way in which GP commissioning consortia work together across broader population bases and are held to account for the delivery of high quality, effective and cost-efficient services on behalf of their populations.

Q336 Chair: Do your current responsibilities include Chase Farm?

Alwen Williams: No.

Chair: In that case, I won’t ask you to comment on it.

John Black: The reconfiguration of services is constantly with us as patient treatments change. My college would take an attitude that if there is a clear evidence base we would strongly support it-where there is a clear evidence base. There are often, of course, very difficult conflicts, politically, with providing a National Health Service with some of the reconfigurations and centralisations of service and we have to recognise that reconciliation of these two may be exceedingly difficult. Remember Kidderminster.

The other point we would make is that if reconfiguration has to be done on cost grounds-we are all grown ups and we all recognise this-it should be made completely open that a reconfiguration is being done on cost grounds and not on improvement of service grounds.

Lastly, we would bitterly oppose reconfigurations brought about by artificial outside influences, such as the European Working Time Directive.

Dr Hobday: I would fully agree with a lot that has been said. As GPs we feel-and I feel from my own personal experience, particularly in Maidstone where I practise-that we have been very much left out of the process completely. It is only in recent days, since Mr Lansley’s announcement that we were to take the commissioning driving seat, that the PCTs and the acute trusts woke up to consult us. Obviously I would say that is a good thing. I feel GPs are in a position to give good evidence for the value of the reconfiguration, considering we see 90% of patients in the NHS and have over 300 million consultations every year.

Locally, as to the four rules that Mr Lansley has imposed, I have a very good example where all four rules have been broken and GPs’ opinions have been totally ignored. I would hope that that would not continue to be the case.

Q337 Chair: Could I ask you to comment on what Alwen Williams said, that there are questions in the new world about the ability of GP consortia to be large enough to look across the range of services required to plan a large scale reconfiguration?

Dr Hobday: The size of the consortia is one of the major questions I don’t think anybody has an answer to. Clearly, everybody knows that if they are too small they have no influence and if they are too big they lose the local value. In my years as a GP, having seen a dozen or so reorganisations, from Family Practitioner Committees to FHSAs, et cetera, they have continually followed this cycle of starting off small, merging and then breaking up again. When PCGs were first introduced, as a policy, that seemed favourable because, initially, GPs were on board. But when they became PCTs, they became far too large and lost their local influence. I really have no answer to how big consortia ought to be.

My local example is that we have worked fairly well in a local PBC group of about 112,000 patients and 70-something GPs. We have had a little bit of influence in tinkering but, of course, we had no great power against a giant local acute trust. We have now merged with two other consortia to produce a group of 360 or so and about 260 GPs. We have already lost our local "feel" and the people that are running these are self-selected because no GPs have come forward yet to want to run them, apart from the enthusiasts.

Q338 Nadine Dorries: You just said that if consortia are too small they are not effective and if they are too large they lose their local influence. That conjures up a mental image of all the GPs practising in one place and we know that they are going to be, still, in their individual practices. Could you define what you mean by large consortia losing local influence?

Dr Hobday: Locally, I can give the best answer by quoting what has happened in Kent. Our local trusts and the local area merged because it needed the size to build a new PFI hospital. But it produced real divisions in the whole area between the two main towns in our PCT group, Maidstone and Tunbridge Wells, where there was almost warfare between the two ends. Without decent co-operation, you cannot produce decent services because people were coming from completely different directions. That was when it was too big.

Q339 Nadine Dorries: That is not exactly losing local influence, though, is it? That implies something else. The GPs in those two groups were still practising as GPs and I am sure the patients didn’t receive any better or lesser treatment because of what happened.

Dr Hobday: No, but in the long run it influenced the services provided. For instance, Maidstone has lost its consultant-led maternity unit against the wishes of local GPs because they were put together with the Tunbridge Wells GPs who had-

Q340 Nadine Dorries: And that is as a direct result of that?

Dr Hobday: That is the direct result of the group getting too big.

Chair: Could I bring in Seán Boyle in answer to the original question?

Seán Boyle: Yes. I don’t think we should say that reconfiguration is necessarily a good thing in itself. What we always need to do is look at the case for reconfiguration and the case for change. That should work in the best interests of the populations concerned. What we should be doing is ensuring that businesses cases are presented on a case-by-case basis with the clear evidence underlying each part of the case. You need to look at a financial case but also at access for populations as well as clinical quality and at deliverability, if there are going to be major changes. This is a process which we have had in the NHS for some time now and that is key to delivering good change.

In terms of the country as a whole, we have different practices in different parts of the country. That is often a good thing, but you also have to recognise that, over time, there are technological changes which mean you have to change the way you do things. Colleagues on my right have said that, and that is important. Always-and I suppose I would say this-the evidence has to be clearly presented and it has to be presented to the public so that people will feel they are properly consulted on what is being proposed and will understand. Often the public are treated like fools, but they do understand a lot of the technical side of this. They can see what a trade-off between access, cost and quality might mean. They also know when they are not being given the real story.

Q341 Chair: There are two different models here, aren’t there? One is that the commissioner is responsible for planning a reconfiguration of services and the other is that the commissioner directs the patient to where the patient is best treated and it is for the provider to plan services in response to the referrals by GPs. Do you have an instinctive preference for one of those routes or the other and do you think that the Bill currently going through Parliament changes the balance of that argument?

Seán Boyle: To take the first point, I don’t have a preference one way or the other. I believe you need to present the case in a way which makes clear the choices being made by professionals on behalf of patients and then bring it back to patients for their view to be taken account of.

I have been involved in a number of issues around reconfigurations over the last 20 years in different parts of England. The sort of choice I mean is that it may be, in order to keep a maternity unit open or an A&E department open, you need to spend another £1 million or £2 million. If you present that as a choice to the public, that if you are going to spend that on keeping local access then you are going to lose something else, and make people aware of that, then the public are making those choices. They are deciding whether or not their local unit should close. They may well say, "No. We can see the need to do that."

As to the changes, it remains unclear to me what is going to happen in the future. Often, what is being proposed is very similar to what we are doing already in terms of business cases, consultation and changes round the edges about who is actually doing things. You may come on in later questions to discuss the structure of commissioning and these sorts of decisions and the way in which local authorities will influence this.

Chair: That is exactly where Mr George wishes to take us.

Q342 Andrew George: That is good, yes. Could I begin by refining the term "reconfiguration"? I am not aware of any community being up in arms or petitioning against having a dialysis service closer to their home or having a CT scanner in their local hospital whereas it was 50 miles away or having an ophthalmic service in a smaller hospital closer to them. When you are reconfiguring and bringing services closer to people, those are pretty uncontentious. If we can refine the term "reconfiguration" to the contentious side, which is the concentration, the centralisation and the reduction in numbers of centres providing those services, could you say how you think the dynamics of centralising the services are best managed under the new GP consortia arrangements? In other words, how will decisions, as you see them, be made by GP consortia when we are talking about the centralisation of services? To what extent will they have a say in terms of that type of reconfiguration?

John Black: We are slightly concerned about the gap between the National Commissioning Board and the GP consortia about services that are not nearly big enough for national commissioning, which is rare diseases with two centres in the country, and areas where the average general practitioner will often not see a patient. I can only speak with any understanding of surgical services, but there are many surgical specialties, such as cardiac surgery, paediatric surgery and neurosurgery, which seem to work best when they are commissioned considering the needs of a population of about 5 million people. I am not saying there should be retention of any of the regional bureaucracies, which most people would be quite pleased to see the back of, but I do think there has to be some commissioning element looking at it between the national basis and the GP consortia basis.

The model for this, of course, is cancer services which have been centralised and we have seen improved outcomes from that. Again, that was more or less done on that population set-up. Cornwall have had that number of population. It is a point that was made by Paul Hobday earlier.

Q343 Andrew George: Yes. Can you see how that dynamic of the kind of grey area between where the scale at which the GP consortia will be operating and the management of national services by the NHS Commissioning Board is going to be covered? Is that something in which you-any of you-have had any kind of engagement in this process so you can be clear about how those services are serving populations of 1 million or more where you need to have that operating because, clearly, there are not going to be any GP consortia at that scale. A lot of them-and even in Cornwall, one pathfinder is 16,000.

John Black: There is no reason why there should not be that sort of arrangement in place. It doesn’t have to be, physically, in any one place and the clinician involvement is particularly important at that sort of level. I see this as a gap we have been asking to be filled, and not necessarily with a formal structure, but either at the bottom end or the top end there should be some arrangements put in place.

Q344 Andrew George: How do you manage the dynamics between the clinical governance issues that you are covering and local loyalty to one’s hospital and much loved local clinicians who, no doubt, people believe can do almost anything? This is going to be made worse, is it not, by a GP consortia structure which is at a very local scale? There will be many more GP consortia than there are PCTs.

John Black: Yes.

Q345 Andrew George: Therefore, they will be much more bound in to the aspirations of their local community, perhaps.

John Black: This is true. We saw this with fund holding, that the more distal based commissioning is, i.e. the nearer it gets to the patient, the more the local hospital is defended.

Q346 Andrew George: Do any of the rest of you wish to comment?

Dr Hobday: Yes, briefly, to add that, when the choice agenda appeared, my patients said to me, "I don’t really want choice. I want a good, local district general hospital that is safe, clean and will produce the basic services", which obviously includes maternity, a bit of general surgery, et cetera. We know that every district general hospital won’t be able to produce vascular surgery, cardiac and coronary, et cetera. On the GP commissioning basis, considering when we refer one in 20 of our patients to secondary care and most of those referrals are basic bread-and-butter stuff-they are not for neurosurgery, et cetera-the majority of our work is wanting to be related to a local district general hospital. Clearly, we have got to have contracts, or whatever it may be, to deal with the supra specialist field. That is a small proportion but it is one that may distort all these arguments if we are not careful.

Q347 Andrew George: Do you feel that you and your colleagues are qualified to make those kinds of judgments about the scale and the clinical governance issues with regard to some services where the level of intervention is perhaps a level above where the DGH will be?

Dr Hobday: We won’t be making those decisions on our own, of course. Our role as GPs is to know when to consult and when to refer on when we have passed our limit of expertise.

Q348 Andrew George: But as a consortia what is the formal structure? Where will you get that advice and when do you know when you need to seek that advice?

Dr Hobday: From experience, there will be a constant dialogue with our secondary care colleagues.

Q349 Andrew George: But would it not be better to have your secondary and tertiary care colleagues on your commissioning board to help you make those decisions?

