To be published as HC 651 -i

House of COMMONS



Health Committee


Tuesday 23 October 2012


Evidence heard in Public Questions 1-74



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Oral Evidence

Taken before the Health Committee

on Tuesday 23 October 2012

Members present:

Mr Stephen Dorrell (Chair)

Rosie Cooper

Andrew George

Barbara Keeley

Grahame M. Morris

Mr Virendra Sharma

Chris Skidmore

David Tredinnick

Valerie Vaz

Dr Sarah Wollaston


Examination of Witnesses

Witnesses: Mike Farrar, Chief Executive, Jo Webber, Deputy Policy Director, NHS Confederation, Councillor David Rogers OBE, Chair, Community Wellbeing Board, Andrew Cozens, Associate, Local Government Association, and John Jackson, Chair, Resources Committee, Association of Directors of Adult Social Services, gave evidence.

Q1 Chair: Good morning, ladies and gentlemen. Thank you for coming relatively early, at our new time. You will be aware, I think, that the House is taking Health Questions at 11.30 this morning, so we have a very brisk timetable to cover a huge range of issues. We are going to try and move it reasonably quickly starting with health, moving on to social services and obviously, the integration of the two being a key issue, we shall want to discuss that as we go through. Could I ask you briefly to introduce yourselves to the Committee?

Jo Webber: My name is Jo Webber. I am director of the Ambulance Service Network and head of policy at the NHS Confederation.

Mike Farrar: I am Mike Farrar, the Chief Executive of the NHS Confederation.

Councillor Rogers: I am David Rogers. I chair the Community Wellbeing Board of the Local Government Association

Andrew Cozens: I am Andrew Cozens. I am an associate adviser to the Local Government Association.

John Jackson: I am John Jackson. I chair the resources network for ADASS, the Association of Directors of Adult Social Services. I am also the director of Adult Social Services at Oxfordshire County Council.

Q2 Chair: Thank you very much. I would like to begin by jumping straight into the theme that you will know the Committee has focused on throughout its work during this Parliament, which is what we call the Nicholson challenge in the NHS: 4% efficiency gain, four years running, £20 billion, whichever way you would like to define it.

The Department of Health reports that £5.8 billion of efficiency gains were made in 201112 while key quality and access standards have been maintained or improved by the NHS. In other words, from the Department’s perspective, we are on course to deliver the Nicholson challenge, as we refer to it. What is very unclear from the evidence we have received from the Department is: first of all, how sustainable the original £5.8 billion is going to prove to be; secondly, whether that pace of advance is sustainable; and, thirdly, and perhaps most importantly, how that £5.8 billion is made up. We have been given a table that splits it down between the acute and the primary sectors, but that gives us very little handle on what has actually happened in the service to allow the Department to score £5.8 billion of efficiency gains. Who would like to have a go at that one?

Mike Farrar: I want to start by saying that the NHS is working remarkably hard to try to do this and therefore the extent to which £5 billion, or around that mark, of savings have been made is a tribute to people at a time when they have been through significant reorganisational uncertainty. I also want to unpack it a bit in the sense of what we have found when we have, by a variety of means, talked to our members about what they are doing in the short term. By "our members", I am talking about the chief executives and chairs of NHS organisations.

Largely, as to the early savings-I think the degree to which that figure is accurate depends on how you count and there is a whole variety of issues in play about the figure-we are seeing some greater efficiencies, but I think we have benefited enormously from the pay restraint in terms of the pay freeze. That has a significant impact on the NHS. For every 1% increase in the pay bill that we might have anticipated that did not happen, there is effectively a £500 million saving, broadly. Therefore, a pay freeze that has lasted over two years has had a cumulative benefit in terms of restraining our pay costs.

Also, we have made what I describe as quite a lot of level 1 savings. Level 1 savings are those that you can make within an individual organisation that have no impact on others around you. Internal efficiencies, thinking about using lean methodology to try to take out waste in the system, and land sales would be good examples of things that have happened to try to support individual organisations.

Where we have yet to exploit-and you can look at this in two ways, that we have not done enough quickly enough to create the platform for more sustainable services or that the good news is still to be delivered-is effectively in changing the model of services such that we have a relatively cheaper but higher-quality service. They are the kind of situations where we reorganise pathways of care and get earlier care. Early diagnosis of cancer, for example, would have an impact on costs of latestage cancer care, treatment and drugs. We have yet to create a platform where we have been able, in a sustainable way, to take out the capacity of acute services.

That, ultimately, I think, is where a big chunk of the £20 billion is to be found because we would effectively be able to operate with a much smaller acute base. It is not that we would be able to get rid of it entirely but that we would need a smaller acute base for acutely ill patients. That set of changes has yet to take place. In fact, the trends around activity in hospitals are rather up and down at the moment. Waiting time reductions were published yesterday around elective work, but there has been growth in nonelective admissions, particularly for frail elderly with multiple conditions and people who, had we got our system working properly, would not otherwise be in hospital.

In essence, what we have done is good but it tends to be short term, to rely heavily on the national pay settlement and on shortterm local actions by local organisations. It is not the sustainable reform of a healthcare system-indeed a health and social care system-that we think is the key to achieving the £20 billion savings over the period of time that we are talking about.

Q3 Chair: Can I ask two supplementary questions and then I know that virtually every member of the Committee will want to come in on this? First of all, how much of the £5.8 billion do you put down to pay restraint?

Mike Farrar: This very much depends on the model that you use to predict what our level of expenditure would have been at the point that you started drawing up the Nicholson challenge. The Nicholson challenge gap is, effectively, if we had continued to spend on our trend line, with that line going up, that would have assumed that the increase in the pay bill would have gone up roughly in line with the last few years. If we effectively avoided any headline pay costs for two years, it is true to say-and we have made the point in our evidence-that, although headline pay was frozen, incrementally in the system there is still a 2.4% increase in staff pay because of the way Agenda for Change operates. So it is the net benefit of what we might have assumed minus the 2.4% that we did increase the pay bill by that effectively has given us some benefit. I suspect that is around 2.5%. It is difficult to be precise and I would like to be really precise. I suspect around 2.5%-

Q4 Chair: Somebody must have been precise somewhere to have totted these numbers up to £5.8 billion.

Mike Farrar: As to the Department’s calculation, it would need to be able to describe what assumptions it made on pay. If, for example, it had made a 5% assumption in pay bill year on year, then effectively 2.4% gives you the 2.6% benefit, which is roughly around £1.3 billion, and, of course, it would have a cumulative impact because, having frozen that for one year, you are then starting next year with a lower level of pay. Therefore, that probably represents about 50% of a £5 billion savings achievement. Something of that order, I would think, would be a realistic assumption of how much benefit we got from it.

Q5 Chair: Thank you. My second supplementary is that in referring to your level 1 preserviceredesign savings, you said not all of them were sustainable and you mentioned "land sales", which, almost by definition, is a oneoff. That is not a saving, is it?

Mike Farrar: No, but it will effectively have enabled the balances of the NHS to look slightly healthier in those years.

Q6 Chair: But the £5.8 billion includes the benefit inyear of land sales, does it?

Mike Farrar: I am not as certain about the £5.8 billion and how the Department of Health calculated that, I have to say. We know, when we surveyed them, that something like 33% of our members referred to asset reduction, or rationalisation of services, as something that had led them to be on track this year with their efficiency saving and cost improvement plans. But it will be highly variable in the sense of what goes into individual cost improvement plans and indeed the level at which they set them for any individual trust. Some of them will still effectively have been achieving their balance by income growth. Others will have had to make far more than the 4% or 5%, which is the average, and will be making 7% or 8%. It will be very variable across the country. The point I am trying to make is that there are some oneoff elements that you can do in a trust or a provider that give you some benefit for a year, but they are not continuous and are not reforming your system on an ongoing basis to be cheaper and higher quality and therefore sustainable.

Q7 Chair: Do you have a sense of how much of the roughly £5.8 billion, in the Department’s view, is that sort of literally oneoff cash realisation? Observing your distinction between efficiency within the current operation and redesigning the operation, some of this, presumably is efficiency, within the existing operation.

Jo Webber: When we asked members what they had done, the three main things were the estates and the assets base, which Mike has talked about, reducing management and admin costs-you cannot keep doing that because you have to have a level of management that supports things-and the third was about changing in clinical staffing and skillmix ratios. Again, you get to a point where you can do that no more because you have got down to a different level and you need to stay there.

Mike Farrar: When I look at the categories by which the Department accounts for progress, clearly they are very broad. They talk about community services, continuing healthcare and prescribing, for example, where there are costs to be met, a big chunk of the £5.8 billion. The £700 million on prescribing will have been part of what was done at a national deal, so effectively there will have been some of that done by better prescribing-generic prescribing-but mostly the action there is at national level. So it is quite difficult to differentiate what the specific actions were underneath this. You would have to go at least one level down to try to understand.

Q8 Chair: That is what I am trying to do.

Mike Farrar: Realistically, as to how much of what we have done so far is about the kind of sustainable service change, I suspect you are only talking of around 20% maximum of the savings we made in the short term. That would be my broad assumption of where we are in terms of the radical redesign of services on a sustainable basis. That might be unkind, but it is probably a realistic figure. As I say, the opportunity, however, is still there for us to realise.

Q9 Grahame M. Morris: I have a number of questions. Going back to your opening statement, Mike, about how well the service has coped, and particularly NHS trusts, given the pressures of change and so on, I note in your evidence that the Confederation says that 10 NHS trusts, 21 NHS foundation trusts and three PCTs are reporting a combined deficit of £356 million. There seem to be wide variations even within London among PCTs. Some have high underspends and some have huge overspends. I wonder how you reconcile that.

