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Lord Bruce of Donington: They are counted as new patients.

Lord Howell: As my noble friend says they are counted as new patients. Why is this done? It is done to transfer the cost of those patients from the hospital onto GP fundholders. That is a serious matter.

People have told me that at one time it was difficult to receive a service unless one could pay to have a private service. What is now happening in parts of the city of Birmingham and elsewhere is that it is not possible to obtain a service unless one's general practitioner is in funds. If he is not in funds, one receives second-rate treatment. That cannot be justified. I hope that the protection of the public, which is what this debate is all about--it is as important to recognise that fact as to be nostalgic over the past 50 years, which we all enjoy doing--will be the prime point that the Minister will address in her reply.

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6.4 p.m.

Viscount Waverley: My Lords, I apologise for my croak. The approach to the National Health Service is indicative of the political divide, with solutions and future direction a contentious issue--all the more so with the forthcoming election. There are some who say that the health service will not survive another Conservative term of office. That has to be a matter of interpretation. It is more correct to say--if one must--that the health service is being subjected to a creeping strangulation. It is important, however, to understand the reasons why that is so before making a definitive judgment.

I believe the time has come for decisive action and for fundamental questions to be answered. Do we retain the health service, or keep only properly funded aspects of it? Do we determine that it cannot be afforded and implement a two-tier means-tested system and insurance based service? What core services should be provided by government? In other words, what are to be the objectives of our future health service and how are they to be achieved? Let me say here and now that I believe that it is fundamental to our society that those genuinely less well off should expect a free and speedy service.

Mrs. Thatcher as Prime Minister--who did not have time on her side in the late 1980s--needed to react to the health crisis by implementing a damage control exercise. What her advisers did not do--I regret--is consult sufficiently. Time may not have permitted that, but with hindsight change was implemented too quickly without the consensus of the medical profession. This Government, with expedient use of time, have the opportunity to be the architect of a rejuvenated, modernised service by addressing the real issues, by being sympathetic to the concerns of the people of this nation, and to all who are directly involved. Certainly tough decisions will have to be made, but they must be made by consensus. I call on the Minister to instigate an immediate consultative process to address those fundamental questions. The process could be completed within one year, with essential pilot programmes leading to full implementation within five.

The Minister should also attempt to allay the fears of those who believe the health service will crank to a halt in the meanwhile--that was a point made by the noble Lord, Lord Howell--by giving an assurance of an injection of money if required. The question of accumulating debt must be addressed in the upcoming Budget. I suspect the Minister will find wholehearted support around the country for an in-depth appraisal, provided it was seen that something positive was being done. For my part, I find merit in a national chain structure of high-tech district hospitals with a comprehensive web of community care centres. District general hospitals would handle all emergencies and major elective surgery while some community care hospitals would be expanded and others built from scratch. Can we hear more from the Minister about the role of PFI funding in such a scheme? Is there a role for drug companies to plough some profits back into the service? I shall not enter the realm of general practitioners as that would be bound up in my desire to

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see an all-encompassing consultative process. However, I see a need for better patient understanding of which aspect of the service to call upon in any circumstance.

In conclusion, I believe that simply throwing money at the service is not the answer. A carefully considered appraisal and restructuring will, when all is in place, meet the ideals of my father, who as a hardworking consultant physician at the Royal Berkshire Hospital, used to say to me that if one wanted the best medical opinion and attention one should use the National Health Service. We have the basis for the finest health service in the world, with standards the envy of all. That is surely a unique base on which to build.

6.10 p.m.

Lord Ewing of Kirkford: My Lords, perhaps I may cite Aneurin Bevan. At the time of illness, wealth should be no advantage and poverty no disadvantage. Perhaps I may follow that by citing Herbert Morrison: the health of the people is the highest priority. One of Aneurin Bevan's great achievements in introducing the health service in this country was to get Herbert Morrison on his side. Anyone who reads the history of that time will clearly understand that that was no easy task. But it was on those twin pillars that the National Health Service was introduced and built by a courageous, visionary, post-war Labour Government. I am grateful to my noble friend Lady Jay for giving me the opportunity today to place on record my gratitude and tribute to that post-war Labour Government for the courage and vision that they showed in very difficult times. They were not easy times; they were very difficult. I live with the abiding memory of my late father going around miners' houses in my native Kirkford, from where I take my title, collecting tuppence from each household in order to give to the general practitioner to ensure that the health of the families was cared for in times of sickness.

One of the problems in this country is that too many people forget what it was like before we had a National Health Service--tuberculosis, poliomyelitis, diphtheria, scarlet fever and rickets in children were rampant diseases. They were tackled by that post-war Labour Government through a massive programme of immunisation. I was delighted that the noble Lord, Lord Butterfield, and the noble Baroness, Lady Brigstocke, mentioned the need for proper preventive healthcare programmes. There is no profit in prevention but--by God!--there is a lot of benefit; and we must never lose sight of that.

Even in his absence, I wish to support the right reverend Prelate the Bishop of Exeter in his plea for proper recognition and support for the hospital chaplaincy service. The valuable support given by the hospital chaplaincy sector to patients and their relatives in times of sickness is not generally appreciated.

I wish to deal with three specific issues. On my first point I concentrate on Scotland, but I have no doubt that the same applies to England and Wales. I refer to the relationship between health boards and trusts. I declare my interest as chairman of the Fife healthcare NHS trust. Contrary to common belief, the trusts have absolutely no power. As soon as one gives the power to

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purchase and, conversely, the power not to purchase, to a health board or any other organisation, that is where the power lies. The trust can supply only that which the health board is prepared to purchase from that trust. We need greater transparency. The health boards should be under a statutory obligation to publish what they purchase, from whom they purchase it, and what they pay for it. We go into these contract negotiations totally blind about what is going on inside the purchasing organisation--the health boards or the area health authorities. I plead with my noble friend Lady Jay--she will have responsibility for this matter in 20 weeks' time--to open up the whole question of negotiations and to give us greater transparency.