Dr Hobday: Yes, and I can’t see any reason why not.

John Black: We would strongly support that. In fact, if you called it clinician-led commissioning rather than GP-led commissioning and merged the secondary care sector and the primary care sector-and it is already beginning to happen, which is slightly encouraging-

Q350 Andrew George: I am sorry, can you explain more?

John Black: I was told of a case recently in a town where the local GPs have arranged to meet the local physicians prior to the new arrangements to discuss how they are going to cut the number of emergency admissions to hospital. That is just the sort of dialogue we would all wish to see, with the sectors working together and the clinicians providing the same advice.

Q351 Chair: Mr Tredinnick wants to come in but, before you do, David, Alwen, do you want to comment on these points?

Alwen Williams: The points I would like to make are these. It feels to me that where we have achieved success in terms of consensus around reconfiguration goes back to John’s earlier point about a very strong evidence base. Where we can encourage and find ways of GPs and secondary and tertiary care clinicians working well together in looking at the whole system of care with a strong evidence base, certainly my experience is clinicians will come out of their institutions to look at the whole system and what is the best design of services to produce the best clinical outcomes-the best use of NHS resources.

We have examples in north-east London where we have just been through a significant consultation on reconfiguration of services. It has been very strongly clinically led and clinically driven with strong patient involvement. When I talk about "clinically led" it has not just been the GPs. It has been acute clinicians as well. The outcomes that we have secured as a result of that, building a consensus of what "good" would look like for the health community but, again, clinicians engaging with patients and patient groups in that process, feels to me to be a sound model. We then need to think about how, potentially, we could get that to work with the new commissioning and indeed provide a landscape that is being developed.

Q352 David Tredinnick: I wanted to take you up, Mr Black, on the point you made about specialist services needing a catchment of 5 million people and, also, that the links with commissioning structures are already starting to happen. If you are going to have one neurosurgery hospital serving 5 million people how do you get down to all these different commissioning groups? Do you have a formal structure? Have you got a representative or does each commissioning group nominate a doctor who is responsible for talking to the neurosurgery hospital? How does it actually work? I see a very hazy tree there or inadequate coverage.

John Black: I see a very hazy tree, too. There are two ways. The consortia themselves could work as a group with those involved in providing the 5 million size service or it could, of course, be done centrally on a virtual level. The services that are required to be commissioned at that level could be all organised centrally in a virtual way. For example, if you look at the reconfiguration of children’s cardiac surgery that is going on at the moment, with support from us because there is an evidence base, the location of the centres should have been decided on a level playing field nationally, I would say.

Q353 David Tredinnick: If you have different commissioning structures bidding for scarce resources, who is the gatekeeper going to be? Do you decide that this tumour is worse than another tumour? How do you evaluate the actual pitch that different commissioners are making? You might get a multiple application, like the Olympics, and you have to say, "I will pick and choose one of those." I don’t want to be facetious. Maybe it is difficult to answer.

John Black: The answer is you want clinician involvement from the appropriate clinicians. I fully support the point. By "clinicians" I don’t mean doctors. I mean clinicians of all specialties. Nurse clinicians are particularly important in various safety measures such as setting nursing levels. One mechanism might well be for that to happen nationally with clinician advice rather than coming from two directions. But I share with you in that I am not at all clear how that is going to work.

David Tredinnick: Thank you.

John Black: But it is not rocket science to produce some mechanism whereby it could work.

Q354 Dr Wollaston: With reconfigurations it is always difficult to persuade the public of their case. Take an example in the south-west of reconfiguring upper GI cancer services, which was initially unpopular but has now been accepted. Subsequently, the evidence is clear and people now accept that that was the right thing to do. I am interested to hear from the panel how many reconfigurations in future will be financially driven rather than clearly clinically led and how difficult you think it will be to persuade the public of the need for that to happen, say, in London which is over-provided with hospitals.

Chair: Who would like to go first? Dr Hobday.

Dr Hobday: Following on, I would like to make a point that we refer to people not buildings. The medical world is quite a small world, so I know the neurosurgeons even though it is a big district, for instance.

On the arguments about whether it is financially driven or not, we have a good example in the last 10 years again in Maidstone. There was always total denial that the reconfiguration of the surgical and orthopaedic services, and, later, the maternity and the paediatrics, was a financial decision. But it has turned out that it clearly was a financial decision and there was no transparency for people to scrutinise it. The consequence is that, in our area, there is now immense suspicion that the policy is made and then the evidence is looked for, rather than the other way round. That is widespread in my area. Transparency has got to be there.

Q355 Dr Wollaston: You think transparency is the key to this, being open with people that this is a tough financial decision but "This is why we are doing it".

Dr Hobday: Yes. Locally, this reconfiguration may go to judicial review because it is so contentious and there are so many faults in it, as far as we can see. But when the trust has gone it is the same as when the trust goes with the doctor-patient relationship. We have to be incredibly careful there because the suspicions of the patients will always be, "Are you doing this for financial reasons rather than for my clinical good?" That is the small example extended to the reconfiguration process.

Q356 Chair: Surely the reality, in most of these decisions, is that it is a balance of clinical and financial questions. It is a question of how you get the best value for the money that is available, which will always be limited.

Dr Hobday: Absolutely, but admit that. In our local area that was not admitted. It was always, "This is not a financial decision." It became obvious, eventually, that it was.

Q357 Dr Wollaston: Do you think it is going to be something that GPs, as commissioners, will find easy to do-easier to do than perhaps has been the case for PCTs?

Dr Hobday: That is a very good question, of course, because PCTs were fairly impotent, as they were in our area, to tackle the acute trusts. I don’t see how GP consortia will be much stronger, unless we go back to the size issue and we have so much clout that, again, it covers vast areas and vast population numbers.

Seán Boyle: The issue about whether it is financially driven is often key in terms of looking at changes and reconfiguration to services. My view is that clinical arguments have often been used to mask what have really been financial considerations in the past. I know we are looking to the future now but you can learn from how things were done in the past. If things were not done well in the past, in terms of being transparent and in terms of your arguments, which is what my colleague has been referring to, we should learn from that and the Government should go forward committed to laying out the arguments in a clear way.

The problem for me, always, has been that I have never seen really good financial arguments put forward in business cases in the NHS. I am not aware of major changes in services-reconfigurations of services-that have resulted in large savings or any savings within health economies. I have not seen the evaluations of change that show you this. In fact, if you look at what the National Audit Office does, it often looks at changes which are supposed to realise benefits and they don’t realise benefits. Why is that? I don’t believe business cases are put forward in a way which is honest in the sense of saying, "We are going to make these savings, we are going to improve quality and we will be tested against this in the future."

Q358 Chair: It is a very important point you are making. If it is true that service reconfigurations are routinely carried out in order to achieve better use of resources and you are saying, in the event, they fail against that test, then that must undermine the case for these reconfigurations as we consider them going forward, doesn’t it?

Seán Boyle: I think they did fail that test. I have not seen evaluations which show otherwise, is perhaps the way I should put it. I have seen individual changes taking place where the NAO has shown some evidence to this effect.

Going back to this notion of consortia, if we think back to strategic health authorities, they drove a lot of the reconfigurations. That is true. That is the way it worked. PCTs were working locally but the framework within which they were working was determined by the strategic health authorities. The Commissioning Board is in a similar position, in a sense. From my reading of the Bill, it will be determining whether or not the plans of consortia will work for local populations, to put it very crudely, and whether the way in which they interact will work.

I personally believe that a Commissioning Board at a national level cannot do that. I know, from the evidence of David Nicholson last week, that he has hedged his bets a bit. He said that the Commissioning Board will not be involved in reconfiguration but, at the same time, that the Commissioning Board will have people at local levels. I would predict that, within a couple of years, what we will have are regional bodies as part of the commissioning boards which might not be called anything but "Commissioning-Regional". But they will be there to ensure that things are working appropriately on the ground. Whether or not we go back to the command and control system that we had under the previous Government depends on whether the current Government wants to use the Commissioning Board in that way. That is their choice. I will be interested to watch what develops.

Q359 Chair: Would any other member of the panel like to comment on that prediction?

John Black: I would like to say that, where there is an evidence base, clearly bodies such as the Royal College should be prepared to defend it. Sarah has mentioned upper GI reconfigurations, of which we have made certain recommendations. In that event, we should be prepared to stand up and say so to the local population. Indeed, I remember getting out of Rugby only just with my head on my shoulders a few years ago. But that is a very good point because the history of trust mergers in the National Health Service is that they don’t save money.

Q360 Chair: But do they achieve better clinical standards? There are two justifications, one is clinical and the other is financial. Do they achieve either of their objectives? If they don’t, then taking local patient groups with us is going to be impossible because they are right.

John Black: You could argue that in the City about all these mergers that go on there. Do they actually improve anything for anybody? Pass.

Q361 Chair: Can I ask Alwen Williams’ views on this?

Alwen Williams: Going back to the issue of whether this is financially led, I would want to emphasise the point that this is about the best use of NHS resource. Looking at the focus, that trusts and commissioners and GPs are looking at efficient systems, we risk having too much capacity in certain hospitals that would then not, in my view, warrant a good use of NHS resource. Again, it is about how the system plans that to ensure that, indeed, NHS resources are best deployed.

There is also a link to increasing quality. To a certain extent, a key driver for us has been increasingly consultant-delivered services rather than consultant-led services-that is key to improving the quality of patient outcomes-and if we can achieve that within a best value approach, as opposed to an incremental cost approach, when we know the reality is that there are real constraints in terms of the financial allocations. Again, I would say it is looking both at how you best choose NHS resources in terms of the application to front-line services and how you can also, at the same time, drive up the quality and cost-contain for the future.

Q362 Dr Wollaston: Can I come back to you on that point about consultant delivered as opposed to consultant led and bring in John Black, who is sitting next to you, because you also, earlier, touched on the issue of the Working Time Directive? How effective do you think the new arrangements will be in enabling primary and secondary care to work together to deliver those outcomes?

Alwen Williams: It is how we design the system. My concern is that one could design a system that is pretty fragmented. You have touched on small scale, potentially, GP commissioning consortia, in a set of relationships that may be more about transactional contracting with NHS trusts and foundation trusts. My view is that isn’t going to deliver the best NHS. It is very much about how commissioners play their role and how providers play their role but we need to ensure that, as we design the system, the system needs to be an integrated offer. Only by doing that, I believe, are we going to continue to improve quality of patient care, make the best use of financial resources and not create, inadvertently, a system that is, in a sense, at loggerheads with itself or, in a sense, so fragmented it is unable to achieve large scale service change.

