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Baroness Cumberlege: My Lords, I rise to support my noble friend. This is the first time I have taken part in debate on the Bill because I was not able to attend Second Reading. I have spoken to Members of your Lordships' House who have agreed that I should take part in debate in Committee.

As I have the generosity of the House and am able to do that, I start by declaring interests. I am a non-executive director of Huntsworth plc; executive director of MJM Healthcare Solutions and a council member of the ICRF. I chair St George's Medical School council. I am a vice-president of the Royal College of Nursing, a senior associate of the King's Fund, and it is time I got a life!

I support the amendment because I like the way that the clause is related to primary care. I have spent a lifetime working in primary care and feel strongly about it. The device which is being promoted here is to try to address the long-standing problem which was identified decades ago by Dr Tudor Hart and became known as "the inverse care law". However, like my noble friend, I have problems with the clause and much of the Bill because of its lack of transparency.

As my noble friend said, increasingly we have seen resource allocation shrouded in mystery. It is almost impossible now to see who is getting what because of the top-sliced money. Recently we have seen the introduction of the performance fund. That is a misnomer. It is not so much a fund as a convenient way of withholding money from general allocation. We shall see the fund grow and grow.

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It is impossible now to tell whether health authorities are receiving their fair shares or getting allocations of anorexic proportions. Added to that, the recent figures are not comprehensively on the public record. Even without the performance fund, if one takes into account health action zones, grants for inequalities, the New Opportunities Fund, and so on, it is hard to tell.

I shall be deeply boring and give a list of some of the top-sliced money: £7 billion for new capital investment; £31 million to improve hospital cleaning; £10 million for improvements to hospital food; £9 million for practical improvements in the working environment--I am not sure what that means-- £250 million for information technology; £570 million for cancer; £230 million a year for chronic heart disease; £120 million of capital funding for the Treasury capital modernisation fund; £300 million in equipment for cancer, renal and heart disease; £300 million for the mental health national service framework; £140 million for professional staff to keep their skills up to date; £8 million for GPs and their staff (occupational health); £30 million for childcare arrangements; £50 million for special services to reward joint working with social services and £10 million for NHS-wide patient advocate and liaison service (PALS), a friend of ours, to which we shall come later.

I could go on. That is not even a comprehensive list. That illustrates how much money is being siphoned off and how little we are able to track it. I strongly support my noble friend's amendment in terms of transparency. He is right that ideally one would want to see the distance from target for each body made explicit. However, I recognise that that will be difficult. We should like to see the targets specified in legislation. Again, that is difficult. However, surely the least the Minister should give us tonight is transparency and agree to the amendments tabled by my noble friend.

I have given notice to the Minister that I should like to have a whole range of information about the Advisory Committee on Resource Allocation. I worked on this late at night. Looking at it in the morning, perhaps it is not so appropriate.

I should like to know who these people are; how they are appointed; the committee's terms of reference; whether it takes evidence; whether it meets in public; and how its decisions are disseminated. As regards this clause, will the committee take into account other community services such as nurse-led primary care centres? Does that come into the equation? Will it take a strategic view of the workforce, which in this case is GPs, or will it consider only financial issues?

I welcome any attempts to attract bright, young, newly-qualified doctors into general practice. I understand that, if enacted, the clause will strengthen primary care. However, can the Minister tell us whether it provides incentives for GPs to work in the wilderness areas? Will the measures in any way attract GPs, and will they address Tudor Hart's inverse care law? Will they bring in flexibility in terms of

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employment? I imagine that with the GP contracts that is not possible. However, will the measures enhance GPs' pay if they are part of a salaried service?

I do not believe that GPs take on general practice to seek money. I know that the Secretary of State has recently introduced incentives in terms of their pay. I believe that GPs are altruistic. They want to treat, heal and care for the sick. The ethic of most GPs is that they love their neighbour and feel that each should be done by according to his needs. That is a Christian ethic and one which many GPs carry out to the full.

However the way in which we employ such people is strange. We give them little opportunity to change their jobs. We expect a GP to arrive in a practice at the age of 28 and to spend the rest of his or her working life in that community. By the time GPs are 40, they are probably fed up. Their hopes have either been fulfilled or they recognise that such hopes are unrealistic. Are there incentives in the system being introduced to ensure that GPs are attracted to such areas, or will the system be mechanical?