Mike Farrar: What you get in headline terms is an aggregate position, but within that it masks a huge variety of experience. The variation is between the commissioning side, which generally is quite strong, and the operating framework.

The commissioning side finances are generally strong for two reasons. One is that, three or four years ago, the primary care trusts were, in the operating framework, required to save 2% of their resources and spend that on a nonrecurring basis. Therefore, that has given flexibility in the commissioning side. The operating framework for a number of years now has been slightly in favour of commissioning at the expense of providers. A very tangible example of that is the fact that, four years ago, any nonelective activity over and above any contract value would have been paid at full price. But one of the operating frameworks made it absolutely clear that over and above-I think it was-2009 levels, that would only be paid at 30%. Therefore, although the activity went up, the trusts were not getting the income. Some trusts have the ability to withstand that because they might have been getting compensatory income from other places, largely elective work and keeping waiting times down.

In the main, trusts tend to make money against tariff on elective work and they tend to lose money. Therefore, what you find is a number of hospitals that were highly dependent on general medicine, for example-the typical small DGHs are-getting forced into a bigger deficit position. In some ways, the policy was designed to do that. That has been one of the senses in which that was going to drive reconfiguration of services. I have to say I do not think it succeeds because what happens is that those organisations tend to carry on trying to provide the service and in some cases-and we have had some highprofile failures-that has led to some real concerns about quality-

Q10 Grahame M. Morris: Mike, I am sorry to interrupt you, but we have very limited time and have to cover a lot of ground. There are a few questions I want to ask in this section, so if you could give us a bit of a shorter answer, it would be appreciated.

Mike Farrar: I apologise.

Q11 Grahame M. Morris: I am sorry if that came over as offensive; it wasn’t meant to. In terms of the criticism of PFIs, and I have been a strong critic myself, I was very interested in the Confederation’s arguments about what the real problems are, because the Government have not come up with any alternative to PFI. We are lobbying for a hospital for my area and the Government are saying, "Go down the PFI route." You mentioned the argument about tariffs and restrictions on activity being more significant factors. Is there anything you could say about the impact of PFI on the ability to meet these efficiency challenges that we are facing?

Mike Farrar: Let me keep this brief. PFI is a pressure on the system. No doubt, if we have built hospitals, as we have over the last 20 years, we are still going to pay for those for the next 20. Secondly, in some cases, the headline assumptions were that revenues would flow in order to sustain the capital case, which now look improbable, if I can put it like that, because of the change in the economic situation. So where you have a PFI, it is going to be harder to pay. Also the activity assumptions assume that those hospitals would be the right place for that care, and increasingly we are, in our sustainable way, trying to find alternative ways. So PFI represents a problem.

One thing I must say is that I think there are some decisions to take, the decisions being, if we have a PFI hospital, whether we now say we have to sweat that asset because we are going to pay for it even if it is not in the ideal location, and say to hospitals that might be in the ideal location but are yet to have new premises, "I’m sorry, we cannot afford to build here because we have somewhere seven miles down the road that we are already paying for." We are calling for a public debate about this because it seems to us that there is a real challenge for the NHS about rebuilding a hospital and using the assets that we have now secured. It is not just acute buildings. Buildings in primary care are also the same.

Q12 Grahame M. Morris: Finally, Chairman, if you will indulge me, is the Department of Health, in your opinion, learning lessons from this? I am concerned about what is happening with radiotherapy services, not least because I suspect some of the capital allocations that should have been used to replace existing systems have been used to balance the baseline. I have FOI requests where SHA clusters and PCTs cannot tell me where the money has been spent. But my understanding is that the Department of Health is proposing to spend something like £250 million, perhaps through a PFI, for two proton beam advanced radiotherapy systems, one at the Christie and one at UCL. Does that make any sense in the present circumstances?

Mike Farrar: The capital regime needs to be looked at again. It does not square with tariff and we do have a problem for building future capacity. In terms of whether proton beam therapy is a good investment in money-

Q13 Grahame M. Morris: It does not stack up with the tariff. The tariffs would be unbelievable, wouldn’t they?

Mike Farrar: But I think it will be helpful for a number of patients who will benefit and have their lives transformed and get outcomes that they would not otherwise have. In a world where resources are tighter, if you asked me where I would be focusing investment in cancer services, it would be on better diagnosis in primary care in order to treat people earlier. I would hope that any business case for new therapies like proton beam therapy have been properly looked at by the system and that they can be justified in terms of improving on the way we currently treat that group of patients, but, as I say, strategically, for cancer services, early diagnosis probably is the best way to invest our money.

Q14 David Tredinnick: In your presentation, Mr Farrar, you touched on the need to rationalise acute medical services. Do you have any time frame in mind and could you tell the Committee what percentage of the existing services you see being removed to meet the financial objectives?

Mike Farrar: Almost every threshold assessment survey that is done-and there are tools to do them, such as one called InterQual, which is a very reliable one-to assess whether or not people are in hospital services who would have needed hospital services reveals that there are somewhere between 30% and 40% of patients who, had we had alternatives in place, could have been treated elsewhere. It is difficult to say in which areas because of what services are rationalised. Because hospitals are complex businesses of separate entities, the point at which a hospital becomes questionable, if you start taking 40% of its capacity out, is very variable, depending on what range of other services it provides. But undoubtedly it is a safe bet that we do not need at least 30% of our acute capacity and we would have, in my view, to be intelligent in the way that we then distributed the services we do need to make sure we have the best opportunity for patients to get care. The good news is that it could probably be done without reducing quality. The downside is that the alternatives have to be available. People cannot be expected to support capacity being taken out if they cannot see where the improved services are. Therefore, community, primary and social care strengthening are absolutely critical to being able to reconfigure hospitals.

Q15 David Tredinnick: You are saying that the Government, to achieve their health strategy, will have to remove 30% of the acute services available in the country at the moment. Is that right?

Mike Farrar: I am saying that if the NHS is successful in creating a better system of care that is within the resource that we are likely to have available, we would be reliant on 30% less of our current hospital capacity. We would need to release the fixed costs of that. This is critical, because you cannot just have them empty. You effectively increase costs if you leave them empty. We would have to release the fixed costs of that and move the variable costs of staff to support the new services in the community.

Q16 David Tredinnick: My last question is: over what period of time would you expect that to be taking place?

Mike Farrar: To be frank, there are things that should and may well have been done had we not been in a big reform process for the last couple of years. So I think we are already into a period where we should have been doing this.

Q17 David Tredinnick: How many years?

Mike Farrar: To a certain extent it is continual, but I think you are talking about a major reform of health services over the next three to five years.

Q18 Chris Skidmore: Mike, in your evidence at 3.2 you refer to the survey that was conducted last year in April and May. It mentioned that 85% of NHS chairs expected financial pressures to get worse in the next year and in particular that 63% expected that it would worsen patient experience. What do you mean by "patient experience"? Could you give some colour to what the financial pressures will mean for patients next year, if you have any idea?

Mike Farrar: It is quite tricky when this is a headline response. When we talked to people, they were worried about waiting list increases and in particular about the nonelective, the waiting times around people to get out of care as well as people getting into care. There is an element of-and I used to work with the criminal justice system-wherever you put the policeman the crime rate goes down but then you lose it somewhere else. So at one level it is: where would you expect to see services cut? I worry about children’s services, mental health services and about the frail elderly. I am probably less worried that we will see reductions in service experience in headline waiting times because that is such a highprofile issue, particularly for elective care, but I think we will see a weakening of the NHS experience.

Everybody is trying incredibly hard to overcome this. There are mitigating factors. We can communicate better with patients to give them a better experience and we can do better to make sure that people are pursuing the best clinical practice, which we are trying to do. These might offset some of these worries, but inevitably there will be areas of service where people will worry about "Is their experience as good in a new world where we have not got these efficiencies in place versus if we have?"

Q19 Chris Skidmore: On the point about staff costs in paragraph 5.15 you say that "A national deal on future pay restraint is essential to protect services" and you talk about NHS Employers having a current dialogue with staff organisations about the changes required. But you mention its intention to try to "modify the incremental pay progression system to promote productivity and provide better value for money". Would that mean, essentially, tearing up Agenda for Change if you are going to make these efficiency savings? Is that the only option really?

Mike Farrar: I don’t think it is the only option but it is an important option that we have. It is with a very heavy heart that we are saying that we should be looking at pay restraint. The upside of pay restraint is that we will probably provide more jobs and job security. The downside, of course, is that all the time the pay restraint operates in this sector you are taking out money from potential consumers of products and services.

Q20 Chris Skidmore: It is not just the pay restriction. You were saying that pay has still risen by 2.4% as a result of Agenda for Change being in place and the banding system, so would you have to not only have the restraint but also tackle that?

Mike Farrar: What we would like to find with the staff side is a deal where effectively we were restraining pay and helping them to make sure that the local flexibilities that come with Agenda for Change have been used properly. In return, we would be trying to sustain jobs.

Q21 Andrew George: On the back of that last question-though it wasn’t my primary question-do you take a view on the actions of the southwest trusts of 20 chief executives, who presumably include members of the Confederation, to explore this issue?

Mike Farrar: I know that NHS Employers is working with them around these options. My sense is that there are three levels in which potentially you could find a deal. One is a national pay solution, which I think is preferable because it takes out some of the bureaucracy and problems that you have in getting those things managed within the system. If you have part national and some regional pay experiment, that is problematic. National pay would be preferable. But I would like the national pay deal to effectively empower both staff side and trusts at local level because Agenda for Change is applied in a local situation in every individual trust. So incremental drift is largely about local chief executives talking to staff about "Did you effectively achieve what was needed to earn incremental drift?" as opposed to "You just sat there and you have now got a higher pay award". The conditions applied to incremental drift are essentially applied at a local level. I am interested in what is happening around the regional scene, but I think that, ultimately, solutions are probably to be found in the national and local scenarios rather than at regional level, at least in the short term, but we will see where they get to.