I turn to care in the community. If we have succeeded in doing a disservice to the National Health Service, it is as regards the care in the community concept. We have succeeded in giving the clear impression that the hospital is not part of the community. The concept is, "Get the patients out of hospital and into the community". I repeat to my noble friend: that programme must be slowed down. The net result is the blocking of hundreds of beds simply because the social work authorities do not have the resources to get the patients into nursing homes. The Government claim the credit for increasing the disregards to £16,000. But they did not give an extra penny piece to the local authorities to take care of the increase in the disregards from £8,000 to £16,000; and that is where the crisis exists in the National Health Service.

I hear the private sector say, "But we can care for these people much more cheaply than the health service". Of course they can because in the health service, in the hospitals, we treat the patient's condition; in the private nursing homes they manage the patient's condition. The two are entirely different. That is not a criticism but a statement of fact. The care in the community programme has to be slowed down.

My closing remarks relate to the value of nurses. The debate in this country is not about whether we can afford to pay the nurses. It is about who can charge the lowest standard rate of income tax. What a sterile debate. My noble friend should take one matter on board. My trust offers the nurses a total of 2.8 per cent. That is not because that is all we think they are worth. It is because that is all we can afford. The gap between what we can afford and what a nurse is worth grows wider year on year.

When the Government have a difficult case to defend they send the nicest Minister they have to defend it. I do not address my comments to the noble Baroness, Lady Cumberlege, because, as I say, in 20 weeks' time my noble friend will be occupying the seat where the noble Baroness now sits. Therefore my closing comments are to my noble friend. Whatever she does, she must begin to close that gap between what we can afford to pay to the nursing, caring profession and what they are worth. Let my noble friend have this on her desk; have it on the wall; stamp it on the mind of every civil servant who crosses her carpet: the health of the people is the greatest priority. We shall achieve that only by raising the morale of the caring professions.

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6.17 p.m.

Lord Astor of Hever: My Lords, I, too, am grateful to the noble Baroness, Lady Jay, for the opportunity to speak on the National Health Service on its 50th anniversary. It is also my 50th anniversary. It is one thing that I have in common with the noble Lord, Lord Monkswell. On these Benches, we are very proud that for two-thirds of its existence the NHS has been under Conservative governments.

The noble Baroness seems to enjoy prophesying the imminent fall of the NHS. This scaremongering is nothing new. Labour always shamelessly proclaims that the end of the NHS is nigh. One needs only to read its manifestos for the past six general elections. Indeed, Harriet Harman said last year,

    "I firmly believe that a 5th Tory term would spell the end of the NHS".

But the NHS has prospered under Tory governments and stagnated under Labour. Moreover, the public are now beginning to distrust the Labour Party on health issues, which is one reason why I am confident, unlike the last speaker, that the noble Baroness and her party will still be on the Opposition Benches next year.

Many health workers resent them talking down NHS achievements in order to help Labour into government. During election campaigns, the Labour Party concentrates on the few examples where NHS treatment has gone wrong, never referring to the other millions of treatments that are completed successfully every year. Last week, the Independent--not a Conservative newspaper--highlighted Labour's complacent attitude to health, which, it said, has focused on scoring points in Opposition rather than constructing a viable alternative. But it is not the complacency that concerns me. It is the cost of what the Labour Party has told us it will do. I give just two examples.

The first is Labour's minimum wage legislation. Mr. Bickerstaffe laid particular stress on the importance of that commitment when he met Mr. Blair in September. In 1992 Mr. Cook costed that pledge alone at £500 million, but we have not been told the cost this time. To fund that, Labour would either have to increase health spending or pick and choose which hospital services would be cut. Not a penny of the minimum wage legislation would buy more patient care. It is another example of Labour putting its old friends the unions first.

Secondly, I read in Labour's document Renewing the NHS, that the party would abolish competitive tendering--which ensures value for money--in the placing of contracts by the NHS.

Conservative reforms have freed hospitals from funding overmanned and inefficient state-run services. They are now free to choose the provider of their choice and to make substantial savings in running costs, yielding extra resources for patient care. The BMA points out that, "the NHS provides better value for money than any comparable health care system in the world". Labour's policy would give hospitals no choice of service providers and would increase their running costs. The thought that a unionised state monopoly--for instance, in hospital laundry services--would save

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money is pure Peter Pan politics. Once again Labour is putting the interests of its old friends the unions above those of patients.

Government spending on the NHS this year increased by £1.3 billion over the previous year. That is equivalent in real terms to some £500 million over and above inflation. This record of constant investment, combined with the Government's determination to put in place efficient and effective management structures, has transformed the NHS.

At the party conference in Bournemouth last month, the Prime Minister committed the Conservative Party to increasing NHS expenditure in real terms, year on year, throughout the next Parliament. Labour, in contrast, has promised the NHS only £100 million next year--a drop in the ocean, given that the NHS costs more than £42 billion a year. The noble Baroness, Lady Jay, used the word "threadbare", which is rather appropriate in this context. The £100 million is, in real terms, a cut of more than £800 million, before taking into account the cost of the minimum wage.

I read in the Labour Party's 1992 election manifesto these words:

    "This election will decide the future of the NHS. Indeed, it will decide whether or not we continue to have a NHS of the kind that the British people want".

Four years on, this Government, rather than the Labour Party, successfully oversee a National Health Service that the British people want and, as a nation, are able to afford.

6.24 p.m.

Lord Rea: My Lords, I am tempted to respond to the remarks of the noble Lord, Lord Astor. However, I have so much to say and only eight minutes in which to do so that I shall have to leave that to other speakers. A 50th anniversary should allow us to take a few steps back from day-to-day problems and permit us a broader view.

Although the percentage of GDP spent on the National Health Service has apparently increased from 5½ per cent. in 1991 to 6.9 per cent.--I need to check those figures, but they are the ones I was given--much of that increase, welcome though it has been, has gone on administering the internal market and the contracting process, as mentioned by a number of speakers. I suggest that in recent years the Government have been relatively generous towards the National Health Service because they could not allow their enormous unpiloted experiment to be seen to fail.