The other question I want to ask the Minister reflects the comments of my noble friend. Let us suppose that a vacancy occurs in a health authority area and the health authority decide not to fill it but to use the savings to address, say, a recurring deficit in acute services. Are there safeguards in the clause to ensure that that will not happen? I want to ensure that there is such a safeguard and that transparency exists. I strongly support my noble friend.

Baroness Northover: I want to address the specific issue in Amendments Nos. 5, 7, 10 and 13 to a clause which allows the Secretary of State and, in one case, health authorities to act,

    "in whatever way he thinks appropriate",

across a wide range of areas concerned with how the resources in the NHS are to be allocated.

There are many areas in the Bill where the Secretary of State apparently seeks wide powers. I gather from debates in the other place that the Government intend to introduce a formula for the use of such powers, when they have worked it out.

Like other provisions in the Bill, that formula has yet to be spelt out and we may come back to this in the next group of amendments. We should not leave this clause as it is, open to abuse. I am sure that this is very far from the Minister's mind. In the interests of transparency and accountability, Amendment No. 9 is the right approach.

7.30 p.m.

Lord Hunt of Kings Heath: My Lords, I am glad about the general welcome given to the intent behind this clause in relation to ensuring that there is a better distribution of GPs in the first instance throughout the country. I particularly welcome the penetrating questions of the noble Baroness, Lady Cumberlege, which I shall do my best to answer. She certainly showed that there is life after being a health Minister!

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Essentially, what we are attempting to do here is to use a formula for determining fair shares for health authority and primary care trust allocations, which brings both parts of the funding regime together. As the noble Baroness, Lady Cumberlege, suggested, this has been a big problem in the past. Even where you had the previous resource allocation funding assistance, there was a limit to what could be done, because it bore no reference to what could be spent under Part II.

Essentially, the clause allows the Secretary of State to take account of the distribution of spending on the non-cash delimited primary care services when he makes cash-limited allocations to health authorities, and then allows health authorities to take account of the distribution of spending on non-cash-limited primary care services when they make cash-limited allocations to a primary care trust.

The intention in the first instance is to develop a single-funding formula which will extend the existing unified budget formula which covers the old hospital health services budget, prescribing and general medical service infrastructure costs, to cover all GMS costs. The clause allows us to bring other Part II services, such as dentists and pharmacists, within the ambit of the formula in future.

We are starting with GMS because the relationship between population needs and the number of doctors is best understood in this area. However, as the dental strategy makes clear, we anticipate that health authorities will play a much more pro-active role in dentistry and indeed actually put their hands into their own pockets to ensure that it is given a boost. Initially we are focusing on personal dental service schemes to achieve this, but as preventative service becomes better understood on a population level we would, using this clause, have the opportunity to bring these services too into the fair shares allocation system, delivered through the single-funding formula.

Various speakers referred to the Advisory Committee on Resource Allocation, ACRA, regarding the development of the non-GMS non-cash-limited element of the new formula. It will be building on earlier work undertaken with the Medical Practices Committee, which developed a formula setting fair shares of unrestricted GP principals at health authority level. Essentially, we have asked ACRA to advise whether, and how, the formula needs modifying to operate in cash terms for the whole GMS non-cash-limited budget at both health authority and primary care trust levels.

Turning to the point made by both the noble Baroness, Lady Cumberlege, and the noble Earl, Lord Howe, the noble Earl referred to the 1997-98 range of distance from target, which was around 15 per cent. For 2001-02, the figure is 18.6 per cent but there is an explanation. While the range has increased as a result of one or two outlyers, I can confirm that more health authorities are nearer to their target. For instance, in 1997-98 93 per cent of health authorities were within plus or minus 5 per cent of their target, but by 2001-02 96 per cent will have reached that figure, being plus or minus 5 per cent. I would also say that the 2001-02

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figures of the unified allocations covering HCHS prescribing and GMS cash limited are not comparable with those for 1997-98, which cover HCHS only.

It is quite difficult, but my own conclusion is that progress is being made to try to reduce the gap between the health authorities in relation to the target. The intent, when we implement the new system, is that we will arrive at a single funding formula that will set a target, or fair share, for each health authority and primary care trust, covering GMS non-cash-limited expenditure as well as a unified allocation. I want to stress that when we allocate the extra resources for unified allocations in future our change-of-pace policy will apply to these new targets. I hope I can reassure the noble Earl, Lord Howe, that this works on extra resources being made available.