John Black: We strongly support a consultant-delivered service where the service is delivered by trained specialists assisted by people trained to be consultants. It is inevitable because we now have enough doctors coming out of UK medical schools to supply our own needs. Like every other first world country, medical graduates will want to have been properly trained to specialist level and to work at that level. GP consortia commissioning with that stipulation would be very valuable and, indeed-sorry I am going on a bit-the old fund-holding practices sometimes used to stipulate that they wanted their patients seen by consultants. The patient group really do. The trouble is the patients do not know if they are seeing a consultant or not, which is yet another issue we might take up one day.

Q363 Valerie Vaz: I want to fast forward. You have mentioned this elephant in the room or the person looking over your shoulder in the shape of Sir David Nicholson. I wondered, in terms of GP commissioning in the future, whether you think it is going to be easier or more difficult to drive through reconfigurations.

John Black: It has always been difficult and will remain difficult. One of the stresses in the Bill, which we were very pleased to see, was a stress on measuring outcomes. If you measure outcomes, there should be more evidence on which to base reconfigurations. Hard fact is very difficult to argue against. For example, if all commissioners had to insist that outcomes are measured as best they could, that, in surgery, would be the biggest single measure you could do to improve patient care.

The classic example of that is the cardiac database where every cardiac operation, 10 years ago, with a bit of kicking and screaming at first, was entered into a national database. What happened? The outliers looked at themselves and there were various reconfigurations driven by the profession, not by commissioners or managers. The profession said, "We’ve got to reconfigure." The outliers were eliminated and we now have the best cardiac surgery results in Europe-probably the world. That could be replicated, with proper outcome measures that could be put into the Bill, if commissioning is absolutely based on outcomes. The difficulty is that it is relatively easy in surgery but, of course, very difficult in other areas. It is easy for me.

Dr Hobday: I would add that, yes, we all fully agree with what John said about outcomes. It is very easy, or easier, to measure in surgery but in mental health and dermatology and all the other specialties how do you measure outcomes? There is this over-emphasis, I believe, on outcomes although we have to measure it somehow.

Q364 Valerie Vaz: Do you think it is going to be easier or more difficult? You are in the driving seat as GP commissioners. There may not be an answer. It may be something else.

John Black: If they were persuaded to make a condition of commissioning that you measure the outcome, that would drive standards up inevitably and I would hope to see that. In fact, the Bill does say "outcomes, outcomes, outcomes" all the way through, which is good.

Dr Hobday: I believe the devil is in the detail. When the White Paper on the Bill was first published, a lot of GPs were in favour of it because there was a simple statement that GPs were going to be put in the driving seat of commissioning. As soon as the detail was looked at, now there are polls that say the vast majority of GPs are against it because of the conflicts of interest, et cetera. It purely depends on the mechanics and nuts and bolts of how it is going to be put into operation. If it is put into operation properly, I believe reconfigurations and commissioning will be easier.

To add a further point, yes, referrals to consultants are the sort of things that must be written into contracts. We now have a situation, and have done for some years, where, as I said earlier, we seem to be referring to buildings rather than people. If we try to refer to named consultants we find our patients in front of a nurse specialist. That sort of thing, in my opinion, is one of the first things that will be stamped on if we ever get the reins of commissioning.

Chair: Mr Boyle was shaking his head.

Seán Boyle: On that simple point, it doesn’t have to be stamped on. Why should it be stamped on?

Dr Hobday: For choice-I am sorry.

Seán Boyle: There are things which nurse specialists can do which they do very well.

Dr Hobday: But not without our saying so.

Seán Boyle: What we are looking at here is a situation where we can deliver the same quality of care more cheaply through using different types of people. I think there will be no argument from the specialists, from doctors, that they should be doing what they are specialised in doing and that other professionals should be doing things which they can do. That is why I was shaking my head, because a lot of people are quite pleased to go to a nurse specialist rather than to a consultant. That was my point.

Q365 Chair: Dr Hobday’s point, as I heard it, was that if you are referred to see a consultant then it should be the original decision by the GP rather than by the institution they are referred to.

Dr Hobday: Yes. If I can clarify, I have no intention of knocking nurse practitioners and nurse specialists because they do a good job when they have the appropriate patient in front of them. I have nurse practitioners in my practice and the skill is making sure that the right person is seen by the right type of professional. But when, for instance, I, myself, might refer somebody, after 30 years of experience, and find that they are seen by a nurse practitioner who is aged 25 and has not got any experience, I would think, "I won’t bother referring in future." But the patient is then denied a choice. Their choice is obviously that we are wanting to consult somebody. That is where the phrase came from, "a consultant".

Q366 Valerie Vaz: Do you see yourself doing it over a wide geographical area or would it just be your local patch?

Dr Hobday: Mainly within the patch but I do not see why, as long as we know the specialist and know the reputation, people should not go further afield. Again, when I first started practising there was no restriction to where I referred patients. I could have sent somebody to Newcastle, if I wished. In 1990 that was taken away so we had difficulty referring to people of our choice. Then it became more generic. We were referring to hospitals and to a named consultant but it was all watered down and that patient was seen by whoever was thought appropriate by the managers.

Q367 David Tredinnick: Do you think the Commissioning Board is going to be out of touch because so many services dealt with by the strategic health authority are going to go out? I think Mr Boyle referred to the possibility of command and control-they are just my notes-and waiting to see how the Board operates. What is your instinct? Do you think it is going to be way up there in the clouds and a non-responsive body or do you think it will be a strong body that oversees?

Seán Boyle: My instinct is that it is going to operate strongly at a local level. At the higher level we are talking, maybe, about £3.5 billion worth of activity-at a really specialised level. Where the action is in terms of money is at a lower level in terms of specialisation. My instinct is that the Commissioning Board will be operating at that more local level. If it doesn’t do that, then it will not be able to work effectively, I would suggest.

I am not putting that forward as a model that I would say, "This is the best model." I am saying I think that that is the way it will work because that is what comes out of the culture of the NHS eventually. There is a way that things often fall back into an almost natural position in terms of the management of things.

Alwen Williams: It is early days, but as a cluster chief executive I can certainly see the benefits of having a degree of a sub-regional structure for the National Commissioning Board. That may need to be for a transitional period when we look at the functions of the National Commissioning Board in relation to direct commissioning in terms of ensuring that GP consortia are developed and are transacting their responsibilities fully. I can see in my role now, for example, as a cluster chief executive with five GP commissioning consortia in situ, that the cluster does play a role in brokering relationships in the GP commissioning consortia coming together with acute clinicians looking at how the system can be best managed. I am not, for one minute, saying that necessarily has to be replicated in terms of that geography but that approach, certainly in the medium term, I can see working well, and particularly with the direct commissioning responsibilities of the NCB.

Q368 Rosie Cooper: What powers do you have? You talk about bringing people together and getting them going but what powers, in your current role as chief executive of a cluster, do you really have to knock heads together to make something work?

Alwen Williams: For the next two years-

Rosie Cooper: Please don’t use the word "influencing".

Alwen Williams: My role as, in a sense, the accountable officer for-

Chair: You hold the chequebook.

Alwen Williams: -the deployment of NHS resources, the contract held with NHS trusts, and clearly a responsibility for the development of GP commissioning consortia and an ambition to ensure that the legacy handed over in 2013 is a good one from the cluster, means that we have a range of current accountabilities and responsibilities that enable us to do things in the way that we think is right for patient care and in a way that enables strong clinical leadership of that agenda.

Q369 Rosie Cooper: Can I ask a quick question? The Secretary of State is saying that some commissioning boards are coming together now and the inference is that they are "commissioning". If, between now and 2013, you have boards which are moving towards, perhaps in 2012, beginning to pull together a commissioning plan and you hold the purse-strings, as we have just been told, could you veto any of those plans? If so, what would that do to the emerging consortia? How would they feel? What confidence would they have in themselves?

Alwen Williams: I would say it is a sign of failure of my system if I got to a position of having to veto a plan. There is a huge reliance on good working relationships, trust and confidence and the GP commissioning consortia having confidence in the management team of the cluster to give strong advice to provide high quality commissioning support services. Certainly in my experience of over 10 years as a PCT and, latterly, a cluster chief executive, I have never been in that position because you have to broker. You have to problem-solve together and broker solutions together and a system that ends up, in my view, either voting at a PCT board or vetoing someone’s plans feels, to me, a system that is clearly not working as well as it should be.

Q370 Chris Skidmore: A key part of a discussion we have had this morning has been to look at laying out the argument for reconfiguration, whether that is on the basis of cost or on the basis of clinical output. I would be interested in what Mr Black had to say about that. But I was also interested in to what extent Government can drive principles of reconfiguration. The previous Government set out, in 2006, that there should be a clinical case for change. I can’t remember what the mantra was but it was something like "localised where possible, centralised where necessary". Since the coalition Government has come in we have obviously seen Andrew Lansley’s four tests for the reconfiguration of services that were placed under a moratorium and to what extent those tests will carry on through will influence future programmes of reconfiguration. I would be interested in your views on that. When it comes to outcomes, which are not always empirically measurable, to what extent can we have principles set by Government that can then be applied over a wide geographic area where, obviously, there is a huge degree of variation?

John Black: As I said at the very beginning, reconfiguration is always going to be with us because medicine changes. The way, where-the place-and how patients are treated is fundamentally different, even from 30 years ago. Defining principles is all that can be done but it is never going to be easy because there is always this conflict. We have a National Health Service and yet we want to centralise the most important services, which doesn’t mean it is not national. Patients hate to travel.

I wish I knew the answer to this dilemma. It is always going to be a dilemma and it is always going to be difficult. As I keep saying-sorry-at least it should be done on looking at outcomes on evidence rather than on finance and politics. I think probably finance and politics are always going to be with us.

Dr Hobday: The trouble is that principles that start off at the DOH end up down at the PCT being interpreted in amazingly imaginative ways and in a way that suits the local PCT, perhaps. I don’t want to go on about Maidstone, but there is no trust in any trust around Maidstone any more because certain things were interpreted and used in a way that did not work or suit patients. Our experience with the small PBC groups was that a lot of the good ideas were blocked at that local level, despite the fact that it was in line with what started off at the DOH as a good idea.

Seán Boyle: There is not a standard-

Q371 Chris Skidmore: Do you think those four key tests that Lansley set for the moratoria of previous reconfigurations were effective? Some of them were quite broad. I think only one of them was empirically measurable.