National Health Service costs rise at a higher rate than inflation because of the age structure of the population and advances in medical technology. There are other reasons, such as the increasing expectations of a society whose health knowledge is improving. As societies become more advanced and a smaller proportion of the workforce is needed to produce the goods we need, a higher proportion of the workforce and national income should become available to be diverted to beneficial, more labour-intensive activities such as health and social care, education or improvement of the environment. All that depends on a prosperous productive sector to provide

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the resources and a proper taxation system to obtain the money from that productive sector. There will be good years and bad years for the economy. All developed countries grow over time. As national incomes rise there is a tendency for the proportion of that income that is spent on health services to rise also, taking a larger slice of the larger cake.

However, the additional money is not always well spent. The most obvious example is in the United States, where, despite 14 per cent. of its much larger GDP being spent on health, a large part of the population receives a very poor service. Some other developed countries have full cover for their population but have higher costs than are necessary, partly because doctors are paid for each item of service. That system is difficult to control when the doctors themselves decide how many items a patient needs. We should be very grateful to Aneurin Bevan for his foresight in avoiding that expensive way of paying the medical profession.

Our National Health Service, as the noble Lord, Lord Astor, said, is the most economical in the developed world, considering the range of care it provides. That still applies--just--despite the expensive mistake of the past few years. It is always necessary to question whether expenditure on health services is being properly directed, provides value for money and serves all sections of the population according to their needs. The use of those words should remind us that the National Health Service is still based (believe it or not, after all these years of Tory rule) on socialist principles.

As a doctor, I am naturally more interested in health than in health services. They are very different matters. It was recently estimated that medical care has been responsible for only about 20 per cent. of the great improvement in the health of the population that has occurred in the past half century; it contributed hardly anything to the much greater health improvement of the previous century before any effective remedies were available. The main improvements in health then, as now, were due to a decrease in poverty, increasing living standards, and public health measures which reached the majority of the population. The major public health problem today is the disparity in health status between the two ends of the socio-economic spectrum--the health divide. Even the Government, who tried to silence the findings of the Black Report in 1980, now agree that health inequalities exist. Although the causes of the increasing health divide lie outside the National Health Service--in people's living and working conditions--the National Health Service has to pick up the pieces. It is established that the socially disadvantaged have higher consultation rates in primary care than the privileged and need more medication. That also applies to hospital use, because of their greater burden of serious illness, although there is some evidence that for equivalent conditions those of high social class are more likely to receive an operation, say, a coronary bypass or hip replacement.

The standard of primary care in relatively deprived areas is known to be worse, as are many other services. But a first welcome step has been taken towards ameliorating that through an additional payment, made since 1990, to the 5 per cent. of general practitioners

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who have patients living in so-called deprived electoral wards. However, in a paper which, with others, I shall be publishing in the British Medical Journal early in the new year, we shall be able to show that those payments only cover about half the additional costs that such patients incur. The majority of general practitioners with some deprived patients on their list get nothing extra owing to the extreme cut-off point on the scale used by the Department of Health to measure deprivation.

It would be useful if any of the changes in primary healthcare which may result from the Government's proposed legislation could be used to expand services for the less privileged, especially in the inner cities. As well as more general practitioners, they need the help of nurses: district nurses, practice nurses, nurse practitioners and community psychiatric nurses, as well as counsellors for the many social problems of inner cities, including homelessness and alcohol and drug abuse and associated crime and violence.

The noble Baroness will doubtless say that such improvements are in progress; she may well point to examples of good practice. I can only say that much more urgent action is needed to cope with the consequences of the fractured society created by the policies of the present Government.

6.31 p.m.

Lord Colwyn: My Lords, while thanking the noble Baroness, Lady Jay, for giving me the opportunity to speak about an important national and public service, I should also pay tribute to the care and treatment provided by that service over the past 50 years. I must apologise to the noble Baroness and other speakers for my late arrival. I have been busy in my dental surgery. It is always a pleasure to follow the noble Lord, Lord Rea. I cannot remember whether he continues to be a general practitioner. To be able to speak at 6.30 p.m. is quite convenient for those of us who are busy in our surgeries.

I do not know whether the noble Baroness made any reference to the general dental service. I have a copy of the brief from the British Dental Association which I know was sent to her and to many noble Lords taking part in the debate. I feel confident that my noble friend will be able to deal with the usual points about underfunding and inadequate fees which I am sure must already have been mentioned.

It is probably true to say that hardly a single day goes by without some reference to health. But are we as politicians, or the news reporters, really talking about health or something quite different? As we are all aware, the state of the health service has been a subject of major political debate for many years. That debate has concentrated not on health but on the nature of funding, the provision of services, the appropriateness of cuts and the conflicting claims of private and socialised medicine. It seems to me to have ignored any serious discussion of the more fundamental issues--above all, the question of whether changes in the financial structure of the medical services will result in any real improvements for the health of the population as a whole.

The assumption that greater availability of medical services, more doctors and health-related personnel, the construction of more hospitals and clinics and the

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development of a wider range of drugs and surgical techniques, will inevitably lead to improvements in health, to increased longevity or to the eradication of disease, is ill-founded yet widespread. It is an assumption which has been challenged repeatedly for more than a generation by an articulate, well qualified body of researchers yet almost totally ignored by policy makers and the public.

Longstanding failure on the part of governments and public bodies to control the almost uninhibited growth of medical technology or to rationalise the style and content of treatments on offer has resulted in problems that are now too blatant and potentially destructive to be swept under the carpet for another generation.

The noble Baroness calls for the need to maintain the public service values of the NHS. Those values are evident every day. The NHS treats more patients than ever before. There are better survival rates, lower peri- and neonatal mortality rates, shorter stays in hospital and generally an improved standard of health for the population.

The Motion also implies that more money should be made available. But more money is not fundamental to the public service values of the NHS. That depends on people and can rarely be bought.

