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Baroness Gardner of Parkes: My Lords, I rise to support Amendment No. 10, moved by my noble friend Lord Howe. It is important to be able to see what money is spent on administration. I believe that this matter has been hyped up artificially. When the present Government were elected, they spent all their time talking about the waste of money on bureaucracy in the health service. My own experience, as chairman of a major trust, was that the administration was extremely hard-worked, very good value for money and that no big business enterprise could have hoped to have achieved, with the same amount of money, what was achieved by the administrators in that trust. The matter has been turned into a political football, which is a great pity. Administrators within the health service are not a separate class of people; they are the people who have been asked to carry out necessary and unenviable tasks, without whose efficiency and commitment the health service could not be run. Nothing has changed on the ground. The same people are all in their places, doing the same jobs; but now they are all in partnership and the terminology is different. It is important that these figures should be available.

I agree with the point made by my noble friend that, unless there is a basis for comparing like with like, there is no way of knowing the true position. With the national institute for clinical excellence we shall be able to see clinical standards that are parallel. We need to be able to see financial standards that are parallel, too.

In a different capacity, I am involved in an NGO which helps children in the third world. I notice that in their annual accounts NGOs include various categories under different headings, and comparing one with another is extremely difficult. If one NGO has an overhead of 10 per cent. and another an overhead of 90 per cent., often a totally false basis has been used for assessing that. My own NGO is very strict with regard to percentages, but, for example, we have noticed that other NGOs include all kinds of things under the heading of education, such as perhaps paying for a person to go in a taxi to deliver papers to someone who is to be educated.

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It is extremely complicated to achieve a common basis on which to assess costs. However, it is worth doing, and not just in the case of primary care trusts, but throughout the health service. It would enable us to know where we were getting value for money. Within the health service it is not just a matter of cost, which I know is very important; it is also a question of value for money. If something looks cheap but is not satisfactory, there is nothing cheap about it. We want to be sure that we are getting good care for patients in this country and that whatever we spend is well spent. That could be done by showing the proportion spent on administration.

When one asks them a question, this Government, like all governments, say that they cannot give an answer. I have had that experience repeatedly over many years when I have asked dental questions: "No, we cannot give you the answer". Yet there is a vast enterprise, which is completely computerised, which decides on the type of filling that everyone has. I am a member of the Parliamentary Information Technology Committee. That committee would tell you that it should be possible to press a button on the computer and see exactly what is spent on every different aspect of dentistry. But, no; we have always had the answer that the information is not available. The amendment, if passed, would mean that the information would have to become available, and I strongly support it.

I read in the newspaper that the Secretary of State wishes to appoint the chief executives in the National Health Service. I believe that that is like expecting a major company to allow the Government to appoint its chief executive. It is a very worrying matter. It is one thing to appoint the non-executive members, but I believe there is cause for concern if the Secretary of State wants to take on the appointment of chief executives in the National Health Service, whether it be of one of these trusts or of any other type of trust or authority. I hope that the Minister can give us an assurance that that will not be the case.

Lord Skelmersdale: My Lords, it is inevitable that, like the Minister's arguments sometimes, in any large organisation subsets of the organisation will come under the heading of "the good, the bad and the ugly". I believe it is vital that these details should be publicised, whether they relate to my noble friend's charity, part of the health service, secondary schools, primary schools or, indeed, clinical excellence. It should not only be possible for the sum to be compared--in other words, by the Government and possibly Parliament--but, much more importantly, for local people to be able to compare and to know that what is done in Blackpool is better or worse than what is done in Blackburn, or wherever.

Governments tend to be rather frightened about the amount of income spent on this or that service. It may well be that a good trust spends more on administration and that that is why it is good. Equally, it may be that a good trust, in specific instances, spends rather little on administration. There is no reason to hide that

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information in either of those cases because it is germane to the public's understanding of what their trust is doing for them. That is what the Bill is all about.