Seán Boyle: They were a continuation of what was there already, really. Support from GP commissioners. PCTs were always expected to support plans and GPs were encouraged to become part of that support network in order to put reconfigurations forward. Clarity on a clinical evidence base. Who is going to say that you should not be clear about that? Nobody. Strengthening public and patient engagement. What does that mean? Not very much. If you look at what anybody said over the last 20 years, everybody said that you are to involve the public and often people have not done it very well. I am thinking of that chap from the west country who did reviews.

Chair: Carruthers.

Seán Boyle: Yes. Carruthers was called in to make recommendations. His recommendations were, basically, "Do what you are supposed to do." Again, the final one, consistency with current and prospective patients. In my view, I would translate that as, "Analyse what the historic patterns are and analyse what you think future patterns of activity should or will be and try and match your services to those." That is not rocket science but I was glad to see, at that point, that quite a few were being reiterated but it was a reiteration.

Q372 Chris Skidmore: There is also an important difference, from now on, with any future reconfiguration. That is, with the progress of the Bill, we will have new providers entering the market and to what extent reconfiguration will have to reflect that. I was wondering if you had any views on whether future reconfigurations will necessarily have to reflect the fact we have these new providers and that possible reconfigurations in the future will be, in essence, breaking down large incumbent providers and allowing new providers to enter into the market and facilitating that with ease. Do you think that is a concern or a reality in the new system?

John Black: There is a level playing field for Any Willing Provider which means they have to provide a comprehensive service. Certainly in surgery, which is not by any means the whole of the NHS, I don’t really see many new providers coming in if they have to provide training, education, audit, research, full emergency cover, measure their outcomes and feed them back. It is unlikely, if cherry-picking is stopped and the same standards are applied, that we would see providers in surgery but there will be others on the panel who will tell of other services where this could indeed happen.

Dr Hobday: Absolutely crucial.

Q373 Chair: Could you enlarge on that comment "absolutely crucial"?

Dr Hobday: The worry of cherry-picking, frankly. We have seen plenty of examples in Maidstone of outsourcing, as it is called: psychology and the cataract service. The tick-box selection of patients by one of the services was so annoying. They could say that they had seen and dealt with a patient that needed counselling by ringing them up and suggesting that they went off to Waterstones and bought a book on stress management, and that qualified. The rump of the NHS service was trying to deal with the really difficult psychiatric cases. That is one example. The patient of mine that wanted a hip replacement at one of the local providers was told that he cannot because his BMI was over 25-like the rest of us here. If all that cherry-picking is stopped then we would have more confidence in the system. But, as John said, which private provider, otherwise, is going to employ a newly qualified houseman? What is the value for them if they are not actually made to and they can save money that way? Therefore, it would not be a level playing field unless the same rules are applied in every area, in education, training, et cetera.

Q374 Andrew George: A moment ago John Black said that we now have the best cardiac surgery outcomes, arguably in the world.

John Black: Certainly in Europe.

Q375 Andrew George: That seems to contradict what the Secretary of State appears to be saying about the failure of the NHS in a whole swathe of areas and a lot of statistics are being brought forward to show how outcomes are poorer than many comparable countries in the rest of the world. To what extent, given that that has apparently been achieved in the area of cardiac surgery, and cardiology, presumably, will these reforms help or hinder the development of similar improved outcomes across other specialties?

John Black: I hope we would see that the stress on outcomes would improve outcomes where they are measurable. But that is the great difficulty. It is easy for surgery. It is relatively easy for cancer. Of course, the trouble with international comparisons is that every patient in this country goes into a national cancer registry. You can’t compare results with France where 10% go into a registry. International comparisons are difficult unless we know they are valid. The cardiac results were valid. Everyone was measuring it in the same way.

Q376 Andrew George: But my question was: to what extent will these reforms help or even hinder these improvements? You are saying this has been achieved before the reforms.

John Black: Yes.

Q377 Andrew George: Will the reforms make it easier for you to improve outcomes or more difficult?

John Black: If the reforms could be done in such a way that what was done in cardiac surgery was done for every form of not just surgery but procedure with a clear outcome, it would undoubtedly improve outcomes. That could be put into the commissioning process. It could be put into the present-day commissioning process as well.

Q378 Andrew George: But you have done this before the reforms?

John Black: Yes. It was done before the reforms.

Q379 Andrew George: What lessons have you learned which you could now apply to a reformed NHS with GP commissioning and in an environment where any other willing provider is also providing the services and competition law will be applied?

John Black: I think I said that. Everybody should have a level playing field and a condition of providing the service should be that they measure the outcome. What has been done in cardiac surgery, and is happening in other specialties where the results are not quite so mature, is a model to which any commissioning system should aspire. They should look at what was done and insist that this goes in to their commissioning from now on. So-called world class commissioning-I cringe when I hear that word-would measure outcomes and insist that those outcomes are fed back in to changing the services.

Q380 Andrew George: So the Royal College supports the reforms.

John Black: We support the stress on outcomes. As a college, we would not have an attitude per se. We think how health care is delivered is for Government and Parliament and the people of this country. But we thoroughly support the stress on outcome measures and we would push for more clinician involvement.

Q381 Andrew George: In the commissioning process?

John Black: In the commissioning process.

Alwen Williams: To answer your question-and again, today, we have discussed structures and size of consortia-what we need to inject into the debate, whether this comes as part of the authorisation process, is that commissioning competencies are key requirements. My view, having worked in the NHS for over 30 years, is that we work with different structures as long as those structures work in an integrated way. It feels to me that the competence of commissioners as well as the competence of providers is absolutely key. As somebody who went through world class commissioning on a few occasions, relatively successfully, I have to say-and I know maybe it is the terminology "world class"-I think the fundamental framework which was about how you measure commissioning competence, how you make sure you have a clear strategy and how you ensure you have very good transparent governance, which goes to your point on reconfiguration, was a very good framework. My answer to your question is that it would largely depend on how competent the future commissioners and commissioning support services are to ensure that the right commissioning processes and decision-making processes are put in place for the benefit of patients.

Q382 Andrew George: Do you share the same confidence?

Dr Hobday: I am worried that the upheaval will slow down the improvements that we have seen in trends and I recommend John Appleby’s paper in the BMJ a month ago from the King’s Fund who, I am afraid, discredited a lot of these claims of how poorly our Health Service is doing. If trends continue, for instance, as they are, next year we will have equally if not better myocardial infarction survival rates than France. It was not pointed out that France spends 29% more on health than we do, so there was a bit of selection and cherry-picking among the statistics there, I am afraid. The paper produces a lot more examples about how the cancer care in this country is much better than Mr Lansley is making out. I could give you the reference for that in the BMJ, if you wish.

Q383 Chair: Could you write to us with that?

Dr Hobday: Yes, I can.

Chair: Just to emphasise that point. It would be helpful.

Dr Hobday: Yes, certainly. If things are left as they are the trends would continue in the right direction and we would be doing very well and on a par with most European countries, if not better. I worry that the upheaval of the changes will sabotage a lot of those trends.

Q384 Rosie Cooper: Could I first ask Alwen how Government policy on reconfiguration has changed since the coalition came to power and how you think GPs will play a role in that reconfiguration process? Then, if I may, I will put that to other members of the panel.

Alwen Williams: We were in the throes of a reconfiguration process as the new Government came into power and introduced the four tests. So we have been a bit of a guinea pig in north-east London in terms of reviewing the processes. The measure of success has to be strong clinical engagement-I would say GP commissioners as well as acute clinicians-in ensuring that the reconfiguration proposals are based on good evidence and clinically led. That feels to me, certainly from our experience in north-east London, looking at a dialogue that then ensues between clinicians, patients and, indeed, local government is a much more powerful dialogue and set of conversations than, I would suggest, between an NHS manager like myself, and local government with GPs and clinicians being towed along.

I think the way in which we design reconfiguration processes to be very strongly clinically-led is absolutely key. We have certainly worked through the four tests and, as a result, from external validation we were enabled to go through to a joint decision making of the joint committee of the PCTs on those reconfiguration proposals. They have since been referred to an IRP process as a result of a referral from one of the overview and scrutiny committees. One of the tensions in the systems, to me, is that if there is a strong clinical evidence base and a strong financial base, and I don’t think we should kid ourselves to say that absolutely everybody will agree because that is not going to be the case, but if there is a substantial degree of consensus in relation to "This is the right thing to do", there is something about the current process taking so long that it mitigates against securing the optimum result as a result of a reconfiguration process. One of my pleas going forward is not only to continue to sustain very strong clinical leadership but to see whether there is a degree of streamlining some of the processes in terms of construction of the case and the decision-making processes. What we absolutely do not want is, having made a very strong business case around clinical quality and patient outcomes, to find that there is significant delay in enabling delivery of that as a result of the processes that are currently in situ.

Q385 Rosie Cooper: I will come back to accountability of that in a minute, if I may. I would like to ask Dr Hobday: how is that working in practice?

Dr Hobday: I am sorry, accountability?

Rosie Cooper: How is the policy working in practice? You had an example before.

Dr Hobday: Going back to the Maidstone example, yes. In practice, for conditions locally, they were totally ignored. They really were. This is one of the reasons why the trust has completely gone.

Seán was mentioning about how you can measure these. We had a survey in our area that was audited correctly and showed that 97% of GPs were against the closure of a consultant-led maternity unit but it was ignored. We had a clinical evidence base ignored and genuine public opinion ignored. The interesting thing was that GPs, in this reconfiguration process that started in 2003, were not asked their opinion once until July last year when Mr Lansley produced his four conditions.

Q386 Rosie Cooper: Now you have been asked and ignored.

Dr Hobday: Absolutely.

Q387 Rosie Cooper: So that makes it better.

Dr Hobday: I was going to say that the commissioning side, as far as the GPs are concerned, is only going to work if the GPs are listened to a little bit at least. But there is a reversal of this policy of diluting the GP role. How can we become gatekeepers and look after the commissioning side if people can squeeze round the side of the gatekeeper, whether it is because they are going to walk-in clinics or Darzi centres and all the sorts of things over the last 10 years which have diluted the GPs role? I am not saying that they are necessarily bad things but it will sabotage or not make the commissioning easier.

My main concern with whether the commissioning can work well is that worry I have of the interference with the doctor-patient relationship-bringing rationing into the consulting room-and, therefore, all the people that have self-selected themselves on to the boards of these groups really ought to be producing declarations of interests before they put themselves forward. In our area, the board has been elected because there were so many places and not many people came forward. So they were a self-selected group.