Health services tend to be demand led. We know that demand is high and continues to increase. We need to pay attention to how to meet the demand and meet the greater expectation of the health service. The NHS provides support for those who no longer have family or alternative networks of care: elderly people living alone and people experiencing the crisis of mental breakdown. Those patients do not always require hospital treatment but are admitted because of their need for 24-hour care for short periods. The service cares for a population that lives longer, has greater diversity, is more mobile and is exposed to greater stresses. Of the relatively few patients who need hospital care, many now benefit from improvements in diagnostic and day care services and do not require admission to a hospital bed. Better care in hospital also results in shorter stays.

The recent White Paper, Choice and Opportunity, emphasises a commitment to better integration between different kinds of NHS care and suggests that a possible way forward is for specialist in-patient services to be supported by more community hospitals where local GPs can also access facilities to treat their patients. I agree with the noble Viscount, Lord Waverley. Those community hospitals will provide a complementary service for people with the district general hospital providing full accident and emergency services and all the back-up support needed to treat those patients with life-threatening serious conditions who need specialist care. Last year my right honourable friend the Secretary of State announced changes along such lines for north and south-east London. A good example is the arrangements in the Wellhouse Trust in north London where acute in-patient services are provided at the New Barnet Hospital and community hospital services are at the Edgware Hospital.

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Those in need of urgent help should receive priority treatment but people do not always arrive at the A&E department in an ambulance. Studies have shown that a large proportion do not require admission and could be treated by their GP at a minor injuries unit. Hospitals are often more convenient. That is particularly true of large cities with mobile populations and a daily influx of commuters. Recently there has been a rise in emergency admissions to hospitals and debate about the causes of the unpredictable peaks and troughs in demand. There are probably complex reasons for that and no simple answer, but a pointer in the right direction must be a closer examination of how we provide and manage our hospital beds to cope with seasonal and other pressures.

The noble Baroness calls for government action. But this is not something for government alone or for the hospitals planning to meet those demands. Other organisations and the public have a part to play. That means providing appropriate alternatives such as sub-acute assessment units to avoid bottlenecks in A&E departments--which are often used for the wrong reasons--backed by adequate social care support for discharge from hospital and improved advice and information to the public.

Health is about caring for people. How much I regret that it is a party political issue. After 50 years of the health service, the improvements in healthcare have not arrived by accident. Nor is it an emergency.

6.39 p.m.

Lord Hayter: My Lords, in our rather curious way in this House we are celebrating the 50th anniversary of the health service. Next year I shall celebrate the 100th anniversary of the King's Fund. The link between the two is that the fund has recently brought out a little booklet called Rationing Agenda in the National Health Service. It ties up conveniently with what the noble Lord, Lord Colwyn, has just been talking about. It is not just rationing of money, it is rationing of people, rationing of places in which people are cared for. The truth is that neither the Government nor the Opposition will admit that there is such a thing as rationing. They call it "resource allocation procedures" or "priority settings". But when one thinks about the matter, there is indeed rational rationing.

Many noble Lords will remember Lord Porrit, who had many friends in the House. When he was Governor General of New Zealand he gave me some words of wisdom which have stuck in my mind: there is no country in the world which can afford the health service that it wants. That is absolutely true. So we come back to the question of rationing. If there has to be a limit, let us see what we can do with it.

I suppose that rationing in this country can be divided into three categories: central government; local government; and individuals. It seems to me that the motto in each case is "Pass the buck downwards". We read in the papers today that the Secretary of State has had a bit of a triumph for his budget. He has obtained a little more than we had expected. He has fought the Government on the issue of priorities between defence, education, health and--dare I mention the word?--tax.

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The money has been obtained; how will it be used? That is the essential matter to which we should address ourselves.

Let me move down a little further into the local budgets. When I was a young man there were words which one could not use in private conversation, certainly not in this House, and about which the noble Lord, Lord Winston, will know: in vitro fertilisation, and some other words that even now I do not dare repeat because I am so old fashioned. But the point is that, in 1993, when 114 purchasing plans were examined, six health authorities absolutely refused to allow in vitro fertilisation. Therefore, if you happened to be in the right place you had it and if you happened to be in the wrong place you did not have it. That seems to be absolute nonsense.

I turn to the category of individuals and to the point made about GPs by the noble Lord, Lord Colwyn. Basically, health services are or should be free whereas social services are means tested. Therefore there is the curious contrast between the two and the doctor has to make up his mind on whether he will tackle the patient or shove the case still further down the line.

In the booklet that can be obtained from the King's Fund, there are a variety of questions. I cannot mention them all but I shall give some examples. First, should we admit that the word rationing makes sense? Secondly, what are the objectives of the National Health Service? I was shocked to read that question. One of the definitions offered by my noble friend Lady McFarlane today makes a good start, although I am not sure whether or not it is up to date today. Thirdly, who should have the responsibility for rationing decisions?

I can start off with a negative answer: not the press; not television; not the pharmaceutical industry (which is very generous in many ways to elements in the National Health Service but it is in business and therefore quite rightly should be looking after it); not--a name that I shall put down although it is not in the booklet--the Church (there are special interests which can confuse the issue even more); and certainly not the judiciary, which is only to be turned to in the last resort if one cannot make up one's mind elsewhere.

So what do we suggest? The words "budgetary control" came to me when I was a young man in business. I asked an uncle of mine what it meant and he said, "It means that you tell the money where to go instead of watching where it went." That is a very good motto to bear in mind.

My last point concerns education. One cannot blame the doctors for not being good at managing themselves and their trusts if they have not been taught how to do it. A long time ago the King's Fund sent a matron of the London Hospital to the Henley Administrative Staff College. It was an absolute eye-opener. She was the first woman to go there. The college had no idea of her responsibilities and she had no idea of some of the techniques that were being taught.

There are many hard choices ahead and there are limited resources. Successful project management must be the point of education for us all. I commend the

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booklet to your Lordships. If noble Lords cannot obtain a copy for themselves and apply to me, I shall try to obtain it for them.

6.45 p.m.