Baroness Carnegy of Lour: My Lords, the Government should not underestimate the interest that the public takes in how much is spent on administration and what the reason for it is. The noble Baroness probably knows that increasingly local government councils, which have by law to circulate a leaflet to their council-tax payers explaining how the council tax is made up, give descriptions of what is spent on administration and why because they know how great the interest is. I believe that most people are sensible enough, as my noble friends pointed out, to know that sometimes a bit more spent on administration can result in a better service and better value for money within a given sum. They understand that, but they need to know the figures and to be able to compare them with those for other like bodies.

The health service is thought of by the public as being somewhat amorphous and difficult to understand, and they do not know where the money goes. I believe that the provision in the amendment would help the public to find the health service user-friendly and that they would understand much better than some of us might suppose, on the face of it, why sufficient money has to be spent on administration. Some of them know the administrators, whether they think they are good or bad, and so on. The better people are educated on this matter, the better regard they will have for the management of their local health service.

Lord Laming: My Lords, we should recognise the helpful point made earlier about NGOs. There is no point having figures for expenditure on administration without definitions of what is included in "administration". We cannot compare like with like unless we record like with like. Recording like with like across primary care trusts and a range of activities requires a sophisticated accounting and recording system. Of course it would be helpful to have information of this kind, but we should not be under the illusion that it can be achieved at the press of a button. It will require a substantial amount of investment and time to assemble information across the country which can be useful in the way in which your Lordships have asked for it. If that is to happen, we must acknowledge the infrastructure required to achieve it.

5.30 p.m.

Baroness Cumberlege: My Lords, I rise to support the remarks of the noble Lord, Lord Laming, who had a distinguished career throughout social services and in government. When the last Government established the total purchasing pilot schemes--the nearest thing to primary care groups--that was, an academic said to me the other day, about the only sensible thing they did. They monitored those schemes carefully, set the baselines and could see how costly they were. Interestingly, research has shown that they are more expensive than GP fundholding and general practice in its generality.

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The Government are setting out on a new road of innovation. Some of us do not agree with the whole approach but clearly the Government are intent on that route, so we are determined to make it work. However, we need to know the cost. I support those of my noble friends who said that the cost should be transparent. The Government have put on record on many occasions their wish for transparency and in this case, they should prove that is so.

Baroness Hayman: My Lords, I am grateful to those noble Lords and Baronesses who contributed and hope that I can be reassuring on both strands of the argument. There has been debate about transparency, comparability of costs, and the need for effective management, which I do not challenge for a moment--but I will speak about the difference between bureaucracy and of the importance of removing systems that create unnecessary administrative work that adds no value to the services provided. It is crucial to make that distinction.

We are completely sympathetic to the suggestion that primary care trusts should include details of the proportion of income spent on management costs in reports to their health authorities and to the Secretary of State. However, we do not believe that Amendment No. 10 in necessary. Primary care trusts will be required to keep and publish accounts in a form directed by the Secretary of State. Under Section 98 of the National Health Service Act 1977, the Secretary of State directs health authorities and NHS trusts to present their accounts in a form set out each year in the manual for accounts. They will show management costs--income spent on administration, to use the words of the noble Earl, Lord Howe--as a separate item. The accounts will show also details of the PCT's income and it will be easy to work out the proportion of income spent on management costs.

Paragraph 16(2) of Schedule 1 states that the report prepared by a PCT at the end of each financial year--that is, its annual report--shall give details of the measures the trust has taken to promote economy, efficiency and effectiveness in using its resources. Crude demarcations between the amount spent or not spent are an insufficient reflection of whether money has been well and usefully spent. That is why economy, efficiency and effectiveness are useful. Those details will embrace administrative or management costs and that is certainly one of the areas at which we shall be looking.

Further scrutiny of expenditure on management costs will be provided by the Audit Commission--which, as the noble Lord, Lord Laming, pointed out acknowledges the importance of the comparability of data. We do not add much light to the argument if we try to compare apples with pears. I accept the point made by the noble Baroness, Lady Cumberlege, about ensuring from the beginning that systems are in place to monitor expenditure. As to her comment about the total purchasing pilots, they had higher management costs than fundholding but covered the full range of commissioning or purchasing activity, whereas fundholding only covered 20 per cent. or so. The

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findings are entirely consistent with the Government's approach to funded care groups--that management budgets should be linked with the responsibilities that go with them.