Q388 Rosie Cooper: Accountability, as something that I have followed right through this process, worries me greatly. On reconfiguration, for example, in the very early days when we had the Secretary of State before us, I asked the question, "What happens if clinicians make a decision pursuing a reconfiguration, the consortium then believe that is the best course of action, yet the Overview and Scrutiny Panel or the Health and Well-Being Board, as it will be, the local population, were against that clinical decision which led to a reconfiguration?" I asked the Secretary of State what would happen in that instance. There is no real level, for me in my understanding of this, of accountability anywhere. We can’t see anybody on the consortia-no patient or external people-there at the table with a voice involved in the decisions. Health and Well-Being Boards will not sign off the plans of the consortia. There is a lot of consultation, there is a lot of influencing but no actual being there at the centre of decision making. What would happen, I put to the Secretary of State, if we had the populus, if you like, against a clinical decision? He said exactly that, it would go to the Reconfiguration Panel. That is exactly the same as we have now without the pretend of consulting and ignoring clinicians.

I suppose I would like to ask the panel generally where you really think you are today. I understand that it is at Chase Farm, in north London, where a reconfiguration of A&E services has been going on, as I think we heard before, for 17 years. That is now on hold yet again. If that is going to happen, where are you going? Does anyone want to pick up that point?

Chair: This needs to be a wrap-up question, if I may. Where are you going?

John Black: If clinicians in professional bodies give clear advice that something should be done to provide higher standards they should stand by that decision and they should become involved in the processes to persuade the patients that it is in their interest to do so. If you don’t do that, you are shirking your duty. But it has always been difficult, it is always going to be difficult and it will never be easy. But if someone like my college says, "We think this service would be safer if it moved from A to B", we should stand up and say so and try to help the local population understand why this should be done.

Q389 Andrew George: But, finally, who is making the decision, is the point I am trying to get to? Is it the clinicians, is it the population or is it the Secretary of State?

John Black: I don’t know-I am not an expert in parliamentary governance-but it is going to land on the desk of the Secretary of State, isn’t it? It is like a planning thing. What is the Secretary of State for but to make the ultimate decision?

Seán Boyle: I will try to answer some of your questions. I agree completely that what we are looking at in terms of the way the process is working, at the moment, is one where the Reconfiguration Panel will look at cases on an individual basis and make recommendations. I would recommend a report from them which I pulled out, Learning from Reviews, which I can let your clerk know the reference for. If you look at that, all that we have been talking about today is contained in the way of the problems of presenting a case for change that will work effectively for patients. That is one thing.

I said, just now, that this is the situation at the moment when we are in a position of transition. What will be interesting-and it is difficult to forecast-is what will happen if we are in a situation where we have independent foundation trusts who should be making decisions themselves about how they are going to reconfigure services and presenting an array of services to commissioners who will then be thinking about how to negotiate with these trusts on the basis of price, quality, et cetera-things which have always been there anyway? At this point can the Secretary of State intervene and say, "Barnet, Edgware, Chase Farm and North Mid, you might be one trust but I am not going to let you close this one down" or is the legislation going to be such that the Secretary of State will have to stand back and say, "You are an independent body. You might not get the business and you might get the business. It is up to you to see what happens"? That is a crucial question. I can’t tell you what will happen in the future. I have given you a bit of a forecast. That one is much more difficult to judge but that is crucial.

Alwen Williams: Your point highlights that the NHS is a complex system and making change to that complex situation requires a degree of resilience, focus and real passion to ensure that we get the very best for patients whatever structures and processes we have in place. We have probably rehearsed with you today what we believe to be some of the key ingredients of success. Often the success is in the execution rather than in a set of principles or a kind of diagnostic. It is how you execute well a plan that involves clinicians, the public and local politicians. In a sense, some of the elements of that, which we have articulated today, are very much related to a strong clinical base.

I think strong relationships are important and I think strong clinical leadership and more sophisticated ways of engaging our local communities with clinicians being much more visible in that process feels, to me, not a recipe for guarantee but perhaps a recipe for success in terms of ensuring that we are able, as we reconfigure, to reconfigure effectively as opposed to reconfiguring in ways that either do not happen because they get stuck in bureaucratic systems or reconfiguring for the wrong reasons.

Chair: Dr Hobday, and then we really need to move on.

Q390 Rosie Cooper: Forgive me. Before Dr Hobday comes in, there is a real flaw in here which is that we can do all that consultation and everything else but the financial base of a foundation hospital or a local general hospital will depend on what is being commissioned and if those conversations do not involve the hospital and consultants and their financial base is challenged then, when the hospital is threatened, you will see that debate will change pretty rapidly.

Alwen Williams: Our experience, in north-east London, is that you absolutely need your clinicians across the system to engage in that. We have had very strong clinical leadership from the medical directors of the acute trusts who see that some of their services are not sustainable and that it is not a good use of NHS resources and that health inequalities persist. I would not underestimate the potential of acute clinicians as well as mental health clinicians as well as GP commissioners to want to do the very best for their health economies and their health systems because many of them have worked in those areas for many years and really have a commitment to high quality patient care.

Dr Hobday: You will only take the public with you on a certain policy produced locally-we have bad experience in Maidstone of this-if there is total honesty, transparency and no vested interests with the policies, as has happened in Maidstone, and if declarations of interests are there.

Chair: On that note, we need to move on. Thank you very much for your contribution. We shall reflect on what you have said. Thank you.

Examination of Witnesses

Witnesses: Suzanne Tracey, President, Healthcare Financial Management Association and Director of Finance and Business Development, Royal Devon and Exeter NHS Foundation Trust, Noel Plumridge, Independent consultant and writer on NHS finances, Andy McKeon, Managing Director for Health, Audit Commission, and Professor Margaret Whitehead, Professor of Public Health, University of Liverpool, gave evidence.

Q391 Chair: Good morning. Thank you for coming this morning. I am sorry we are running a little late. Thank you for listening to the earlier session. Could I ask you, briefly, to introduce yourselves and your particular interests? The subject we are going to wish to move on to now, I should say, is the management of deficits by commissioners, both inherited deficits and how they move forward. It is more financial rather than the reconfiguration issues we have been discussing. I would ask you to introduce yourselves.

Professor Whitehead: Good morning. My name is Margaret Whitehead. I am the Professor of Public Health at the University of Liverpool. I am also a member of the Technical Advisory Group of ACRA, the Advisory Committee on Resource Allocation, but I must make clear that I am not speaking on behalf of TAG or ACRA. I am in my capacity as Professor of Public Health.

Andy McKeon: I am Andy McKeon, Managing Director for Health at the Audit Commission. The Commission appoints auditors to all SHAs, PCTs and NHS trusts. We have assessed the financial management in PCTs and trusts for each year from 2005-6 to 2009-10 and we have published annual reports on financial performance in the NHS and also some specialist reports. In 2006 we published something called Learning the Lessons of Financial Failure in the NHS.

Suzanne Tracey: Good morning. I am Suzanne Tracey. I am President of the Healthcare Financial Management Association. My day job is as Director of Finance and Business Development at the Royal Devon and Exeter NHS Foundation Trust.

Noel Plumridge: Good morning. My name is Noel Plumridge. I am a career NHS Finance Director although, for the last 10 years, I have been working independently as an author and, increasingly, as a trainer.

Q392 Chair: Thank you very much. I would like to ask you, please, to set the scene in terms of the current level of recurrent deficit within PCTs and, therefore, the inherited level of recurrent deficit that threatens as we move into the new commissioning structures. The Secretary of State has made it clear that he wants those recurrent deficits removed by 2013 and I would be interested to know whether you think that is a realistic and achievable target for the outgoing regime, given the scale of the financial challenge that the NHS currently faces. We will start with Professor Whitehead.

Professor Whitehead: I am going to pass directly.

Andy McKeon: It is very hard to identify what the recurrent position of PCTs is, or even of trusts. It is quite clear when a PCT posts a deficit. It is less clear what their underlying position is from year to year. Last year there were only four PCTs with a deficit and there were six trusts which incurred a deficit. This year there is a forecast of four PCTs and three trusts which have a deficit. These are not significant sums.

On the other hand, it is also clear that PCTs receive support from SHAs in one way or another. For example, last year North Yorkshire and York received some money as a non-payable transitional grant to enable them to get rid of their current problems in that year financially and to concentrate on a recovery package in the next year. I am afraid the message is that I can’t give you a figure for the underlying position across the country on PCTs and trusts. Having said that, it is clear that there is probably enough money in the system to deal with outstanding legacy debts but not whether a PCT is over-trading, for example, or a trust is over-trading, its costs are too high and it needs to do something with its cost base.

Q393 Chair: That is a very important piece of evidence to me, that because of the way emerging recurrent deficits are effectively plugged by an SHA at the end of the year, which is, in effect, what you are saying, we cannot know which PCTs have a sustainable current budget.

Andy McKeon: That is correct, yes.

Chair: Thank you.

Suzanne Tracey: I would echo Andy’s points but add to that in terms of the size of what we are looking at-in reported terms. The four PCTs that Andy has alluded to are currently forecasting a total deficit of about £56 million. In the overall scale of things, that is not huge. The difficulty comes in terms of identifying what the real recurrent underlying problem is, but if we look at that in the context of the NHS has made good inroads in terms of improving financial management-and, in overall terms, the system is not only breaking even but making a relatively reasonable surplus-then in actual fact you would think there is sufficient money in the system. The question will be what it starts to look like on an individual locality basis once the changes that we are moving forward on start to take effect.

Q394 Chair: Could I ask Mr Plumridge this? We have heard the response from the people who are in the line management roles, effectively. Can you have an estimate as to what you think the position at a recurrent level is?

Noel Plumridge: The recurrent position is difficult to put a figure on. The most recent national figure we have from the Department of Health was a surplus, echoing Suzanne’s words, of some £1.3 billion. However, that most recent figure was as at the end of September. A surplus in this financial year is encouraging news. We will need the surplus because of the pressures that are building up through matters which the Committee has already touched on, reconfiguration and the cost of change associated with current changes. But we are in surplus this year.

Q395 Chair: That is looking at the PCTs.

Noel Plumridge: That is on the PCT side and a further £200 million surplus on the NHS trust side but, of course, the Department of Health does not cover the foundation trust world.

Could I add a couple of footnotes to that? It is a rosy position but, since September, we have seen a pattern at individual PCTs of deficits emerging. Some that have been publicised recently have been south-west Essex, a forecast deficit of £18 million, and Cumbria, a further £7 million. Those are some specifics in the last month or so. More generally, we have seen a pattern of restrictions, especially on access to surgery, being imposed by PCTs which suggests a need to make savings in a hurry, either through rationing or through delays.