Lord Haskel: My Lords, during the 1980s Professor Enthoven's theory of the internal market became the fashionable answer in the private sector to the problems of large organisations. It said that competition within the organisation would produce the best goods and services. So, that theory of a fairly obscure professor of management was plucked out of California to become the answer to the problems of the National Health Service. It is not difficult to see why the Government fell into that trap. They virtually created it themselves.

In the mid-1980s the Government were busily running down the status and dedication of the public service and at the same time praising the wonders of business, individuality and the market. After all, business managers were seen to be successfully cutting costs. So what could be more natural than adapting business's methods to a public service which was chronically short of funds.

Industry became a little sceptical when contradictions began to appear regarding people's individuality. Workers had to focus on quality yet at the same time speed up to cut costs. They had to have long-term vision, yet be ready to change direction at a moment's notice. Most firms moved on but the Government decided to implement that relatively untried theory. My noble friend Lord Winston told us how untried it was. At vast expense consultants were brought in, and my noble friend Lady Jay told us the cost. Civil servants became business managers. Many noble Lords have spoken of the large numbers of new managers who were appointed and encouraged to manage in the worst kind of bureaucratic manner. Citizens became customers and the public sector was landed with the latest management theory of the private sector. There is a wonderful account of that in a new book published last week called The Witch Doctors. Perhaps I may reassure noble Lords that the "Doctors" in the title are management consultants and not medical doctors.

Of course, the inevitable happened. Industry found that shopping around the market might produce cheapness but it did not produce excellence. It also turned out to be less expensive to concentrate on selected suppliers with whom to co-operate in order to produce world-class results. The private sector is more fleet of foot; that realisation triggered mergers and long-term commitments fairly quickly. But, quite naturally, things happen more slowly in the public sector. In the NHS the Government persisted with its internal market philosophy, which was rapidly going out of fashion.

The noble Baroness, Lady Flather, told us that the internal market has been modified. However, the internal market and fundholding GPs have not produced the centres of excellence and the multidisciplinary hospitals that modern medicine needs. Indeed, as other noble Lords told us, it is proving to be a barrier. With an outdated philosophy, competing fundholders are not

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best served by competing hospitals. The internal market still left the old hospitals expensive to run. To have new hospitals--reconfiguration--meant closing the old hospitals to make way for the new specialist units. That meant that health authorities needed to make long-term commitments to those hospitals instead of shopping around, as they were required to do in the market system, however it was modified.

The whole ethos of the National Health Service now is competition between trusts. Trusts are judged on their ability to provide the services. Yet there is little doubt that mergers would provide a better service. But they are reluctant to act as this requires local health authorities to co-operate and plan. This is a complete change from the market ethos. Mergers to produce single, acute trust hospitals are not compatible with competition, and the pressure for the limited resources within the NHS means that full competition cannot work. It is too expensive, as industry found out. The Government have to decide where competition stops and co-operation starts.

The NHS internal market does not deal with the contradictions of its customers being citizens and voters. As customers, they want quality and service. As citizens, the public legitimately are attached to their local services and are reluctant to see them disappear. They have their local preferences and attachments, and vested interests.

Many noble Lords have spoken of the lack of money in the NHS. So, trying to use the private sector's financial principles in the NHS throws up contradictions. To close wards and reduce services because patients have been processed more quickly, and the available cash used up, demonstrates this. In the private sector this increased efficiency would be rewarded by higher profit. In the NHS it means that the gains made in the past few years in speeding patient care will be lost. As a result we have drift. We were promised lots of new projects via the private finance initiative and, in spite of the remarks of the noble Viscount, Lord Bridgeman, nothing major has happened.

However, business and government can learn from each other. Many lessons have been learnt by the NHS from private sector management theory: breaking up giant organisations into manageable units, measuring performance, accountability and becoming more customer conscious. But these business and financial perspectives are near the bottom of the list of criteria valued in modern business today. Inspiring a shared vision and developing organisational talent are near the top because it is those talents which enable managers to improve performance and implement change.

Many noble Lords have told us that these values exist in the public service. Perhaps the focus needs changing, but they are there. Before the internal market there was a shared vision in the NHS which would be greatly admired by modern business. It is sheer vandalism to destroy it.

The Minister is going to have to take difficult decisions; more difficult than dealing with excessive and bureaucratic management. The NHS is landed with yesterday's theories from the private sector. There is

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nothing more dangerous than yesterday's view of the future. My suggestion to the Minister is to stop trying to apply transient private sector management theories to the NHS. Let the NHS develop its own, incorporating the public service values of service and dedication, remembering that the NHS is also a social and political community, and using the best of private sector efficiency which has stood the test of time. Allow health to be the indicator of success instead of accountancy.

That is why the Minister should support the Motion of my noble friend Lady Jay to maintain the public service values of the NHS and why we should both thank her for moving the Motion.

6.53 p.m.

Baroness Berners: My Lords, I begin, as others have done, by thanking the noble Baroness, Lady Jay of Paddington, for initiating this debate so that all sides can bring out the problems as they see them and confirm the excellence that has been achieved during the first 50 years of the National Health Service, as so well expressed by the noble Baroness, Lady Seccombe. Indeed, I very much support the sentiments of the noble Baroness, Lady Brigstocke.

There is so much in place right now to maintain the public service values of the NHS due to the recognition of this Government of that need, as mentioned in the speech of the right reverend Prelate. Under the Conservatives, the National Health Service has responded fully to the advances in medical knowledge by facilitating the demands of the ever-increasing discoveries and inventions of this compassionate service, as is evident in the drop in infant mortality from 13.2 to 6.1 per thousand live births between 1978 and 1995, to a longer, more useful and often more comfortable life expectancy.

Taxpayers' money is being continually readjusted so that it is used more efficiently and effectively as greater and greater demands are made on it to provide for the staffing of all the many facets of maintaining and improving the health of the nation. This Government are maintaining the value of the service by increasing the spending, so that we are still confident that we shall be attended to quickly and expertly in an emergency--and for free.