Essentially, those who are spending less than their fair share on GMS non-cash-limited services can be given a larger increase for their other services, and if they are spending more than their fair share they may get a smaller increase. The intent is to do that by a process of levelling up so that no area will have its existing level of resources reduced.

Of course, this clause does not stand on its own. It is clearly linked with the abolition of the Medical Practices Committee, as set out in Clause 21. We shall debate that later, but the important point is that in a sense we have anticipated the debate we had on Second Reading, in that it is really pushing responsibility down to the health authority level to try to tackle some of the very difficult problems in relation to GP distribution.

In answer to the noble Baroness, Lady Cumberlege, of course we want health authorities, and particularly primary care trusts, to use new flexibility to attract doctors to areas or localities where primary care services are poorly developed or over-stretched. We are looking particularly at GMS local development schemes or NHS walk-in centres. Those services are funded from cash-limited money and the new formula will mean that under-doctored areas will receive a proportionately greater share of increase in the unified budget, which they can use to fund these initiatives. Also, I am sure many of your Lordships will be pleased to recognise that some of them, like NHS walk-in centres, offer the possibility of using the skills of nurses to develop services to complement those of traditional general practice.

I would also say that in relation to issues such as the procedures that health authorities will need to go through they will have to work through a process of consultation at local level, particularly where they need to declare a GP vacancy, thereby taking over the role of the Medical Practices Committee. The essential point of all this is that we are giving much more leverage and responsibility to health authorities at local level.

Turning specifically to the amendments, in answer to the transparency point, only the provisions for funding health authorities under Section 97 of the 1977 Act, the formula process or mechanism by which the Secretary of State determines the allocation of each

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health authority, is left to his discretion. It has always been left to the Secretary of State to decide what each health authority should receive and how that is determined, subject to the usual accountability to Parliament. The funding process is monitored by the National Audit Office, and powers must be exercised in accordance with the principles of administrative law. It cannot be exercised in a way in which no reasonable Secretary of State would exercise the power. That allows for the allocation process to evolve over time in line with policy changes. We have simply adopted the same approach in the clause.

The alternative to a general power, which is in there to put beyond any doubt that the Secretary of State has the responsibility to decide these matters, would in fact take a very much narrower power to allow the Secretary of State to introduce a scheme for taking into account an authority's non-cash-limited expenditure when determining its cash limited allocation. I believe that such an approach might limit the ability to modify our approach over time; for example, as new information or research becomes available. The whole history of resource allocation formulae in the health service over what must now be 20 years suggests that new information becomes available and one needs a flexible approach to deal with it.

The words which Amendments Nos. 5, 7, 10 and 13 seek to remove simply make it clear that it is the Secretary of State who exercises this power and that he has a wide discretion to determine precisely how the health authority's non-cash-limited expenditure is to be taken into account.

I turn to Amendment No. 9. That takes us to the transparency issue in the allocations process. I accept the principle behind the amendment. However, I believe that the current allocations process is already transparent.

We already publish details of the current allocation formula. Every year we publish details of each health authority's target, the underlying calculations, and its distance from target and allocation. I can assure noble Lords that we will continue to do this for the new arrangements proposed in the clause.

The noble Baroness, Lady Cumberlege, has been assiduous in charting all the new initiatives that we have centrally funded and one way or another handed out to the NHS. All those initiatives have been publicly announced. The tables for central budgets are included in the allocation publication. Although the list of announcements was impressive--it was certainly an impressive sum--it was nevertheless relatively small compared to the total allocation.

The effect of the amendment would be to require us to publish details of the basis of the calculation of any variation in initial allocations. At the start of each year we divide the money available for the NHS between initial allocations to health authorities and budgets held centrally. As the noble Baroness has suggested, some of these central budgets are then allocated to health authorities for a number of different programmes. It would be bureaucratic to have to publish the details of these calculations. We shall

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publish the Part I and Part II allocations and the targets. The pace of change policy will be in the public domain, as will ACRA's work on the formula.

We are committed to transparency. I believe that the arrangements I have set out show that that is so.

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