I would add one further footnote, if I may, Chair. A recent paper by the Nuffield Trust has commented on how the efforts of making savings have been concentrated in the acute hospital sector. The acute hospital sector is less than half the average PCT commissions and the suggestion is that if we try and focus savings of at least 4% entirely on the acute hospital sector, we will face difficulties. That is a way of saying it may not be quite as rosy as that September projection.

Q396 David Tredinnick: I want to talk to you about the PCT deficits in respect of how they are caused. Is it by mismanagement? Is it by a failure to reconfigure? What do you say to that? Why do we get these deficits in the first place? Is it poor accounting? Do you see them miles out?

Chair: It is the threat of deficit you are talking about because, at the moment, they may be in surplus. But where is the risk of a deficit?

Suzanne Tracey: There are many factors in terms of what could be the underlying cause for those deficits. It could be, very simply, the ability for providers and indeed PCTs to generate the level of efficiency. If you are working in a hospital that has a high reliance on agency staff, for whatever reason, that might lead to a different approach in terms of efficiency. It could be as a result of different referral levels and different infrastructure in terms of social care. It could be down to different cost bases, particularly in relation to capital. There are all sorts of reasons why those underlying deficits could arise.

Q397 David Tredinnick: I would suggest to you that, with modern computer programming models and tracking systems, it is almost impossible to get into deficit without knowing you are going to get into deficit. There must be, inevitably, a degree of negligence if you get into deficit.

Andy McKeon: From our experience and research, up to a point management and mismanagement is a factor in creating a deficit. In our study in 2006 about financial failure it was clear that, in a number of cases, there was poor leadership by the board, there was often a turnover on the board or the information systems were not very good-Noel did quite a bit of research for us on this study- and all of that created a position where these organisations get into deficit. Again, poor financial information and poor information about activity, despite modern computer systems, is still a problem, and so, perhaps, is setting the budget in a way which doesn’t allow for the potential real level of activity and putting in something that is more optimistic. Failure to meet cost improvement programmes is another reason why people get into deficit. Management, undoubtedly, has a part to play in this but there are two or three other things I would say about deficit.

One is that once you have got into a deficit it is quite difficult to get out of it.

David Tredinnick: As in life.

Andy McKeon: As in life. Once you have gone over on your credit card bill you have to keep paying back the credit card company and so on. There is difficulty getting access. One of the sure things about people who have a deficit is they have had one before. Of the four organisations that are PCTs posting deficits at the moment, three of them have appeared before in the past three or four years, perhaps on a regular basis. That is true of trusts. Some people, though, are dealt a more difficult hand so there is a link with allocations. I don’t want to stress this too much but the deficits tend to cluster around outer London and in some of the shires. There is a statistically significant-meaning it is there-but weak link between allocations and deficits.

Q398 David Tredinnick: Do you have a view on whether the Private Finance Initiative has contributed to deficits through projects?

Andy McKeon: The Private Finance Initiative is clearly on the hospital rather than the PCT side. It is a bit unclear. There is some evidence that private finance might add something like two or three percentage points to overall costs. That is the difference between non-PFI and PFI hospitals. It is relatively small in the scheme of things but it may be there.

Q399 David Tredinnick: Should pathfinder projects have a role in eliminating deficits, do you think?

Andy McKeon: Yes, pathfinders will have a role in eliminating deficits or, rather, put us in the way of trying to make sure that the commissioning and clinical activity and finance are properly aligned because that is, ultimately, it seems to me, at the heart of putting GPs in charge of commissioning.

Q400 Chair: Before we leave deficits, and I want to move on to the funding formula, could I ask about inherited debt as well? You have said that four PCTs reported deficits last year. How many reported inherited debt to carry forward into the new world? What is the quantum of that? We asked Sir David Nicholson about this last week and he suggested that there were sufficient reserves within the system to discharge that debt. The reason for asking him the question was that the Secretary of State has said that the debt will be paid off before the consortia are established. That raises the question, if there is a debt within the NHS that tends to be a lend and asset somewhere else in the NHS, are trusts going to be asked to lose their reserves, effectively, that have been lent to PCTs with inherited debts as opposed to deficits? Shall we go to Mr Plumridge?

Andy McKeon: Yes. I was thinking of nominating Noel.

Noel Plumridge: To the extent that there is an accumulated debt, it would seem that there is a reasonable match between the money that is available in the system this year with a potential of being committed next year to meet some of those costs. There may well be a reasonable balance between the surplus that has been accumulated to date, the surplus that is being generated this year and those costs that are being classified as debt. What is less clear is the continuing legacy of existing commitments. The PFI has been mentioned. But Suzanne mentioned the wider issue of the cost base of individual hospitals and the sustainability of those costs year by year in a system that is trying to save money with very limited growth. The continuing effect is harder to give assurance upon.

Q401 Chair: You are saying, crudely, that existing reserves and this year’s surplus can pay off the debt as now but we must expect deficit somewhere in the system-I am not quite clear where-to accrue between now and 2013 which we don’t have resource to pay?

Noel Plumridge: I am saying that, though with some caution about the level of debt that is in the system as a result of the current reconfiguration.

Q402 Andrew George: Moving on to funding formulas, the issue here is that a lot of that discussion presupposes the allocation of resources is fair in the first place. I carry the scars of 10 years of dealing with ACRA and challenging the formula which, I would say, is not something to be taken on by the faint-hearted. Certainly, I would not recommend it to anyone. This is, in particular, in relation to the basis on which the market forces factor had been allocated and the weighting given to it. I simply want to ask Mr Plumridge, to begin with, how many people in the system, do you think, understand how the formula is arrived at, how the weighted capitation is achieved? A second question, if you like, and this may be taken up by others, is what you think are the key differences between where we are now and where we will be once the weighted capitation arrangements are put in place for the new commissioning consortia.

Noel Plumridge: How many people understand the formula?

Andrew George: Yes. Are you satisfied the people who are dealing with this system actually understand how the formula is arrived at?

Chair: The Schleswig-Holstein question.

Andrew George: Yes, it is the Schleswig-Holstein question. Do you think that the people dealing with this understand how the weighted capitation is arrived at?

Noel Plumridge: I would hope that 152 primary care trust finance directors have at least a smattering of knowledge around the theme because it is so important to the financial position and outlook of any one PCT. I imagine there are plenty more people who have taken a keen interest in the formula. There may not be quite so much awareness of the significance of the formula and how it works in practice. For instance, I hear a number of arcane discussions about whether the weighting in the formula should be biased towards age or towards deprivation and towards rurality without looking at the scale of the adjustment.

To give a feel for those numbers, City and Hackney PCT, £2,235 per head of population this year, Liverpool, £2,137-those are the organisations that would gain most out of the current formula-whereas Cambridgeshire, £1,350 and Oxfordshire, £1,362. There is quite a material spread between where the money is now and where it would be going under the formula. How quickly that will change is harder to say because, in a time of limited growth, providing extra funds to one PCT requires taking it from another. That is a much more painful exercise than the redistribution of growth money. We may stay in that position for some time. Exactly how that will work under a funding system that is based on consortia rather than simple geographic areas is quite hard to project, but others on the panel may know better than I there.

Q403 Andrew George: Professor Whitehead, are you content that this system is fair?

Professor Whitehead: I am a great believer in an equitable resource allocation formula. We need it because all health care needs are not equally spread across the population. We do, and we have since 1977 endeavoured to develop such a fair formula. I agree with you that it is very, very difficult to understand but it is absolutely imperative to have within it an age adjustment, an adjustment for need and deprivation and the market forces factor. It is absolutely imperative but the shift that we will have from resident population to the registered patient system under a consortium is enormous and very difficult to predict how it would work.

The current PCTs have responsibility for all people resident in a defined geographic area. They cannot pick and choose which people they serve. They have the lot. That is an incredible protection against cherry-picking. You don’t have that constraint with consortia. It is based on registered patients only in a very fuzzy, ill-defined area. You have GP practices coming together and choosing which of their colleagues to work with in consortia. You can have great scope for cherry-picking. You can get some practices shunned because of their patients. You can have some, perhaps, from more affluent areas encouraged to join a consortium. There is great scope for cherry-picking at that level as well as other levels. Then, when it comes to trying to devise a formula to allocate resources to consortia, you have a big problem. You haven’t got the geographic footprint that you have with the PCTs, none of the data are configured in the ways that the consortia are configured and trying to pick out measures of deprivation and other health care needs of the population will be incredibly difficult.

Q404 Andrew George: On the basis of your understanding of both registrations and unregistered patients and the problems of defining geographic boundaries, do you have any indication as to what types of areas are going to gain and what types of areas are going to lose out under this new allocation system?

Professor Whitehead: Obviously, the new allocation system has not been devised yet.

Andrew George: No.

Professor Whitehead: But it is clear that the consortia will be very different from each other. Trying to work out which are at a similar level of deprivation, for example, to give them a deprivation weighting, will be very difficult because you do not have the geographic footprint that previous commissioning authorities have had. You could get a situation where very aggressive, competitive consortia could configure themselves very favourably in terms of receiving money and using the commissioning budget in such a way that they are in a very good position to make profit, et cetera. In that respect, you could get a situation where some consortia are much better placed than others to thrive and to make profit and to improve services for their patients, whereas others are not in that situation.

Q405 Andrew George: Is it fair, then, to say that there is an incentive for consortia to configure their own boundaries in such a manner that they will pick up areas of high registration, possibly, to the middle-class communities and try to avoid drawing their boundaries where they will be picking up large populations of, for example, Travellers and Gypsies and others that may have low levels of registration? Would you say there may be incentives there for those consortia to configure themselves in that manner?

Professor Whitehead: It is not just a matter of registration. It is more the characteristics of the people in different areas and those living in deprivation. Where the prevalence of ill health increases with increasing deprivation, you then have more costs involved with treating that population. They are also likely to have multiple interacting health problems so their treatments are complex and costly. They are likely to have poor living conditions, making recovery harder and making it necessary to have more intensive services to reach them, et cetera. Those populations are more costly and less profitable if you are thinking in market terms. They are perhaps populations that, if you are trying to work in a market, you would avoid.

Chair: Both Mr McKeon and Mr Plumridge would like to contribute.