I think we sometimes forget how that is being managed. It is due to wise and efficient Conservative policies over the past 17 years. We have a much better chance of being treated more quickly for less immediate conditions, with a far shorter waiting time than 10 years ago. I know that some of my more elderly friends and relations are amazed at and very grateful for all the expert personnel who swing into action and put together a very helpful and supporting plan that will solve some of their problems--either to enhance their independence or arrange for care when it is not possible to continue on their own.

Thanks to the Conservatives, today's National Health Service is managed locally by people who understand local needs and how to meet them. So it is quite evident that the Government's concern is that the patient should come first. They have provided far more information for

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patients than ever before--about how they can be helped and who will advise them on the available services in their area--and they have provided information to patients in hospital, as was so well expressed by the noble Baroness, Lady Flather. The developments and improvements continue through the release of funds at the local level for the health service, so that there can be more up-to-date, economical and efficient use of capital investment to build new units in more appropriate places to serve the patient better by streamlining the services in the area.

The East Gloucestershire Health Authority has been able to provide a new unit for the acutely mentally ill and another new unit for geriatric assessments. Both of those, fortunately, are close to where we live. This past month a new maternity hospital has been opened adjacent to several new wards in the Cheltenham General Hospital. The new orthopaedic ward opened its doors to patients on the waiting list recently--of which my husband is one--so that we could see how much will be done for us and where some of the taxpayers' money goes. Those parts that keep us walking about without pain can cost a bomb! Of course they are expensive; it has taken years of research by skilled medical and industrial scientists to come up with the goods--as mentioned by the noble Lord, Lord Butterfield--matched by the skills of the surgeons and clinicians. Much of the taxpayers' money goes to the funding of these important activities.

Is it not the principle of the division of the cake that, where some receive more, others inevitably will receive less? This balancing act goes on down from the national to the local level, where the hunk, slice, sliver or crumb must be fairly distributed or rationed, as the noble Lord, Lord Hayter, said. If all departments are running at full strength with normal work, when an emergency arises some of that work must be left for a while so that the emergency can be dealt with. I think noble Lords will agree that it is not a sound economical practice to have areas of accommodation and personnel lying unused to deal with an emergency that may never happen--certainly not in a small set-up. The staff of the National Health Service are of such quality that they will have done all that is possible; they will know where commodities can be put on hold, and will know what will be demanded of them in order to cope efficiently when the emergency arises. The East Gloucestershire Health Service cannot be the only one in the country that has managed to budget, with the funding available, to have adequate forward plans for emergencies, winter or otherwise, as well as run an excellent service.

7 p.m.

Lord Desai: My Lords, as the last speaker in this debate from the Back Benches, I am aware that quite a few things have already been said. I shall concentrate on the question of rationing, as mentioned by the noble Lord, Lord Hayter, and the internal market, mentioned by my noble friend Lord Haskel.

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We can start with the proposition that the National Health Service, by and large, is a very good and efficient service. It is a credit to all parties on all sides and especially to the people who work in the service. I do not believe that anyone doubts that. No one doubts also that there was rationing in the National Health Service from when it first started.

The issues that arise nowadays are the following. Despite £43 billion being spent, there is a feeling abroad--not just on this side of the House, but it also appears in the newspapers, including the Evening Standard, where there have been many headlines--that at the margin increasingly people are not happy with the way the NHS is performing. The question is why that is the case. I wish to suggest an answer.

Before the reforms of the National Health Service and the introduction of the internal market, people who needed the health service felt that they could get it. They had access to it either through their GP or through the hospital. Yes, there were problems, but, by and large, people did not feel that there was discrimination, one against the other, depending on where you lived or your GP. There were queues and there was rationing.

There was also the strange phenomenon that the United Kingdom had, through the NHS, the most cost-efficient health service of any developed country. We were spending a smaller proportion of our GDP on health and that was a good thing. The amount of money spent on something is not a good indicator of quality, but the outcome is. In terms of the health service, we were getting a good service.

It was false propaganda during the 1980s which stated that the NHS was in crisis and that it was costing too much money--about 5 per cent. of GDP. People also said that there were inefficiencies and that the demand for healthcare was unlimited. It is a fallacy to say that the demand for healthcare is unlimited. It is not unlimited because nobody actually fancies going to a GP. It is an unpleasant thing to do and it costs time. You go only when you have to.

The internal market signally failed to deliver. First, the devolution of funds to some GPs--not all of them, yet--made people who belonged to a fundholding practice feel that they were better off. Indeed, they were better off than people who belonged to a non-fundholding practice. I do not believe that that was a delusion. The mistake arose from the fact that when fundholding was introduced, placing patients here or there became not a matter of the health needs of the patient but of the need for efficiency and the profit-making quality of a fundholding GP. Until then people belonged with the practice and they got whatever they wanted. But once there was a cost consideration, GPs were encouraged to market their services. If there was a genuine market in health, as there is in hamburgers, one would not mind. But you cannot have a genuine market in health because people do not pay up front; they have to be provided with whatever they want.

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In the allocations among hospitals we did not have a market, but what I would call, and have called before, Stalinist pricing. If one has Stalinist pricing there are more or less fixed prices for, say, hip replacements, but differential costs because the accountants have imposed rules on hospitals. Inner-city hospitals have to meet the cost of the land on which the hospital stands. Nobody is about to buy it. The accountants will tell you that opportunity costs are very important--a great deal of money is spent on these Coopers & Lybrand reports. If one is in the City of London and, for example, at St. Bartholomew's, that land is very valuable. You have to factor that land into the costs. If that happens you can see why in inner cities there is a crisis in the health service. Inner-city hospitals have become uneconomic and they cannot attract patients. Therefore, they have to be shut down or the number of beds reduced.

That is wrong costing. An inner-city McDonald's--or an inner-city Claridge's, I should say--can easily charge a higher price for hamburgers, but St. Bartholomew's cannot charge. So it is false pricing. There is not a proper market but a bureaucratic one. Once you set up a market like that, costs have to be written down specifically. These are transaction costs in the form of managers and accountants who have to write down all this bilge.