Q22 Andrew George: Thank you for that. Although one of the Rwords, "rationalisation", has been raised, the other Rword, "rationing", has not. Only a shortliving politician would suggest that as the primary basis on which to advance a solution to the issue, but, given the position that you are in, your opening comments on this and the fact that we are clearly well beyond lowhanging fruit, is there anything that the Confederation wants to contribute? All of the evidence that you are giving, if you like, is suggesting that rationing is something which is just over the horizon, if it has not actually arrived. Would you like to comment on that?

Mike Farrar: Yes, and Jo might want to. Rationing is something we do not support because we believe that there is an important opportunity, effectively, to provide a higher quality service cheaper if we can reconfigure our services. So in some ways we see those kinds of commentators who talk about the certainty of rationing or the breakup of the NHS as we know it as being rather doom-sayers. But we believe that, unless we take the actions that we are describing, there is a stronger likelihood that Government will start to look at this issue now.

Since the debate about prescription charges, within the Health Service rationing operates, in a sense, around access to the treatment times. It is not about entitlement to free healthcare. There is a risk that we will see some lengthening and stretching of waiting times, which we would oppose and want to try and avoid. We are saying that we think it is important that there is a new settlement, a debate with the public about what they want from their Health Service in the way that in 1945 there was a debate-"In Place of Fear" was Nye Bevan’s book-about avoiding the fear of not being able to support people because of inability to afford to pay medical costs. We feel that there is a desperate need for a new dialogue with the public about the use of Health Service resources, not because we want to hasten any kind of explicit rationing in the way that decisions were taken about introducing prescribing costs but because we want to avoid that. We believe that, if the public understood the NHS and its resourcing and the politicians are able to feel the public understood that and therefore take real political leadership, there is a chance that we can reconfigure services and give them the better care. So we do not support rationing. We are clearly trying to find a way of avoiding rationing and reducing the NHS free offer.

Q23 Andrew George: Is the basis of that making the acute sector much more significantly the shortstay option, avoiding unnecessary admission and much more rapid discharge, and cost shunting that out to the social care sector?

Mike Farrar: No. This is not about cost shunting. This is about getting the right base of care. I am on record in other places as saying that I think the future of the healthcare system is a care service with a medical adjunct rather than a medical service with a care adjunct. In that environment, we need to be in a situation where colleagues to the left of us are properly resourced to supply the care elements that are needed to make that real. We are not looking to cost-shunt. We are looking to devise new models where you get a better service in the whole lifetime costs of care. You need a safe hospital service to make it work for colleagues. Any community service needs a strong hospital sector in order to work properly, but we know that the system is not working properly. That is part of our problem.

Q24 Andrew George: Finally, on the issue of transparency of allocation, in order for any of these systems to effectively work, under the present system, where money is clearly-not particularly clearly but as clearly as I think it is possible to be in the circumstances-allocated through the resource allocation formula to PCTs, that arrangement is going to be made much more complex when CCGs take over and the NHS Commissioning Board and so on, and the various networks, are set up. Are you content that the new arrangements are going to transport funding to local health communities that fairly and transparently allocate resources on a basis where people are assured that the money is going to the right places on the basis of need?

Mike Farrar: Very quickly, there are three elements. One, the new system fragments commissioning, so it is quite difficult to track which bits are going where. We have primary care commissioning and specialist care commissioning in the National Commissioning Board. We have community and hospital spend in the CCGs, and we have adult and children’s social care spend and now health improvement spend with local government. When you have distributed those, it is quite difficult to know what is happening to resource. That is one thing.

The second thing is that transparency is absolutely critical. I believe, in terms of a process of change, it is very important that there is strong public accountability. Without transparency and understanding of the basis of allocation, it is very difficult for this House to scrutinise what has happened.

The third thing is that fairness is always a difficult issue. Therefore, we fully support the fact that independent groups like ACRA, which has advised the Government on the allocation of resources against the best available need, have to be absolutely to the fore, not just for allocation of the hospital community but for primary care and indeed for allocation of resources to local government.

Q25 Andrew George: You will be pressing that issue with the Department.

Mike Farrar: Yes, we are pressing it.

Chair: We will have Sarah next, then David and then I want to move on to social care.

Q26 Dr Wollaston: Is the burden of making efficiency savings falling disproportionately on secondary care, or is this the right way we should be going, seeing more of a shift towards primary care in the NHS?

Mike Farrar: That is a very good question. Initially, my sense is, yes, secondary providers have borne the bigger burden, so I mention the distribution of risk or, if you like, pressure that was set out in the operating framework. Certainly, the secondary care suppliers in mental health as well as in acute care have borne the brunt. There are real efficiencies in primary care spend. There are efficiencies in community services spend, but the real productivity gain, rather than just pulling out more immediate efficiencies, is in the whole of that system working better. That is how I would describe it to you.

Q27 David Tredinnick: You talked about giving the public what it wants and more of the public turning to complementary and alternative medicine. There is very strong evidence now that complementary medicine can deliver cost savings to healthcare systems in areas such as prevention and treatment of chronic disease and supporting active and healthy ageing, and I am looking at a European Parliament report here. Would you agree with that, that we should look more sensitively at a fuller range of options, particularly given the health reforms?

Mike Farrar: The great opportunity of reforming the system is to empower people to be more responsible for elements of their care, not to shift the blame to them. That is what people want. When my dad lost the ability to look after my mum at home, that was the worst day of his life. He wanted to look after her, so this isn’t about trying to shift a burden. This is about trying to support people. People will make choices in all kinds of ways. When they have had personal health budgets, they have used different things. The evidence seems to be that, where people are more in control of how they spend their resources and support themselves, they get better outcomes. There is an evidence base that is supported and disputed by different parties about complementary medicine. One of the ways to get through that is effectively to say that, if we empower the patient themselves to think about what they need, they may well find their solutions in different places than we currently offer.

Q28 Rosie Cooper: There is a high risk that the £20 billion will not be delivered by 2015. What do you think the position would be if that happens? Many more organisations will be in deficit and you describe the future, and savings, as relying on what we will call transformational change. Yet it does not feel to me as if there is enough time for that to take place, especially before the 201415 time scale, to allow trusts and commissioners to get any real change there. We have not mentioned the impact of any qualified provider and the view that perhaps collaboration, not competition, is the secret to producing savings and a decent quality of service at the end of that.

Mike Farrar: There are two things there. One is that you only really have three outcomes. The first is that we maintain all our service standards but effectively organisations have gone into deficit doing so; the second is that organisation of the NHS overall is largely in balance but some of our service standards are weak, and as to whether they are always visible we will see; the third is that we have transformed our service and have delivered. Obviously, we are absolutely focused on trying to achieve the third of those, but there is a degree to which we will see some slippage on either side of that equation.

In terms of time frame, the kind of transformational change that we are talking about is, as I said, in a three to fiveyear time frame. We are struggling even as we speak. We have had the last two years largely looking inwardly at the NHS and people not making decisions because they did not know they were going to lead the organisations of the future. We are now putting that to bed. I think we have to hit the ground running. I worry about the fact that the public and political support for this does not seem still to be there. If you take some of the major reconfigurations of services, they are finding it very hard to come in within a fiveyear period. Some of them are taking seven years. That is not a great place to be in terms of my start gate, which says we are going to have to work incredibly hard to get there in the next three to five years.

Q29 Rosie Cooper: What do you think is going to happen if we do not really start-

Mike Farrar: You also mentioned collaboration and competition. Clearly the jury has been looking massively at this issue of competition and it is a matter for the political parties, which take different approaches. The one thing I believe, and our members believe, is that in order to successfully take capacity out, a degree of planning is incredibly important to do that safely. Most of the NHS experience has been that it was where we have successfully rationalised and changed the model of care; as in mental health services, it took a highly planned environment to change that, and even there it stretched a long time. The risk of a competitive route to get at the right size of providers is that providers keep risk for longer and there are potentially risks and quality issues. How quickly you get there, and with what degree of service failure as you go along, is a very questionable proposition for the public to contemplate.

Q30 Rosie Cooper: You have said that we ought to be planning it. I think Lord Coe said to the Select Committee something like, "Two years to win the Olympic bid, seven years to plan it and seven weeks to deliver it." Everything here will be based on good planning and yet there is no time, there is no clear view through. How would you deliver against that background?

Mike Farrar: We have to have the consensus and we have to work hard to get people to understand that. We have been trying to do it for the last two years. There is a lot of responsibility in this House to talk about these issues more openly and I think it is an allparty matter. If we can do that, we then need the mechanics in place, the way that the tariff works and the way that the incentives support people to change their model of provision rather than reinforce them hanging on to what they have. Competition is important. I am not saying competition is not important at all, because competition can lever behaviour change and can introduce higher quality services, but we need to be, again, honest about who bears the risk of excess supply in a world where you are trying to offer competition. That, again, needs some airing and discussion.

Through the last decade, we introduced competition in ISTCs, but largely the state bore the risk of trying to introduce new capacity and probably did not-you might argue in retrospect-get the value that it might out of that, although we did reduce waiting times. We have to be clever about this. I know that there are political divisions and it is not for us to take a political stance. What we would encourage, just like we are doing around social care settlements, is that there is a need for all parties to think about how they can solve these problems. This is a muchloved institution. It absolutely needs us to not be in a position in three years’ time where the service offer is reduced or we are all in deficit. Across the House, there needs to be a view expressed to the public about the needs of the service, and what it needs to do to change and there needs to be some real political leadership.