Andy McKeon: I am sorry, I do not quite agree with what Professor Whitehead said. A possible way of doing this is to use the method that PCTs are currently using in allocating resources to practice-based commissioners which is known as person-based resource allocation that is being developed by the Nuffield Trust. I had better declare I am a trustee of the Nuffield Trust and you need to take that into account. But the intention would be to take into account the characteristics and the use made of the hospital and other services by the GP practices’ registered population to match the resources to the practice and the way in which the practices have brought themselves together. Therefore, if it is the consortia that have brought together practices which, essentially, make little use of hospital resources, for example, then that would be reflected in their resource allocation. It is a slightly different thing about the area and the practices. That is an important bulwark, to make sure that the allocations are fair between practices.

The second thing, as I understand it, is that there are more people registered with GPs than ONS counts for the population of this country. The registrations are greater, as I understand it, in areas of deprivation. One of the bits of work that has been going on is to try to identify the differences between that because that would mean more money would be sucked in to those local areas.

The third point I would make is that, clearly, allocations to consortia are going to be different from those for PCTs because their responsibilities would be different. Consortia will not have responsibility for primary care, for example, and they will not have responsibility for tertiary specialist services. Those will be the responsibility of the Commissioning Board. Also, there will be an allocation of public health budget to local authorities which would currently mostly rest with PCTs. Their responsibilities-and there will be a formula for allocating that-will, presumably, be geared to health inequalities. One of my messages is that the Department are aware of the issues between person-based resource allocation and consortia and understands those very well. Also- and this is the other point-the picture is going to change because of the different responsibilities of consortia and the Commissioning Board and local authorities from what they are now.

Q406 Chair: The Government has also made it clear, hasn’t it, that the consortia, in addition to having a responsibility for their registered population, will have a population-based responsibility which, presumably, will be reflected in the resource allocation process somehow?

Andy McKeon: There will have to be allocated non-registered patients, essentially, yes, and the resources to go with that.

Chair: Yes. Mr Plumridge.

Noel Plumridge: It might be worth highlighting a further pressure in the system which we may see emerging. Professor Whitehead mentioned that the formula we have had since the 1970s has effectively been based on an estimate of health need and is, therefore, a means of redistributing funding within England. Crudely, lorries load up with money in the south-east of England. Some falls off the back as it goes round the M25 but a lot more makes its way up the M1 and the M6 and is redistributed to the northern cities. How you then measure age or deprivation is another matter, but the people in control of funding in the south-east have been saying, for some time, that this is not their version of fair and perhaps those who pay the greater share of taxes ought to get a better health system than those who do not. That is a pressure that we have seen recently from the leaders of the south-eastern shire counties. We would, you might say. But the pressure has not gone away. It is also one that is visible in some other European countries as the economy has come under pressure, for instance in Belgium and in Italy. That may rear its head as time goes by.

Q407 Andrew George: Last year’s allocation showed that most of those PCTs who were above target were, indeed, within the M25 and those who were at the maximum 6.4% below target were largely in Cornwall and the north, and I say this on pain. In terms of, in future, being able to both assess what is going on and then also challenge, which seems to be something that has never happened, the amount of money that you are being allocated, will there be anything in the system that you can see that would allow the consortia to, if you like, engage in any discussion or will they simply accept what they receive and there is no conversation whatsoever?

Chair: It is unlikely, in the world that I would recognise, that there would be no discussion, I suspect.

Andy McKeon: Yes, I think there will be a discussion. Eventually, money will be allocated and there will be a decision about that but I assume-and it is only an assumption-that functions like ACRA will continue within the Commissioning Board and consortia as PCTs and health authorities before them were able to make their pitches about why it was fair or unfair in their particular circumstances or in general.

Q408 Chris Skidmore: I am aware from the Command Paper that the NHS Commission Boards are going to have the power to adjust the allocation given to consortia, perhaps even annually, reflecting overspend or underspend. Is that not just going to compound an historic problem we have in the NHS that you reward those people who often overspend and penalise those who underspend?

Andy McKeon: It obviously depends how it is operated but the principles would be, yes, you might have to tide somebody over in the short term because they are overspending in order to meet the needs of their population but they would then have to pay that money back in future years. That is one of the reasons, as I said earlier, that, once into a deficit, it can be very difficult to get out of it.

Q409 Chris Skidmore: Yes, but then we get into a situation where one consortia may take over the consortia that is performing badly and it would drive, in itself, expansion.

Andy McKeon: It may do and the GPs may decide to join a different consortia because the one they have currently joined, maybe, is not very good.

Q410 Yvonne Fovargue: I would like to go back to the cherry-picking and almost move a stage further from that. The fund-holding GPs were suspected of bouncing patients from their list and keeping the patients who needed the least on the list for financial reasons. Do you think that this could happen under this system as well? Will it create practices that have a high level of expensive patients and those that have ones that need minimum care?

Professor Whitehead: Yes. It is theoretically possible that practices could pick and choose patients. Whether it would happen in practice is another matter. Certainly, as I said, at the formation of the consortia level it is a real possibility. It is feasible that you could cherry-pick the practices that you have in your consortia and consortia are unstable. As has just been mentioned, they might reconfigure after one or two years and keep on reconfiguring.

Q411 Yvonne Fovargue: I would go further. It is practices choosing the areas trying to remove patients from their list who are the most expensive and refusing people who they consider may be more expensive when they apply to join. As to those particular practices, do you think that is a danger?

Professor Whitehead: It is certainly a possibility. I wouldn’t like to say whether it happens or the extent to which it would happen. I would not like to hazard a guess.

Andy McKeon: I think it is much less of a danger because the allocation is to the consortia and not to the individual practice. Therefore, I am not clear what the advantage would be to a practice in the future arrangements to cherry-pick patients. The allocation, as I say, goes to the consortia and not to the practice. The other issue is, looking at the resource use by practices, which will take place, I have absolutely no doubt that GPs in the practices will be looking carefully at the resource use by their colleagues and the sort of patients they have and so on. I think the danger is exaggerated that you are suggesting.

Q412 Chair: Am I right in thinking the consortium will have the power to allocate patients who can’t find practices to individual practices? If it is not consortia, presumably somebody in the system has that power.

Andy McKeon: I understand, as the commissioner of primary care, it ought to be the Commissioning Board that has the power to allocate patients to individual practices if that individual cannot find one.

Q413 Chair: So it will rest with the National Commissioning Board?

Andy McKeon: One of the things about this is that the National Commissioning Board will be commissioning very local services and if you cannot find a practice you will have to apply to the Commissioning Board or one of its local arms to get one.

Noel Plumridge: There is an assumption, I think, that acceptance on to a GP practice’s list is absolute and one either is on the list or not. I am starting to hear messages from GPs that acceptance is conditional, for instance, on compliance with management regimes for long term illness. Many GPs are motivated, I believe, less by filthy lucre than by the smooth running of the practice and improvement in patient conditions. Yes, there might be some reluctance to take on the person who has, for instance emphysema, but is unwilling to take some of the measures that might mitigate the symptoms. That is partly because of the nuisance value back to the practice, but it is also back to how the GP spends the time and what rewards, in terms of clinical improvement, are visible from it.

Q414 Dr Wollaston: I am wondering how confident the panel is that the person-based resource allocation formula will be ready to be used in shadow form in 2012-13 and then for going live in 2013-14 and what kind of shifts we are likely to see, what sort of scale of shifts in funding when it comes in?

Professor Whitehead: There is still a lot of work to do on the person-based resource allocation before it is ready to go live and to be used in that way. Maybe it won’t be ready in time, is the short answer.

Q415 Dr Wollaston: There is a huge amount of uncertainty, do you feel?

Professor Whitehead: Yes.

Q416 Chris Skidmore: It has got to be ready by June 2011. Is that right?

Dr Wollaston: 2012-13.

Chris Skidmore: Simon Burns told us at Westminster Hall that ACRA are going to report back in June 2011.

Professor Whitehead: Yes, but not on the person-based one. I thought you mentioned the person-based one.

Dr Wollaston: We have here, in our brief, that it should be ready to use in shadow form in 2012-13.

Professor Whitehead: Yes.

Q417 Dr Wollaston: But you are not sure that will be ready?

Professor Whitehead: Certainly ACRA will report.

Q418 Chris Skidmore: Your recommendations in June will encompass a wide range of suggestions.

Professor Whitehead: Yes. The June one will report on wider briefs.

Q419 Chair: There is uncertainty about whether it is ready in 2012-13. Has there been any discussion between ACRA and the Department yet over the scale of testing this formula in practice, looking at what the impact is going to be before it goes live? There is potentially a very significant resource shift between different practices and different consortia implied by this formula and seeing how it would work in practice is going to be key to success, isn’t it?

Professor Whitehead: Yes, it is going to be key to success. I can’t answer that because it is part of the work of ACRA at the moment. I can’t speak on behalf of ACRA.

Chair: I understand you can’t speak on behalf of ACRA. I wondered if you were aware of any discussion about the principle of testing or if any member of the panel was aware.

Professor Whitehead: Obviously, it is very important to test but I am also aware of all the difficulties. That is why I am saying it would be optimistic to think that things could be ready in time.

Suzanne Tracey: The point I was going to make is not only is it going to be important to be able to assess and test the impact of the changes to the resource allocation, but also to be very clear about the pace of change that will apply to that because we need to make sure we are doing that in a way that is not going to destabilise current health economies more than is absolutely necessary. That needs to be assessed alongside the allocation formula itself.

Q420 Nadine Dorries: Do you think that all the consortia will be ready and able, by 2013, to take full control of commissioning budgets?

Andy McKeon: That is uncertain, isn’t it? It would seem as if the Department is preparing an authorisation process, rather cynically, that perhaps implies that not everybody will get through it. It would be surprising if there was 100% coverage of all consortia by April 2013. But it is uncertain how many will be authorised.

Q421 Nadine Dorries: Is that uncertainty shared by anybody else on the panel?

Suzanne Tracey: I would share that in terms of there is going to be different understanding and involvement to date under practice-based commissioning and the shift into the shadow arrangements for consortia. Some will be very actively involved and engaged and, therefore, would be far more ahead in terms of their ability to take responsibility on. Others may need some further support in terms of getting there.

Q422 Nadine Dorries: What kind of support do you think will be available, because it will be a brave new world for the consortia, in terms of balancing their books and ensuring that they don’t go into deficit, particularly in their first few years when this is all new? What kind of support is going to be there for those consortia?