Roughly speaking, up to 5 per cent. of the budget is transaction costs, not in terms solely of the managers, since the time spent by the health professionals in filling out forms has also to be taken into account. But up to 5 per cent. or more of the budget is concerned with transaction costs. It is a total waste of money.

I am sure that when people thought of the internal market they thought that it was such a nice word because it suggested that it would be efficient. What was already an efficient service, and one which had to ration in a way which citizens found satisfactory, has now been messed about with. In not understanding the principles of the market we have a polluted and distorted market in which people have been segregated and made to feel unhappy. The inner-city hospitals are in crisis and that is costing a great deal of money.

I say to the Government that they should go back to school. We shall tell them how the market works and then there will be a proper market. Perhaps we need a better, collective socialist market than the one we have right now.

7.8 p.m.

Baroness Robson of Kiddington: My Lords, it is very difficult to follow the commercial break that we have just had. We on these Benches are also very grateful to the noble Baroness, Lady Jay, for introducing this debate. In introducing it she told us something which we all know; namely, that in 1946 there was not a bipartisan policy on what was going to happen with the introduction of the health service. However, she failed to mention that there was a third party in the House in those days as well as now. First, Beveridge was a Liberal and not a Socialist. Secondly, the Liberal

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Party introduced its plans in 1942 for a policy called Health of the Nation, which was based on the Beveridge Report. That was before 1946, so I believe that we on these Benches take some credit for its introduction.

The Motion invites us to celebrate 50 years of the NHS, which, up to now, has been the envy of the world. I know that personally because I was born in a country, Sweden, which has been generally admired all around the world for its health and social services, which have been magnificent, but the one thing in our NHS that that country has always envied has been our general practitioner service and the fact that every member of our society is registered with a doctor and has somewhere to go for primary healthcare. I believe that that is the basic strength of our health service. The basic principle of healthcare being available to all citizens at the point of need was a grand vision. It was a vision in which we all still believe, one to which we must be still dedicated and one which we must do our utmost to preserve.

Many noble Lords have referred to the benefits of our National Health Service, but the Motion also refers,

    "to the need to maintain the public service values of the NHS and to the case for immediate government action to prevent a breakdown of services this winter".

Sadly, I want to concentrate on the problems that face the NHS rather than speak of its benefits. After endless reorganisations over the past 14 years and the threat of a breakdown of services this winter, we must urgently examine what has gone wrong. We could go through the various reorganisations and analyse their impact on the NHS, but that is now in the past. That is history. Perhaps the one thing that we should say is that they were all introduced without adequate tests and pilot schemes being undertaken before their national implementation.

The last reorganisation, the introduction of the provider-purchaser principle, has probably made the greatest impact on the services provided by the NHS. The principle itself is a good one, but its implementation leaves much to be desired. Not enough thought was given to the tremendous increase in the time of both managers and clinicians that would be needed to cost and implement the contracts between providers and purchasers. As many noble Lords have said, that has resulted in an unprecedented increase in the number of managers employed by hospital trusts and boards. I believe that the number has increased by more than 400 per cent. That endangers the money available for patient care.

This year--I am not talking about the present negotiations, but about the financial year in which we are now functioning, 1996-97--the Secretary of State proudly announced that he had negotiated an increased allocation for the NHS of 1 per cent. above inflation. He failed to mention that out of that £500 million at least £178 million was destined to pay off the debts of the previous year. It had to be siphoned off before the new money could go to the health authorities. That has resulted in some trusts which were particularly badly in debt receiving no increase above inflation.

Unfortunately, the same thing is about to happen this year. I am told that, although we are only half-way through the financial year, health authorities have

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overspent by £134 million. I have discussed this with clinicians, who are adamant that patient care has not received any appreciable increase. They say that health authorities are not taking important strategic decisions because of financial uncertainty and that such decisions are endlessly postponed from year to year. Some of those strategic decisions could be financially sound and might improve the service. It is a tragedy that they cannot be taken.

The largest part of the increased allocation has been spent on increased management costs. I believe that that is mainly because of the short-termism of the yearly contracts between purchasers and providers. Which industrial company could work efficiently on only a year-to-year basis without having any idea of what will happen in the next year? As soon as this year's contracts have been settled--on the whole, it takes managers and clinicians a year to work them out--they have to start working again on the contracts for the next year. That means that clinicians are losing time that they might spend on patient care. I wonder whether the Government might be prepared to try to persuade the Treasury to consider three-year contracts so that much money could be saved, not to mention the valuable time of clinicians, thus allowing them to devote more time to patient care.

The last part of the Motion deals with the danger of the breakdown of services this coming winter. The need for action is urgent. Trusts and boards have, to a large extent, already had to abandon their efforts to reduce waiting lists because of the constant pressure on their accident and emergency departments. There are two main reasons for that. First, in too many hospitals too many beds have been closed--not because they were not needed, but in an effort to save money and to come up with the right accounts at the end of the year. As a result, we have seen people having to wait on trolleys and an increase in the length of time before a patient can be found a bed. Both the National Association of Health Authorities & Trusts and the British Medical Association state that, unless an injection of £200 million to cover the deficit of the present financial year is forthcoming, the outlook for the winter is black. However much money there is next year--and however well negotiated it has been by the Secretary of State--it will not help unless it reaches the health service now.

I have also found out that GP fund-holders are now suffering from a lack of resources. Many of them have no money left for cold surgery--and we are only half-way through the year. They have had to resort to a block on calling in new patients despite the fact that some of those patients may already have been waiting for an unacceptable length of time, many of them in great discomfort and often unable to work as a result. It may be that some of the increase in the number of patients attending A&E departments is because patients use A&E as a last resort. Having failed to be referred to hospital by their GP, they decide to use the A&E department to get help.