In Committee, when we considered a proposal similar to Amendment No. 11, I undertook to give the matter further consideration. I can report that we will seek to bring forward an appropriate amendment, I hope on Third Reading, that will have the effect of placing on PCTs an express duty to publicise the specified accounts and reports in accordance with requirements set out in regulations. That will make the duty on PCTs more specific, in line with the proposed amendments, but will retain the Secretary of State's discretion to make regulations setting out, for example, when the accounts and reports must be published, any other requirements, and whether the list of documents that must be publicised should be extended to those other than accounts, annual reports and auditors reports on matters of public interest. That arrangement will have the added benefit of retaining flexibility, to cater for future changes in circumstances.

Many statutory schemes contain powers rather than duties to make regulations. That is true even when the failure to do so would render the scheme inoperable. There are a number of instances in the Bill where the word "may" is used but where there is a clear intention that such regulations will be made. It would not be appropriate to review every such instance where the word "may" rather than "must" is used. I hope that the noble Baroness accepts my assurance that we intend to impose an express duty on PCTs on the face of the Bill to publicise their reports and accounts. On that basis, I hope that she feels able to withdraw her amendment.

As to management costs and our commitment to ensure that £1 billion that would otherwise have been spent on bureaucracy is freed up for patient care, I was asked for hard facts. In Committee, I reiterated that we are looking to add to that target as well as improve the target reduction set in May 1997 of £84 million in health authority, NHS trust and GP fundholder management costs, together with further reductions of £73 million in 1998-99, which we announced last December.

Cumulative savings to date are already about £250 million. Primary care trust management costs are expected to be contained from the replacement of the internal market, GP fundholding and related measures. Together with PCGs, they will bring a more rational approach to the commissioning services and, across Great Britain, the number of commissioning bodies will be cut from more than 4,000 to 600. PCTs in particular will enable savings in management costs through the merger of functions between PCGs and community trusts and by more cost-effective use of staff, a greater skill mix and sharing of skills, and resources across primary and community healthcare. As I said earlier, there is no way that I would wish to denigrate the contribution made by managers within the NHS as part of the team that provides high-quality healthcare. Money that is spent on effective management to ensure that that takes place is money well spent.

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To deal with the point raised by the noble Baroness, Lady Gardner, about the appointment of chief executives, the Government attach great importance to developing and supporting a strong cadre of highly trained managers. We have already strengthened appointment procedures by arranging for NHS executive regional directors to act as the external assessors for such appointments. This new approach will need arrangements and methodology that are being developed. It is right that the Secretary of State should have an interest in ensuring that there are high quality managers available to the NHS, which is a public service, but I can assure the noble Baroness that these new plans will fall strictly within the Nolan Committee rules. In no way are they concerned with politicising the appointments process, and the appointments will themselves be made by NHS chairs and boards. I hope that the noble Baroness finds that reassuring.

I hope that I have also reassured the noble Earl, Lord Howe, that the Government recognise that a high proportion of NHS costs should not be spent on management. One of the great successes of the National Health Service is that it is much cheaper to administer than systems based on private insurance or private healthcare. That is one of the reasons why we manage to provide a high quality, effective service at lower cost than in other countries. For that reason we are determined to safeguard that publicly taxed-based system. In so doing we recognise the role of effective management and the payment of appropriate amounts of money to reflect that management. We do not want to spend money on the unnecessary and bureaucratic paperchase that was a feature of previous arrangements in the NHS with all those different commissioning bodies. In particular, teaching hospitals had to deal with contracts involving hundreds of individual commissioners and bill them which meant a paperchase around the National Health Service. That added nothing to patient care but took money out of it. Based on the assurances I have given as to what is already in the Bill and what we intend to put in it, I hope the House will feel that the Government are safeguarding the transparency of the costs of administration and management within primary care trusts.

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