Q31 Rosie Cooper: If that is not there, what then happens?

Mike Farrar: I don’t even want to think about that, really. I am an optimist. I believe that there is an appetite in the service to do this. I believe that clinicians know that they can do this and keep the quality high, which is the key thing for us. This is not just about efficiency. I believe that clinicians want to do this. We have to convince the public. If we could convince the public, people in this House would feel safer in supporting some of that public view. I would worry that we would have a weaker service offer. I don’t think we will go bust because the mechanisms on financial control are tight. I would worry that if you said, "What might happen if we cannot do it?" then we would have weakened the service offer and particularly, as I say, I worry about children, mental health, learning disability, that end of it, rather than headline waiting times.

Q32 Valerie Vaz: May I take you back to something you said earlier about money going out to these different organisations in a fragmented way? Who is going to be auditing this public money, how do you get all that information together, and who is going to track this?

Mike Farrar: You have five separate strands of resources now. If you are a family with a disabled child who uses specialist services, you will need those five organisations to spend their money in an aligned way for you, so it is getting harder. They will be properly audited. I do not think there is any question of any kind of fraudulent or neglectful behaviour on the part of the finance community but it just gets harder.

One of the hopes that we have-and I do not know whether this Committee is looking at it-is that commissioning support services, which are potentially the technical support for CCGs, could themselves support local government around commissioning and purchasing social care. Some local authorities are looking at that route. Also, instead of the local area teams of the Commissioning Board, because they are owned by the Commissioning Board, these commissioning support services could do the specialist and primary care commissioning as well. Despite the separate accounting and auditing routes, they could be at least the vehicle for pulling it together into a coherent whole. So there are some opportunities in the system. That, I think, is where people are fighting now to find ways to make the reforms work.

Jo Webber: When we did some work on where children’s services are going to be commissioned in the system, we found that there are eight different places now. The only place where you can do strategic planning in the new system, basically, is at health and wellbeing board level. So there is a challenge there for health and wellbeing boards also to bring to account the National Commissioning Board for the elements that they commission, to look at the whole of the pathway for a child-because we know that it is at the transitions from one service to another where the quality gap tends to be-and also to work with other health and wellbeing boards to make sure that where you are looking at, say, the acute service and its offer, you are also taking into account what is working in other local areas. It is only by that kind of joining together, and particularly using the health and wellbeing boards’ good offices to help do that, that we are going to get that element of planning in the system at a population level that makes sense for people.

Q33 Rosie Cooper: Mike, you said it would be properly audited. I do not just mean in terms of fraud, but there are organisations which will perhaps place contracts which are not the best contracts ever. How do you get them audited in a much more holistic sense, that they are the right pathway, the right thing to do? With the health and wellbeing boards, if you don’t have district audit or the Audit Commission any more, who holistically looks at whether that service, right through, is the right thing to be delivered? Local authorities placing contracts with what are private companies do not have the capacity, the intelligence or the business knowledge to be dealing at that level. Then, here we go, they are heading into a contract, you try and get the details of it and you are told it is commercially sensitive. How many of them are we going to get?

Mike Farrar: You make an important point about who has the holistic view of how the whole system operates. It was a point throughout the Bill that was reinforced because the Secretary of State is the one who sits on top of all the different elements.

Q34 Rosie Cooper: He is going to be busy then.

Mike Farrar: The design of the new system is such that you have to go to that level to argue, "Where was the integrated element that made all of these things work in the way that you hoped they would?" We have, for example, offered to meet the Secretary of State on a regular basis to compare the bird’s eye view of what is happening with effectively, sadly, our worm’s eye view of how it is experienced. We have four outcomes frameworks already, so it is not just the spending of the money; it is the incentives and the signals sent down the line. Research and education spend is even separate to that, so this is a big challenge for the new system.

Chair: I want to come back to the whole question of integration of health and social care, but can we look first at social care as a separate entity and then at mixing the two together?

Q35 Barbara Keeley: First, on local authority social care budgets, the Department of Health estimated that the figures for 201213 are a drop of only £350 million or 2% following a £220 million or 1.5% reduction last year, in 201112. Clearly, this is different to the ADASS figures, which are more usually quoted, of cuts last year of £1 billion in social care budgets and, in 201213, of £890 million. Can you start us off by saying what is an accurate picture of those reductions in social care budgets and even perhaps comment on why there is such a discrepancy?

John Jackson: It is a question of presentation. I do not think there is a difference in terms of what is happening. If you look at the figures they quote, it is the total amount of cash spending on adult social care. Our survey identifies that there is about £400 million in demographic pressures that local authorities are adding to the budget but effectively not creating extra spending power because you have to spend that money to meet the needs you raise.

There is also a degree of inflation. Our survey identifies that prices paid to providers have gone up by 0.9 of 1% and there will be some other pressures in the system. We have not had a complete reconciliation, but it seems to me that, if you take the 350, add on 400, then add on something for inflation, you are getting very close to the figure that we have come up with of £891 million. I would also say that our £891 million represents the input from over 145 authorities. Nearly every single authority has actually said the figure that they are setting, which they will have reported in their budget spending plans.

Andrew Cozens: We would agree with that. It is a matter of presentation, in that respect. We have some things we want to say to you later about the sustainability of that level of savings over time, but you no doubt have questions for that later.

Q36 Barbara Keeley: I think that is where the questioning is going to go. There is next the question of the level of efficiency savings, whether they are efficiency savings or cutting services. The Department again indicates that the value of service reductions-which is clearly the important factor out there-in that £1 billion of saving has dropped from £226 million to £113 million in 201213. Obviously, that is an important figure too, if that was the service reduction figure. What is your interpretation of that?

John Jackson: The figures are not great in themselves. It is also the case in the first year of making any savings that it is more difficult to plan efficiency savings, I think, for the same reason that my NHS Confederation colleagues were explaining. In terms of delivering genuine efficiency, savings tend to take more time. The fact that there is a little bit of a reduction-there was a bigger figure in the first year and it fell in the second year-is probably a reflection of that.

The point I would want to stress is that, if you look at the planned savings for this year, local authorities are planning to deliver 5% efficiency savings. Our view would be-and I think it would be the LGA’s view as well-that that figure is not sustainable going forward. The Department of Health in its submission referred to what we said-and by "we" I mean ADASS and the Local Government Association-in the submissions for the last spending review. We said we believed we could deliver 3% efficiency savings and the Department of Health has supported that analysis. In fact, we are delivering 5%, but there is a very real risk about that continuing because, within that, people have been squeezing on the price that is being paid and including that as an efficiency saving. We know, from all the court cases around, that there is a big question mark as to whether that is sustainable going further. Indeed, if providers were here, they would be talking about a significant increase of saving in price paid for care homes.

Q37 Grahame M. Morris: Can I ask a supplementary there? This is sophistry, isn’t it, the choice of words, whether it is "efficiencies" or "cuts"? If we are manufacturing widgets, I can understand how we can make efficiencies from scales of production, but, when we are dealing with complex care needs for the frail elderly and for people with complex mental and physical health challenges, it is a labourintensive activity, isn’t it, so it is very difficult to conceive how that can be termed an "efficiency". If there is downward cost pressure on wages and the fees that are paid to the providers, that must sooner or later impact on the service in one way or another. Why can’t we just be straight about it in the language that we are using?

Andrew Cozens: I don’t know if David wants to comment, but our evidence suggests that in the first year, while there have been service reductions, there have also been things like increases in charges, changes to the eligibility criteria and squeezing, a continuing downward pressure on fees, which do not directly affect the number of people receiving a service. Those are not sustainable. Those are shortterm issues, and our subsequent evidence talks about getting beyond the efficiency into the bones of the service.

Q38 Grahame M. Morris: You see, our dispute with the Government, or our disagreement, a point of contention or whatever terminology you use, is whether the Government are making sufficient resources available to local government. The evidence that we see from our own areas and from you is that that is patently not the case and that the shortterm savings from downward pressures on wages and charges cannot be sustained. Is that your view?

Councillor Rogers: Can I try to respond to that? I would never say that there is no scope for further efficiency savings, however you describe them. There are all sorts of ways, and I can go into more detail if you wish as to some of them. Obviously, because the social care system is a local system, the different local authorities are in different places on that journey. We are working with a number of them to help in that respect. However, what the LGA is also doing is making the case very clearly-and, as you know, the LGA is a crossparty organisation, so we are representing all local authorities-that the current social care system is unsustainable. That is not about the need for reform per se. It is also about maintaining the current system until reform should come about. I hope that is a helpful answer to the point that you were making just now.

Andrew Cozens: Our final point is that, as we have said repeatedly, the Department of Health’s view of this does not have regard to the wider position that local government finds itself in-the requirements to make savings overall. On a number of occasions we have talked to you about that, including, most recently, the impact of children’s social care and adult social care and waste on the overall position of the funding of councils.

Chair: Can we come back to the 5% efficiency achieved?

Q39 Barbara Keeley: Yes. As to the 5% efficiency savings, you said you had more detail. It would be useful to have it. Perhaps you could talk to us about where local authorities are looking to reduce that expenditure but also about the pressures. Obviously we know about the demographic pressures, but what are the pressures that are going to start coming in from providers who have been having their costs held down? What is the scope for local authorities to charge even more for services than they have raised in their charges in the last year? What is the balance, if you like? Where are the 5% efficiency savings to come from, what is the pressure from providers in terms of needing to put up their charges and what is the reality of the situation in terms of local authority charging? Certainly, it is my view that larger numbers drop off as you lift charges if they cannot pay them.