What can we do about it? What are the ways forward? Both the BMA and the Royal College of Nursing have advocated the setting up of acute assessment units in hospitals to relieve A&E departments. Heart patients, for instance, could be assessed for hospitalisation

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instead of automatically taking up a hospital bed, even if only for a night or two. Acute assessment units could also be used to make sure that patients who required diagnostic treatment were referred to the appropriate departments and not through accident and emergency. That would relieve the pressures on A&E. But that would not reduce the need for an injection of cash this winter to avoid a breakdown of the service.

At present the Government are engaged in the annual spending round. According to the press, the Secretary of State has had some success in obtaining cash for the NHS, but there are two provisos. First, as I have already said, cash next year will not help the NHS over this winter. It is essential that the NHS receives an immediate injection of £200 million to tide it over this winter. Secondly, when announcing the NHS allocation for next year, account should be taken of the amount of money which, like this year, will immediately go to paying off the debt incurred this year, so that the public is not given a false impression as to the amount of money available to the NHS.

When announced, there will be many calls on the money available, not least from the community services, which have been seriously underfunded since emphasis on care has been moved into the community. Nowhere is this more important than in care given to the mentally ill in our community, where both health authorities and social services are underfunded. The noble Lord, Lord Mottistone, made that particular point. I see in today's papers that Mr. Dorrell has become aware of the problem and is considering the reorganisation of the service yet again--for example, by the appointment of a new health authority to manage community services for the mentally ill. We do not need any more health authorities; we need more money for the health service and the social services to enable them to look after these people. At all costs we must avoid reorganisation and its high management costs but instead concentrate on providing our dedicated staff with the financial backing that they need. I plead with the Government to consider changing the contract principle to a three-yearly contract, to reorganise accident and emergency departments and to be transparently honest in announcing the proposed cash injection.

7.23 p.m.

Baroness Hayman: My Lords, this has been a wide-ranging and fascinating debate. I am sure that the whole House will congratulate my noble friend Lady Jay on her sense of history, timing and geography in initiating it. We continue to debate the National Health Service 50 years after the passage of the Bill whose stages were fought over, as my noble friend Lord Bruce reminded the House, in this very Chamber when the Commons sat here post-war.

I start by declaring an interest as chairman of an NHS trust. I believe that it is important to strike a balance in discussing the National Health Service. One must have admiration for the work that the NHS has done and the work that continues to be done day in and day out by dedicated staff. But that admiration should not inhibit one from speaking out when one believes that problems

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ought to be addressed. I find inconsistency in the attitude of noble Lords and Baronesses sitting opposite. When, on this side of the House, criticisms are made of government policies towards the NHS, it is said that we are playing party politics. But when praise is heaped on what has happened in the NHS over the past five years, that is an objective analysis and just happens to be the result of government policies. If Aneurin Bevan were able to revisit the Chamber and sit where he was sitting 50 years ago I believe he would be amused and gratified to hear the universal approbation from all sides of the House about his creation. My noble friend Lord Haskel reminded me in the course of the debate of the old saying that success has many parents but failure tends more often to be an orphan. The parentage and support of and for the National Health Service run across this Chamber.

The NHS is a remarkable creation. Professor Peter Hennessy, in his book dealing with Britain post-1945, describes the National Health Service as the nearest that Britain has come to institutionalising altruism. It is a very noble creation. That is why some of us feel passionately that the values of that noble creation--the equity, collaboration and work that the staff do by way of public service, not service for profit--should not be undermined by an ideological approach to the organisation of the service.

My noble friend Lady Jay deserves congratulation not only for her historical sense but her sense of contemporary political timing. Many noble Lords have referred to reports of the Secretary of State for Health going to the wire (as sources close to the Department of Health would have it) for extra funding for the NHS. I echo the sentiments of the noble Baroness, Lady Robson. We wish Mr. Dorrell well in all his attempts. However, one must understand the severity of the financial problems now building up which could eat away at any settlement for next year. One must also understand the importance of an injection of cash this year to address the current problems expounded by many of my noble friends. For example, the noble Lord, Lord Howell, referred to the problems in Birmingham. Without doubt, one is dealing with a severe crisis in the NHS.

I have no desire to instil in patients unnecessary anxiety about the services that are available to them. In the vast majority of cases the NHS continues to provide a high quality of response to patient need. That has been spoken to by noble Lords on all sides of the House. However, I do not believe it right to ignore the views of professionals and others throughout the service about the severity of the difficulties. The BMA says that the NHS faces the most difficult winter since the introduction of the internal market. NAHAT has said that this is the toughest year since 1987-8. It is essential that there is extra investment. The trusts federation--which is hardly a left-wing voice against the Government--has said that this year the NHS is not crying wolf and that resources are needed now because it is £200 million to £300 million short.

When I have raised these issues previously with the Minister, who has a long record of fighting for

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resources within the NHS, she has tended to look at me wisely and say 'twas ever thus. Noble Lords opposite accuse us on these Benches of making party political capital, of in some way enjoying the problems that exist within the NHS. I have to say to the noble Baroness, Lady Rawlings, that far from not having experience of hospitals my right honourable friend the Leader of the Opposition was visiting Great Ormond Street Hospital with Mr. Chris Smith this morning. My noble friend Lady Jay was at a hospital yesterday. I was at a hospital today.

One of the things that most upsets staff within hospitals is when Ministers go into the mode of Panglossian speech that, "All is for the best in the best of all possible worlds", and there is nothing wrong when their daily experience is of appalling problems, real difficulties and real pressures on A&E described by the noble Baroness, Lady Brigstocke. We have a duty to expose them.

I was somewhat reassured that this was not a party political issue when I awoke to the "Today" programme yesterday morning to find that it was not just people on this side of the House who were making the point but to hear the dulcet tones of Mr. David Mellor informing the nation that he had taken a delegation of 10 Conservative MPs from south London to tell the Secretary of State how urgent it was to have some money for the NHS this winter.

The concerns of the elderly have been mentioned. It is a group of people about whom we should be worried. My noble friends Lady Turner and Lord Stallard talked about the problems and the anxieties that the awful episode at Hillingdon engendered with the market structures of the NHS, squabbles between rival hospitals, the purchasing authority and the social services unable to achieve a coherent approach--

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