Suzanne Tracey: First and foremost, one of the only two statutory requirements is for a chief financial officer. One would hope that the role of that individual was to help support. I could give you a plug for HFMA here in terms of the work that we have been doing to prepare our GP colleagues as to what to expect and training and education facilities that we are making available to ensure that GP consortia are ready to take on that role. The whole point about the assessment process as well, one would hope, is that that identifies what is required. Part of the arrangements put in place is a development fund for GP consortia to take time out and invest in the training and education required to get them to the point of competency.

Andy McKeon: If I can pick that up, it is the question of what tests are going to be applied for authorisation and, therefore, what support would be available or is necessary. If I am thinking about this and looking at past failures I would say, first of all, the degree of clinical engagement that there is within the consortia is the critical point. The quality of their financial planning, which is going to be rather difficult because some will not have a track record but there will be a way of looking at whether their plan is a sensible one, what it takes into account and so on. The degree of financial awareness across the consortia, which perhaps goes with clinical engagement, would be another critical test, and the supply of information and their ability to monitor that and to act on it. I am sure there are other clinical things but those seem to me some of the critical financial tests that should be applied, perhaps drawing on world class commissioning, and then the support should be tailored to fit the needs that are then identified.

Q423 Nadine Dorries: In the first year, of course, it is very dependent on the funding formula and how accurate that was and how definitive that was in terms of anticipating the future commissioning requirements of the consortia. I suppose in the first year it is going to be even more difficult for the individual GPs who are commissioning, with this new funding formula and this new world ahead of them, to get the balance right. With the ability of the NHS Commissioning Board to step in if they get it wrong, I wondered if you felt there should be something in place, particularly within the first year or the first two years, which is additional to what is there at the moment to help those GPs who may struggle with the new funding formula and the new commissioning, particularly those who are not in a pathfinder and particularly the ones who will come forward in 2013.

Professor Whitehead: Could I say that I think more support is needed not just in financial terms? Speaking out for public health, I think that the consortia will require considerable public health support in needs assessment, in service planning, in performance management, et cetera, and it is not clear where they will get that support. Certainly the NHS Commissioning Board should make adequate provision for that support because they will be floundering if they do not have it.

Chair: Bearing in mind that the average budget of one of these commissioning boards is going to be something between £0.25 billion and £0.5 billion a year.

Professor Whitehead: Yes.

Andy McKeon: I am probably more confident in that funding and GP capacity to understand that because it seems to me that one of the essential points is to start off with what use is being made of services by a GP practice. There is quite a lot of information on that available and that is what is being used in allocations to practice-based commissioners and so on. The question is about how you insure against risk, in a way, and what would be the best way of doing that. The proven method of doing that in the NHS would be to have some sort of top-slicing in order to create a risk pool across consortia. One of the issues is if all bits of the commissioning side of the NHS decide to keep back an amount to insure against their own risks that would place the hospital side in difficulty. Making a judgment on what would be a prudent risk pool would be an important point for the commissioning board at the start, as well as assessing the capacity of consortia to manage to the money that they are going to get.

Suzanne Tracey: To come back on a point I should have said, on the fact that GP consortia are not starting totally from scratch, this is about how we get clinical leadership married with good financial management and good financial planning. Of course, those skills exist already in the PCTs and one of the key points is how we make sure that that experience and skill does not get lost in the transition. The cluster arrangements being put in place are a good way of looking to not lose that from the Service. We need to build on that as well.

Noel Plumridge: Could I highlight two potential risk areas? Assuming that GP consortia achieve a level of capability and competence that we have become used to with PCTs, I suspect that there is a risk about the governance regime and the effective freedom to act that the new organisations will have. We have already seen the enthusiasm with which GPs are approaching their task. However, they will be working within a governance framework that will be unfamiliar and will need to be tested. There may be some ripples in 2012-13 as that emerges.

A second risk point, I suspect, is the context. By April 2013 we will have been through a further two years of an NHS with cost pressures but negligible growth funding. That suggests that the financial challenge and the need for action may be rather greater than they would have faced were they sailing on a smooth sea.

Q424 Valerie Vaz: I am conscious of the time, so it is just a quick question, but it may not be a quick answer. We have this patient choice and Any Willing Provider. I wondered if I could have your view on what sort of effect that will have on the health economy.

Suzanne Tracey: The answer is it could have quite a profound effect depending on how far that whole agenda is taken. From my personal perspective, the important thing for my own hospital-and this is what is happening locally-is to engage very early with the GP commissioners in terms of the sorts of decisions that they are looking to make, and to encourage this not to be a short-term agenda but to plan for the long term. By understanding what the long-term aims are, we can plan to work in tandem in how they are implemented and delivered. Whether that will be the same across the country remains to be seen.

Noel Plumridge: If our main choice is being regarded as patient choice, with the support of a GP, of a hospital for a procedure, I think there is a wider dimension of choice. One that intrigues me is how I, as a consumer, would choose the GP practice and its consortia membership that might meet my personal needs which is, I fear, classed as cherry-picking or health tourism that would seem to be an equal dimension of handing choice over to the end user.

Andy McKeon: First of all, I think this is a long term agenda. I would not expect to see much change in the first two or three years, at least, through patient choice. It does not seem to have had that much effect on patient referral or patient flows so far so I would be surprised if there was some significant change in 2013. As to Any Willing Provider, there are two sorts of willing providers: one who will enter the market and take their chance on patients choosing them and operating under the tariff, and there seem to be quite significant barriers to entry that the previous panel talked about in terms of gearing up to be a competing hospital or section of a hospital, and then there is where tenders are let for a provider to do some form of community services. Clearly, the consortia will be in the driving seat for doing that because they will be letting the tenders. It is very easy to exaggerate the degree of change that we will see in 2013 or in the first three to four years of this system because, in other reforms, it has certainly been the case that the fears or hopes of great change in the short term have not been realised.

Professor Whitehead: There is speculation on how much cultural change there will be because we have had a culture in this country of sticking with GPs. People do not move about. They stick for years and years with the same GP. So I can’t imagine a great shuffling about in that respect. As the GP representative in the previous session said, when patients are asked about choice often they want a good quality local facility near their home. Rather than being able to travel, theoretically, all over the country what they want is a good service of good quality nearby. I cannot see great change in that respect.

Q425 Rosie Cooper: Can I ask how far it would be down to individual GPs to undertake rationing of demand management in clinical prescribing and referring decisions? Coming right down to it, is this going to affect the patient-GP relationship?

Professor Whitehead: The individual consortiums will have to devise methods of monitoring their individual practices and, in some way, managing them. In that respect, it will come down to individual decisions by GPs and there will be a delicate relationship between the individual GP and the management of the consortium. I am sure there will be quite a lot of conflict in some places in that.

Q426 Chair: Is that significantly different, though, from the current structure? That is the reality in the tax-funded health care system, isn’t it?

Professor Whitehead: Yes, it is. It will not be any more relaxed. It may, in fact, be a tighter control by each consortium of its members.

Rosie Cooper: The GP won’t be able to displace the blame to the PCT, maybe.

Chair: That is a difference.

Andy McKeon: There is a slightly more positive side to this, that if this system is to work then the consortia will have to influence the clinical practice of their GP constituents and, hopefully, improve it. You talk about rationing and demand management but one of the questions that we will undoubtedly ask is, "There are so many patients from your practice who are attending the A&E department. Is there anything that we can do to give them an alternative?" and so on in order to improve the practice. Although you could speak very negatively about demand management and rationing, it could be rather positive in terms of improving clinical practice and getting your GPs-all GPs-up to the standard of the best.

Q427 Rosie Cooper: Anybody else?

Suzanne Tracey: I think it will be limited in terms of the amount of impact that will have on an individual consultation with a patient. I can’t believe that at the point at which there is a patient in front of the GP, if they are in any doubt about the care of that patient they will not refer the patient appropriately. Where you will start to see the impact is where you start to use the data to look at differences and variation across peers and how other people are performing and then that starts to influence behaviour. That is certainly what we are seeing in the acute sector when we start to get into information about individual consultants and what they are spending on individual treatments. That, itself, is a very powerful mechanism for change and probably more so than that you allude to.

Noel Plumridge: We may see more differentiation within a GP practice between partners who are ultimately setting and looking at the enforcement of protocols under which non-partner GPs will be working. That may form a source of tension. It has done in other countries where insurance companies set the protocols. I think we are moving towards that sort of system, not in terms of funding but in terms of the style of performance management within primary care.

Q428 Rosie Cooper: In terms of funding, will consortia hold on to the surpluses? Does anybody know?

Andy McKeon: It is not clear exactly how the funding will be arranged but in any system if people are making surpluses from good practice, part of the incentive is to let them carry it forward. If not, then there is no incentive.

Q429 Rosie Cooper: And GPs holding on to any profit element in their practices, any build-up-some of those decisions back to the choices that the patients are seeing-will there be an increased tension?

Andy McKeon: We were talking then about what the consortia were doing and how the consortia will spend its commissioning money and what it will do with any surpluses it makes, not about individual profits of GPs in individual practices.

Q430 Rosie Cooper: But the perception will be, if consortia hold on to their profits, what happens to them if they invest in buildings or whatever else it is-there is a general increase in asset there-and where does that feed back into practices? Then patients will see that they may or may not be allowed a treatment. Whether it is absolutely right in technical detail, there will be this fear that will be out there, "The treatment I am getting is being influenced by all these external financial things going on." Would you agree with that?

Chair: It is not entirely clear why patients should react differently with a consortium in that position from the way they do when a PCT is in that position.

Rosie Cooper: That is the point I was saying before about the doctor laying the blame off to the PCT, "We can’t do this because". Now, in the new world, if the patient believes the GP has the power to make all those decisions, then all those other things do come in to play and they can’t offload the blame.

Chair: It has now become a debate within the Committee. Are there any other quick questions to the witnesses?

Q431 Valerie Vaz: I wanted to ask about the Department of Health impact analysis, that if you take the directors of public health out of the PCTs then commissioning is not cost-effective. Do you agree with that statement or not?

Professor Whitehead: As I said before, there is an essential element of public health expertise required in the commissioning of services, whether it is from directors of public health or whatever. You must have some of that input else it will be inefficient and ineffective. But I don’t see that the directors of public health in their role in local authorities will have the resources to support all the different consortia in their patch. Something extra is needed.

Q432 Chair: Does anybody else want to contribute?

Andy McKeon: Only that public health advice will be important to consortia. It clearly doesn’t have to be an officer within the consortia. It could be obtained from elsewhere. It is not only epidemiological advice on traditional public health. Public health doctors traditionally included in their decisions effectiveness of treatment, for example. There is no doubt that that sort of advice will be required.

Chair: It has been very helpful. Thank you very much indeed.