John Jackson: I will come to charges secondly. In practice, the issue of eligibility to some extent is becoming less relevant because nearly everybody is-83% of authorities are-at critical and substantial now. The issues for somebody if they are not changing their eligibility criteria are about how much that care is costing and how much of that and what sort of care is being provided. There is scope to intervene-and it is again not dissimilar to some of the changes that were being talked about in the Health Service-in a different way, which avoids more expensive forms of care. That normally is associated with better outcomes rather than poorer outcomes. The classic case is bringing people out of residential care, younger adults, often particularly people with a learning disability, and moving them into supported living arrangements or alternatives within the community. That tends to be cheaper. It is also better and what people want. That is an option.

To come back to the earlier point about how we reduce the costs of staffing without cutting wages, there is scope to improve productivity. A practical example that we have in Oxfordshire is using assistive technology to change the number of people that might be needed for night care for people in supported living. Assistive technology means that you do not necessarily need to have somebody on site but have someone very nearby who can come within five minutes if there is a problem because they are based at another supported living arrangement close by. So there is scope for that. Indeed, assistive technology more generally is probably an area where we could see some genuine savings going forward, where you can improve productivity without damaging the quality of care that is being provided.

The question of what price we pay for care is problematical. Undoubtedly, if the providers were here they would say that we are often paying too little. In some cases, when we look at procurement arrangements, there are clearly some providers who will provide care at a lower price than others. We have to get the best value for the public money we have in terms of meeting care. We have to make sure that the right quality of care is available.

Councillor Rogers: Can I answer that too? John has been talking about assistive technology, but there are other examples, such as falls prevention, which again, if that is successful, would help people to remain in their own homes and not require more expensive forms of care, and a universal offer of information and advice to those who will subsequently need to pay for their care as well as those who will have taxpayerfunded care. That helps them make the right or better decisions at an earlier stage to reduce the likelihood that they will then fall back on the need for stateprovided care sooner than would otherwise be the case. In some cases, it might avoid that altogether. All of these things could be described as efficiency, but I accept that there are other ways of describing them as well.

Q40 Grahame M. Morris: Can I carry on very briefly? I am confused about the evidence that has been submitted, where both the LGA and ADASS are quantifying the increased pressures in relation to demographic change, particularly among adults with learning disabilities in the 18 to 64 category. You mentioned where it might be possible to make savings there in bringing them from residential care into supported accommodation in the community and yet we are anticipating quite a huge increase, according to your evidence, in demand for this service, which is going to place a considerable strain in terms of extra demand on the budget. Your estimate is that it will go up 66% between 2010 and 2013 to £11.3 billion. That is just for adults with learning difficulties. So whatever efficiencies you are able to make through reconfiguring the service will be more than offset by the additional pressures of new people accessing that service. The Government have to recognise that that is something that cannot be met from efficiencies. We have to have some sort of debate to say: are we going to properly fund this service or not?

John Jackson: Yes.

Q41 Grahame M. Morris: Then we will have to ration it if you are not prepared to do that.

John Jackson: That was David’s point about the LGA. ADASS’s view is exactly the same, which is that you cannot ignore the impact of demography on adult social care. That is why the LGA came out with its funding outlook prediction. That was not just figures plucked out of the air. It reflects the demographic changes that are happening.

Andrew Cozens: We are keen to highlight that there is a legitimate argument that pressures in relation to older people are significant, and they are, but we are trying to highlight through this that learning disabilities is currently, certainly for the next Comprehensive Spending Review, hugely significant.

If I can answer the last point about charging more for services, there is relatively little scope for that, given the overall economic circumstances. It is also the fact that, in general, councils are spending more on fewer people. Therefore, the ability to get more money from that smaller group of people is limited. These are examples of where our ability to respond in relation to efficiencies through those means is limited in subsequent years in the spending review.

Q42 Chair: Can I come back-Barbara, with your permission-to this 5%? My question around that is the same question as I was putting to Mike Farrar earlier on. What does that mean? How does that break down? Does it include, for example, putting up charges? That is not an efficiency gain-that it is boosting revenue. How is this 5% efficiency gain made up?

Andrew Cozens: There are three headline issues: reducing the number of people going into the system, which is eligibility criteria, but also-

Q43 Chair: But that is not efficiency either, with respect, is it?

Andrew Cozens: But there is also investment in preventative and alternative arrangements. There is making sure that the right people go into the system in the right place.

Q44 Chair: That sounds more like efficiency.

Andrew Cozens: There is reducing the cost of care, where we can, in terms of the model of care that we provide for people going into the system. The area that has perhaps received the greatest attention, and where there are ongoing efficiency programmes described in our evidence, is reducing the bureaucracy associated with care, the costs associated with assessment and with simply turning people away and so on. Those are the main areas.

John Jackson: If I can give you the figures, of the £891 million, £688 million is coming from what people have described themselves-and we do not have the details here today to respond, to give you details on how they are broken up-as either service redesign or efficiency. It is 5% on that. For the other 2%-because the saving is about 7%-it is £77 million to increased charges, and we would not describe that as an efficiency saving as it would be inappropriate to do so, and £113 million to be secured through service reductions.

Q45 Barbara Keeley: Perhaps we can come on to talk more about efficiencies. I think it is accepted that local government is already the most efficient part of the public sector. You are saying efficiency alone is not the answer and that councils cannot continue to make the levels of savings they have achieved to date. The question is about you calling for an urgent Government response to those funding pressures. I have to say that I recall a few months ago in this Committee the Minister of State for Care Services told us that he thought there was no funding gap at all. So I suppose we have to wish you really well with your request for a response from the Government and perhaps you can tell us what sort of response you are envisaging. Members here tried to put the pressure on around that but, in a situation where the Minister of State for Care Services says there is no gap, it is tricky.

Councillor Rogers: Let me try to answer your question. Whatever has been said thus far, we shall continue to advocate the case not only for reform of the care system, which I accept we are not talking about this morning, but also for adequate funding of the current system in the interim. That then comes back to the point that has been alluded to already, which is, if that is not to be the case, then we are pointing out to Government in our socalled "graph of doom" explanation of that situation-which has been pretty widely circulated already since it was launched earlier in the summer-and continuing to take every opportunity to make the case, that, if the current system is not adequately funded, then these will be the consequences. Social care and waste will start to squeeze out other universal services that are highly desirable in local areas, and that includes things that contribute to people’s overall sense of wellbeing, whether it is transport services or library services-whatever it might be-and there will be, by the time we get to the end of this decade, a very much reduced amount of money available for those types of service. That is the scenario that has been calculated by our financial advisers. We have set it out very clearly in a report and I believe it is gaining increased understanding. If you can help us to gain more understanding, that would be most welcome.

Q46 Barbara Keeley: I have one point of detail in what Andrew Cozens said. You made the point about reducing the cost of assessment, reducing the cost of bureaucracy. If anything, surely there is a pressure from legislation to have more assessment. There is a great emphasis, and rightly so, on carers’ rights and entitlements. But, if anything, it must be your estimate that the Government are looking for you to do more and not less. How do you square that? If the 5% savings is based on doing less of that, in actual fact the Government are really trying to push you along having information on advice portals and doing assessments even for people who are outside council eligibility criteria. That must have a cost associated with it.

Councillor Rogers: You were kind enough to recognise that local government is already the most cost-efficient part of the public sector and obviously we will continue to strive to maintain that position, but it is not enough and that is the point we keep on making. We are not going to abandon the quest for efficiency, but things are not sustainable under the current system, and you rightly pointed out that if certain aspects that have been proposed in relation to reform were to come about-and we do not yet know, of course, whether they will do-then there would be a requirement for universal assessment, because you cannot have a cap without universal assessment because you do not know where people are on that process.

Andrew Cozens: The proposals in the Bill are about a more transparent system and therefore new responsibilities in relation to that, for which some funding is promised. But transparency is very difficult unless you have a stable and predictable system, a sustainable system, but also, critically-and, listening to Mike’s evidence, it is a shared problem-a more integrated approach to these issues so that we are collectively making the best use of public resources across the system. So we welcome the Bill as a platform for a more transparent service, but it has to be stable. There is no point in transparency about what a message is.

Q47 Barbara Keeley: So you are saying, I think, that it is time for the debate, and not just the debate around funding reforms on social care, to move away from demand management on to consideration of entitlement-what local authorities should be doing on social care and what entitlements people have. Do you currently see, given the figures we have talked about, a debate like that leading to a reduction of overall levels of entitlement, or are you seeking to push it into a wider debate that will involve extra funding?

John Jackson: I am not sure I would use the word "entitlement". I understand why you use it.

Q48 Barbara Keeley: I think it is from what was put in.

Andrew Cozens: It is our phrase, I think.

Chair: It is your term of art.

John Jackson: It is ours. Thank you for that clarification. As to the issues about how we reduce need, legally we have to meet people’s care needs. The law is very clear about that. The draft Bill will not change that obligation. How do we reduce people’s care needs? Some of the things that Mike was talking about earlier on in changes in relation to health ought to help as well, within social care. We need to be working together along those lines.

I will give you a specific piece of work that was done in Oxfordshire by the Institute of Public Care. Together with us, it looked at the triggers for people going into residential care and found that there were five key triggers. What is interesting is that most of those have a health dimension. The five triggers are people having a stroke, suffering from incontinence, suffering from dementia, having a fall and people suffering from social isolation of some sort. If we can work together on those five key triggers, we can reduce the demand for residential care. Even for people who have some residual care needs, the cost of supporting them in the community will be less than it would be to meet them in a care home or nursing home.

Q49 Grahame M. Morris: Can I come in on that? Given the new structure-the health and wellbeing boards and the joint strategic needs assessment and then the strategy arising out of that-has your experience in Oxfordshire, or experience elsewhere in the country, been able to demonstrate that closer integration and work with the commissioners to identify interventions to mitigate these five triggers have proved beneficial?

John Jackson: I will give you a solely Oxfordshire perspective and colleagues might want to talk more widely. In Oxfordshire, we consulted on our draft strategy earlier this year. We have an agreed strategy, and a key thing that has come out of it is the commitment to have a joint strategy between health and social care for frail older people. If you look at where the money is spent across the system, whether it is health or social care, a significant proportion of it is spent on frail older people. How we intervene in a different way to improve outcomes for those people and thus reduce care needs has to be our agenda going forward.

Q50 Grahame M. Morris: Is that working, or is it too soon to tell?

Councillor Rogers: The enthusiasm with which the concept of health and wellbeing boards was taken up by local government bodes well for the future, but I think I would have to say it is too early to be sure of that because, of course, they are not legally yet in existence. They are there in shadow form and working across those different aspects of the public sector to bring them together with a shared set of priorities and with the intention to focus on the type of issue that Mr Jackson has just referred to-frail older people. That might not be the decision everywhere, but it is a very good example of how all the different players can be brought together with a common sense of purpose.

Andrew Cozens: Can I add to that? Certainly in the places I have looked at, there is enthusiasm, particularly among clinical commissioning group leads, to work with the council on these complex and challenging issues for the reasons that are described. One of the difficulties, though, is the extent to which they feel they will have the levers that are necessary to make the changes-whether they will be able to commit to strategies-and the different levels of authorisation of clinical commissioning groups. Also, the significant role that the Commissioning Board itself will play in health and wellbeing boards, as the commissioner of primary care and other specialist services, needs to be played through. Our view is that this is a good opportunity for local leadership-and health and wellbeing boards are central to that-provided that local leaders are able to work on appropriate local solutions.

Councillor Rogers: Can I add to Andrew’s point about the role of the NHS Commissioning Board locally? As we know, the local area teams are currently being appointed, but that relationship between whoever is to represent them on the health and wellbeing board and all the other players who are already there, except the local Healthwatch, which of course is also in the process of formation, will be crucial in bringing about this more unified view of what the local priorities are and how they should then be addressed.

Q51 Chair: Could I ask Mike Farrar to come in on the NHS view of where we are and how effective they are expected to prove to be?

Mike Farrar: The health and wellbeing boards have been welcomed also by the NHS. The concept around health improvement, all Michael Marmot’s work, suggests that you have to tackle the wider causes of ill health. But practically, on the ground, people are now sitting with the clinical commissioning groups, and working very hard with health and wellbeing boards to try to get this broad needs assessment. They are the champions of their local perspective for spending money, so they have natural common cause. What David is pointing to is profound in the sense of, if we want integrated provision, how do you make sure that that primary care spend is being pulled in against the local needs? Primary care is the critical strategic amount of money that we have in our system and the Commissioning Board has yet really to find a way to engage at local level through its local area teams, and they cover a bigger population. Often, they may be working with 10 or 12 different health and wellbeing boards, so it is quite difficult in some cases to see the logistics of it, but that is a vital bit.

Q52 Grahame M. Morris: Mike Farrar made an interesting point earlier on that I had not thought about in much depth, about the problems arising from fragmentation of commissioning. I have always considered it from the perspective of fragmentation of service delivery, be it mental health, primary care, community care, or whatever, but there are issues there that we need to learn from, as to what the implications are of fragmentation of commissioning for social care and health, whether that is part of the problem. The theory sounds great, but I am interested to know from your experience whether the practice is living up to the ambition for the theory.

Councillor Rogers: There are two things I would say about that, Mr Morris. First of all, to repeat what I said just now, there is enormous goodwill and enthusiasm for making health and wellbeing boards work, but I cannot give you the evidence because they are not yet in their legal role. Specifically, on the NHS Commissioning Board and the local relationship with health and wellbeing boards, we in the LGA have worked closely with them over the last few months to develop a concordat, which is now agreed and is about to be launched publicly, which sets out a series of intentions as to how that local relationship would work. The reason we have done that is because we realise how crucial it is to making the whole new system work.

Andrew Cozens: Can I add to that? There is a tension that I am aware of between a population approach to the joint strategy needs, or even a subpopulation approach, and a sort of pathway approach that is intrinsic to an awful lot of health planning, which sees people going along a pathway. For a number of the groups that we are particularly concerned about, there is comorbidity, so that in itself is a problem. Then of course there is the way that the payments are designed that flow from that, so the whole tariff system. There are a number of things that it is quite difficult to work through at a local level unless there is more of a national sense of this. My own personal view is that the missing part of the overall picture is a health and wellbeing board at a national level to work through some of these issues once rather than have them repeated 150, or whatever, times as they are at the moment.

Q53 Barbara Keeley: I did not want to lose the point that had been made about the reasons you have identified for people needing social care-the stroke, incontinence, dementia, falls and isolation point-because I watched as things happened that definitely detracted from the ability to tackle that. Here, and in our evidence, we have a lot about cost to the NHS if local authorities cut services, but in my local area the PCT stopped a pilot of active case management that it was running. The other thing is that Age UK also had a project of active case management with older people with longterm conditions. Both of those have removed an ability for early intervention for early signs, early warnings, with people living locally to me. It is crazy if efficiency savings in one part of the system are taking away something that would help. I do not know how much our experience locally is typical, but is that a frustration that is coming in from local authorities-that some of the NHS efficiency savings decisions are saying, "You are taking away our ability to do what would be the only thing we could do to reduce our costs"?

John Jackson: There are two comments I would make. One is that I think it is accepted that we do not have a good enough understanding of what works in terms of early intervention. That is referred to in the White Paper, and the Department of Health has promised to do some work on that. That would be useful for the same reasons that are referred to in terms of "Let’s do it once nationally".

The second thing is what might work locally, and the decisions that are made locally will reflect local decision making. In the submission that we made, we referred to the risk that people would reduce spending on prevention and early intervention because they see no other real option because they have to meet people’s care needs. That is undoubtedly a significant risk going forward. But it may also be the case that some of the individual prevention and early intervention schemes are not being effective and we cannot justify spending money on ineffective prevention and early intervention schemes. We need to find the right prevention and early intervention schemes. But the capacity of local authorities to do that is limited, because we are under such significant constraints. Some of this takes quite a lot of time to develop and implement, for all the reasons we have been discussing already, and we are trying to manage things under huge amounts of pressure.

Mike Farrar: Might I briefly comment? That phenomenon that you describe is writ large at the moment. Our hospitals are busier than ever with patients for whom the tariff does not cover costs, so it is not that they are sucking them in to keep them, and people who, by medical assessment, could have been given an alternative had it been available. There is an opportunity-I am not the counsel of despair-and it is the commissioning boards’ commissioning strength, the financial strength, to make some strategic investments in those local areas to try and break out of that cycle. But it does need some bravery on their part, saying, "We are not just going to hold it for ever, thinking, ‘When does the rainy day come?’" Some of that resource could be spent strategically to break that cycle, but it would not just be spending it on improving the tariff for the acute sector. It needs to be spent on building community, primary and social care capacity.

Jo Webber: That is also the reason why the viability and the good strong working relationships within the health and wellbeing board have to be the place where some of the pressures from one part of the system on the other are rehearsed and looked at. A falls prevention service that does not have a health element to it, for instance, or an issue around delayed discharges that does not have a social care element to it is just not going to hit the spot. In the same way as individual organisations within the NHS cannot tackle this alone, individual parts of the system locally cannot tackle it alone either. It has to be a co-ordinated response.

Q54 Chair: Does it follow from this-if we can just be clear and explicit about it-that the emerging conclusion is that the way of reconciling Mike Farrar’s five different accountability streams for care services is to locate that within a developing health and wellbeing board?

Mike Farrar: I would like to see the primacy of health and wellbeing boards with CCGs in their joint needs assessment. If they are done properly, they are effectively the blueprint into which you could pull the resources from these different elements.

Q55 Chair: You used the words "primacy of the health and wellbeing boards".

Mike Farrar: Yes, I meant the primacy of CCGs and health and wellbeing boards working through that vehicle to effectively identify what are the needs and priorities for expenditure. That sets the boundaries for how you pull the other strands of funding through. It is almost like turning the accountability bit on its head and saying that the Commissioning Board spend needs to be pulled through into local systems to support this need that has been identified locally. Then people will be held to account in that way. It is a very important bit of the system-in integration terms-to have an integrated plan. Without the integrated plan, it is going to be very difficult.

Q56 Chair: As designed and legislated, are health and wellbeing boards fit for that purpose?

Mike Farrar: We are all working incredibly hard to make sure that they are when they start. We spend an awful lot of time together trying to support health and wellbeing boards. At their worst, they could be public sector committees, but we are desperately keen to make sure they have good analytical support, can meet in the right way to make decisions, can appreciate the sharing of risk between parties and can pull that together. They are critical. Mr Morris made the point about integrated commissioning. I think they are a critical bit of an integrated commissioning system here.

Q57 Chair: I have one supplementary question and then I will shut up. I am personally sympathetic to that point of view, but I am also cognisant of the fact that in the history of the Health Service there is a long history of antagonism between different bits of the Health Service and what is seen as political intervention in particular by councillors, which is what you have to get used to in a health and wellbeing board. I wonder whether that enthusiasm would survive councillor intervention.

Mike Farrar: In the spirit of cooperation, my colleague will answer.

Councillor Rogers: I understand the point you are making, Mr Dorrell. What I would say-and again this is from emerging evidence of what is happening in shadow health and wellbeing boards up and down the country-is that the local elements, both elected and professional at local level, because, as you know, there are councillors and also directors on the health and wellbeing boards, together with the representatives of the CCGs, are finding remarkably significant degrees of common approach to what the priorities should be locally. I think that is working quite well. As I said to Mr Morris earlier, we don’t have hard evidence that it is going to work in the new system because they do not yet have their legal powers. However, the way the development of health and wellbeing boards is going up and down the country, and that is supported by an LGA programme that is in part DHfunded, is demonstrating that the capacity is there and therefore-and I think you used the term "optimistic" earlier in relation to something else-I am optimistic that that will be the case when April next year comes around.

Andrew Cozens: The two weaknesses are: is everybody agreeing to the strategy locally and agreeing to work within that framework? At best, I think we could say that it is aligned with some cocommissioning rather than integrated commissioning that will flow from this. So the weakness is that, if there is not agreement, or if there is bogus agreement to the strategy, the behaviours then in the aligned commissioning could unravel it, potentially. So at the moment there is an awful lot of goodwill but the real exercise is about shared leadership with common objectives, I think.

Q58 Andrew George: I may be taking you back, and I apologise if I am, but I wanted to find out-perhaps only for my benefit because I may be behind the curve on this one-about the role of personal budgets and, increasingly, personal health budgets as they are being rolled out. How relevant are they going forward in relation to the management of budgets and the provision of services? Are there dangers with them? Are they going to be a useful tool or are they a little bit of froth on the side that is pretty irrelevant to the overall shape of things going forward?

Jo Webber: Can I start with the personal health budgets, because this obviously is in its infancy?

Q59 Andrew George: It is just being rolled out now,

Jo Webber: It is only just being rolled out now. This is going to start with some things where it is very easy to quantify the money-things like continuing healthcare. We are back where social care was about 10 years ago and it will take time to roll these out because, alongside the change in the way in which the money flows round the system, there is a way in which the culture has to develop to enable this to be a much more equal discussion about how this money is going to be used. There are some elements of healthcare that are more amenable to personal health budgets, particularly around, for example, mental health services, but there is quite a long way to go before we grapple completely with precisely how much of the NHS budget will end up as personal health budgets. It gives the opportunity for people with very complex needs to link together at the individual level the personal budget they get from social care and the personal health budget they get from health. It would be exciting to see where that takes us with the way in which services then can be configured round the individual. But in health terms we have a very long way to go before we are anywhere near where social care is now and it has taken quite a long time for social care to get there.

Councillor Rogers: My professional colleagues may have more detailed evidence to give you, but I would pick up something that Mike said earlier. When people do have the ability to make their own choices, they often choose less conventional ways of meeting their needs and the outcomes could well be better. Whether that also saves money is always the difficult question, I think. If we are talking about outcomes and people’s overall wellbeing, I think there is a very significant impact. The numbers of those who have personal budgets, of course, in social care has increased very significantly over the last few years.

The other point that I would make, which I think is often in danger of being lost whenever we talk about social care, or certainly wherever journalists talk about social care, is the failure to recognise the vast numbers of those in the social care system who in effect have always had personal budgets because they are meeting their own costs. They are not eligible for statefunded care.

Andrew Cozens: Can I make an important distinction between service designed round the needs of patients and users, for which I think there needs to be perhaps an increasing amount across health and social care, which perhaps is collective provision and therefore not susceptible to individual personal budgets? Those are all the things we have talked about, reablement and intermediate care and all those sorts of services. The key advantage of personal health budgets and social care budgets is the ability of individuals to design their own services around their individual circumstances and those of their carers. That is potentially transformational. But it is important not to see the whole of the system being balkanised into a series of individual budgets. There is still an important role for planning at a collective level, particularly if we are going to transform who goes into the system and what they receive when they go into the system.

Q60 Andrew George: I have one supplementary, if I may. The politics of this plays into the arguments between those who see a fragmentation and the need for integration and also that this is a stalking horse for the privatisation of health services. Following up on Andrew’s comment in particular, obviously if you have a lot of individual choice, which of course is welcome at the theoretical level, to what extent is there a risk of that contributing to the fragmentation of services that need certain, if you like, economies of scale in order for it to continue existing, as it were?

Mike Farrar: Andrew was partly describing that when he was describing the balance between what is deployed through personal budgets and what is, effectively, managed on a collective basis. Therefore, we do not want a situation where individuals could not afford to have complex heart surgery. This is lumpy expenditure of sorts. The trick is the balance of that. What we have seen is that personalised budgets in both social and healthcare have challenged the dominant culture that the public commissioner knows best what you would need for your care. That grit in the oyster is having, hopefully, an impact in the way in which the collective spend is being deployed to support patient voices, steering that as well. It has limitations-I don’t not think any of us would be advocating you put the whole system in so we all get our £1,250’s worth. None of us is at that level, but we all welcome the fact that personal budgets can, for specific groups, deliver better service packages for them, but we also think it is changing our culture, which is for the good.

Q61 Rosie Cooper: I want to go back to health and wellbeing boards. I too hope and wish with all my being that they work, but having been on both sides of this argument-as a deputy chair of a strategic health authority, a chair of a hospital and a councillor for 30 years-I know that the reality will come when the power arrives at the table and difficult decisions have to be made. Bearing in mind that you are telling me it is working well now and you don’t have the power and those difficult decisions are not there-this is currently motherhood and apple pie because you are trying to work out what the best would look like-in order to get real dynamic decisions, leaders have to be around the table. With those organisations you are talking about, are the leaders in the CCG attending, the leaders of councils, not just "AN Other" councillor, not just "AN Other" officer, but the people who have the power to make that decision? Are they already there?

Councillor Rogers: My answer to that would be not universally but, generally, yes. The reason I say not universally is because, of course, the precise composition is a matter for local decision. As the representative body of member councils, I would say that is right and that is how it should be. However, coming back to the overall analysis, many health and wellbeing boards are chaired by council leaders. If that is not the case, then it is somebody like the lead member for adult social care, or another very significant cabinet member. So I do think that that appropriate level of seniority and, therefore, the capacity to make decisions, which I think is what you are seeking, is likely to be there in most cases.

Q62 Rosie Cooper: Great. Do you have the CCG present at all times? I ask that because, in my area, the CCG in its last, say, six months has been established as a subcommittee of the PCT. It does not even bother holding meetings and it does not even send the PCT-or the remnants of it-the minutes. So, if that is already at that stage, good luck with the rest of it.

Councillor Rogers: I am sorry to hear that.

Q63 Rosie Cooper: It is actual fact, though. I wonder how many other places are like that.

Councillor Rogers: I do not know the answer to that question, but my experience is that CCG leaders, both GPs who are exercising that clinical leadership and, increasingly, the accountable officers and so on that they are appointing, are playing a very significant role in meetings of the health and wellbeing board. Of course, the board meeting itself is not the only thing that is going on. There is an immense lot of work that goes on behind the scenes between meetings of the board itself.

Rosie Cooper: There is something about authority and authorisation behind those missing bits that we are talking about. If they are not even playing the game now, what on earth are they doing? Anyway, thank you.

Q64 David Tredinnick: Perhaps I may, unusually in this forum, be allowed to answer Rosie’s question and say that in Hinckley, in my constituency in Leicestershire, the health and wellbeing board structure is effective and the clinical commissioning group has been very effective in looking at all these issues in coming up with a new structure and will be ready to roll at the appropriate moment.

I want to return to personal budgets-the point my colleague across the way took up. I am informed that the Department’s clinical trials have been very successful in that they have shown, first, that the patients are acting very responsibly with the money that they are given, and John Jackson is nodding his head, so the money is being properly spent; secondly, that it is very costeffective; and, thirdly, that patients are absolutely delighted with the choice, and this is going back to my earlier point, which means that very often they are choosing less expensive routes of therapy that are not necessarily seen in the Health Service. For example, they are turning to yoga exercises or t’ai chi, getting aromatherapy massages to relieve anxiety or muscle strain, or music therapy-just listening to music.

The last point is that this has empowered the families who are looking after them. Now, for the first time, carers, members of the family who have in the past felt bedbound, in the sense they are chained to the bed of the person they have to look after-and Andrew Cozens and Mr Jackson are now nodding their heads, if I may put that on the record-who have never been able to get out are able to get out, get jobs and make alternative arrangements. So the personal budget, one of the most important reforms that we have seen coming out of the Health Bill, has seismic potential for the future. Forgive me, Chairman, for making a speech there, but I am looking for comments on those points, please.

Chair: Andrew has been mentioned in dispatches, so-

Andrew Cozens: I had better justify my nodding. On personal budgets and direct payments in social care, there is no question that carers value them and that they have led to creativity and all sorts of approaches being taken to care and support beyond things that have been done before. The evidence on personal health budgets is probably a bit less as there are fewer of them over a shorter length of time, but this is Jo’s specialist subject.

Mike Farrar: It is interesting that some of the patterns are initially of underspending but increasing up to the level at which the budget was set. I know we are pressed for time, but there is the great story of the personal budget holder in Rochdale, who, instead of respite care, bought two season tickets to watch Rochdale Football Club, my team, and sadly it is no longer available, after much controversy, not because they took away the option but because Rochdale failed the any qualified provider test. Strike that from the record.

Jo Webber: It is difficult to follow that. The other side of this is the conditions that it is being used for. It is for a limited range of conditions at the moment and they are pilots. There is potentially a very large impact on the way in which the NHS, particularly, looks after people with longterm conditions. The issue alongside that is that it does take time to implement and is not something where you could start realising all of the benefits within a couple of years. It is fair to say that that is the experience in social care. It takes a long time to change the culture of the professionals alongside the way in which the individual feels that they can get power from the situation to spend the money in the way that best suits them. But it grows over time. If you look at the takeup of personal budgets in social care, you see quite a long lead time and then it rising very rapidly towards the end. So it will take time. I don’t think it is something that you could realise benefits from in, say, a year or two.

John Jackson: Can I endorse what Jo has said and develop this very slightly? Jo referred to the fact that this started 10 years ago. In fact, it started rather earlier than that, under the Major Government in the 1990s.

Chair: Indeed it did, yes.

John Jackson: So it has been going a long time in adult social care. I also would make the point that local authorities have not yet transitioned everybody across to personal budgets. We are making good progress but there is still some way to go. There is a question about whether people then take that in the form of a direct payment, which gives them additional flexibilities, and then the issues are going to be, or the question going forward is, how are providers, particularly in adult social care, going to respond to that? If people start asking for some of their needs to be met in a very different way, will providers be in place to be able to do that? Over time, they will develop, they will change what they are doing to fit that, but it is not a quick process.

Q65 Chris Skidmore: To bring the topic back to the subject of the report on public expenditure, in terms of the ADASS evidence, you say in paragraph 24 that "the ADASS Budget Survey shows that, in 2012/13"-basically, from the money that has been transferred from the NHS, which, as far as I can make out, comes out to £1.7 billion-"£284 million has been used to offset pressures and cuts to services, £148 million has been invested in new social care services, and £149 million has been allocated to working budgets."

The second two seem to be absolutely fine for the sort of purposes that NHS money is used for, but should that £284 million really be used for offsetting pressures and cuts? Is that not the purpose of the additional formula grant?

John Jackson: Can I deal with the formula grant because we have not discussed that? What is very important to stress is that the 28% reduction in grant funding for local government was after taking account of the formula funding being injected. If it had not been there, local authorities would have been facing a much bigger reduction in grant funding. So we have had to manage. Our problem is that we have had to manage in the context of the overall local authority position that David was referring to earlier on.

Councillor Rogers: Can I emphasise that point? It is often misunderstood by those who report these issues. They only report the additional funding that came from the Department of Health to support social care in the way that you were describing. They failed to recognise the point that John has just made, and which is very important at an individual local authority level, that most of our grant is from the DCLG. Of course there is also the council tax element and there are pressures on that as well, as you will appreciate, and therefore there is a far bigger impact from the overall 28% reduction over the spending review period than the new additional money, welcome though it was.

Q66 Chris Skidmore: I want to pick up on the council tax. Obviously we have a new commitment to a third year of successive council tax freeze, or a 1.99% cap, before you have a local referendum. What is that going to mean for local authorities in terms of downward pressures on social care?

Councillor Rogers: It emphasises the points that we made throughout our answers to you and your colleagues this morning that, if the demographic pressures are there, if the cost pressures are there from providers and if the expectations that people have of the quality of services continue to rise, as would not be surprising, then the constraint on the level of resources that can be raised locally is simply an additional pressure.

Q67 Chris Skidmore: Can we quickly model it? The council tax funds, say, 50% of the overall settlement.

Councillor Rogers: It is very different in different parts of the country and there are many parts of the country where significantly more than 50% of the resources available locally is raised locally through council tax. Equally, there are many other parts of the country, represented no doubt by some colleagues around the table, where significantly less than 50% is raised locally and the vast majority comes from central grants.

Q68 Chris Skidmore: In terms of the geography or tapestry of social care provision and how that is provided for, in paragraph 23 you say that "£1.89 billion has already been taken out of adult social budgets over the last two years". Can you correlate that with council tax freezes in terms of local authorities that are more dependent on paying for adult social care out of council tax budgets?

Councillor Rogers: I am not sure whether John has any figures that would help to answer that. It is a key issue, of course.

John Jackson: First of all, just so that people understand the £1.89 billion, £1 billion was taken out the first year and an additional £891 million the second. In total, over the two years, £3 billion will have been taken out-£1 billion in the first year and £2 billion in the second. If you carry on taking that extra billion out, by the end of a four-year period you will have taken £10 billion, over four years, out of adult social care. In relation to the council tax fees, or whatever local authorities decide to do for council tax, that obviously will constrain or cap the amount of resources available to local authorities. If they need to make more savings to manage within that cap, adult social care is the largest single budget within the local authorities’ control, and they will expect savings from adult social care.

Q69 Chris Skidmore: David, in terms of your "graphs of doom", I was very interested in the second graph on paragraph 18, which obviously has the holistic makeup of local authority spends. You say in paragraph 19 that in 201011 30% of the local authority expenditure was on adult social care, potentially rising to 45% of council budgets by 201920, although for some other local authorities obviously it is different and you are going from 40% as a baseline to 52%. Is there a sort of critical tipping point in local authority finances? You mention other services being squeezed and you can see that in the graph, but is there an advisable makeup-would the LGA advise local authorities to be balancing their budgets by spending in certain proportions, otherwise it becomes unsustainable in the future?

Councillor Rogers: We would not seek to adopt that type of centralist approach to local decision making about relative priorities. All I can say is that the further we go along the time axis, the more critical the situation becomes, hence our longheld and frequently expressed view that not only must the system be reformed but, in the meantime, it must be adequately resourced to prevent it reaching a crisis point.

Q70 Chris Skidmore: Finally, in paragraph 31a, you mention your concerns about "A late local government settlement in December 2012 following the Autumn Statement, which itself will be later than normal", and, therefore, there may be the possibility of revisiting figures in the spending review. Then you talk about the possibility of judicial reviews. Do you want to expand on the concerns you might have over the coming months?

Councillor Rogers: Yes. The overall point-and John may, from a professional perspective, be able to cast more light on this-is that budget preparation for the following year begins almost as soon as the budget is set for one year. The later any information comes in, whether that is from the Chancellor’s spending review or from, specifically, the local government settlement, the harder it is to accommodate any changes within that budget planning process and in particular-and this is an increasing risk for local authorities-the time for consultation with residents over service changes. As you know, if that is not done properly, it can be liable for judicial review or others seeking to say, "You have not done it properly. You have not taken into account equalities", all those sorts of things, and challenging the outcome in the courts.

Q71 Chris Skidmore: To wrap in the service change point, in my local authority we have that going through and I am sure in most other Members’ local authorities there are issue of home care services and to what extent residential homes are being run by the council or outside providers. But at the same time you mention in paragraph 33 that basically you have "a planned £890 million reduction in adult social care budgets in 2012/13, front-line services are being protected where possible through £688 million worth of efficiency and service redesign."

The service redesign is key, but is there a fiscal cliff here where you are firefighting to protect existing services and, as a result of the firefighting and protecting existing services, there is not a focus on redesigning those services in the first place so you are not getting the changes you need fast enough? To meet popular demand and public pressure you are having to keep the show on the road as it currently is, which is effectively inefficient.

Councillor Rogers: It makes it more difficult to achieve that certainly, if the other pressures are there. There is a point I would like to make that I do not think has come out yet and that is that, despite the reductions in social care spending that we have talked about this morning, social care has been relatively protected through council tax and other mechanisms compared with the impact of the overall 28% reductions that I referred to earlier. That varies in different councils, but it is generally true across all councils.

Chair: There is a final question from Rosie Cooper.

Q72 Rosie Cooper: I am going to wrap up three or four questions that I had at the end, so this will be a quick runthrough. The LGA and the NHS Confederation argue that integrating care is the best way forward. How do you see integrated care and services being structured and paid for? If we do not get it right, are we moving on to what would be a postcode lottery and do you think the £1.6 billion savings we have had should be used to help the transition, integration and the redesign of services?

Chair: Who would like to go first on that?

Andrew Cozens: I would like to answer yes or no, but it-

Councillor Rogers: It is more complicated than that.

Andrew Cozens: What I think both presentations have highlighted is that we have a shared need to reduce demand, develop preventative services, make sure care is in the right place and reduce the unit cost. We have both said in different ways that taking money out of the system removes some of the opportunities to double-run the system so that there is public confidence in the alternatives that we are trying to put in place. That is the real difficulty that we face. Our view on integration is that structural solutions would be a further distraction because that is part of the problem we have now, but there are a range of obstacles, both in legislation but also in working arrangements, that get in the way of integrating care around the needs of individual patients. We believe that more should be done to remove those. There are some interesting emerging issues that I think we refer to in our evidence coming from the community budgets approach that may shed some light on how this might be done practically.

Mike Farrar: We have mentioned integrated commissioning as a way forward. I don’t think you can have integrated care unless primary care is part of that and that means blowing up some of the contractual elements of primary care, particularly for local enhanced services, but I do not think we are getting value for money there. They should be spent in a much more integrated way.

I also think that practically now most teams on the ground-their fieldwork and their rapidresponse teams-operate as a shared team, but then they have to come back to the office and trigger separate funding and formfilling to create the integrated package. It seems to me that we know so much about the barriers to integrated care that we have no excuses any more and could say, "At all levels, let us just break free." So that would be an integrated audit process, shared incentives, community budgets, single bureaucracy, single assessment and would empower the front-line staff who want to do it.

Q73 Chair: These are familiar themes about which the Committee has already issued more than one report. It would be very helpful if the two organisations, possibly Mike Farrar and Andrew Cozens, could draft a common paper to us as to what is required to unlock the pathway to integrated care.

Mike Farrar: I would be very happy to do that.

Chair: If you could deliver that to us, it would be an interesting contribution to the debate.

Q74 Rosie Cooper: The final bit is about the £1.6 billion. Redesign of services costs money. It doesn’t just happen. Do you think if we reinvested the money in helping you to do that that it would unlock huge-

Mike Farrar: Supporting the improvement of integration of care is a wise investment for that £1.6 billion. I would certainly support money like that being used for that purpose.

Chair: On which note, despite scepticism at the beginning of this meeting, we adjourn at 11.26 in time to attend Health Questions at 11.30. Thank you very much for your evidence.

Prepared 29th October 2012