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Lord McCarthy: My Lords, I understand the Minister to say that our amendment, if re-written, would be beneficial to the worker, and that that is no good. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Davies of Oldham: My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion I suggest that the Report stage begins again not before 8.33 p.m.

Moved accordingly, and, on Question, Motion agreed to.

Health Funding

7.33 p.m.

Lord Smith of Leigh rose to ask Her Majesty's Government what plans they have to redistribute health funding towards the areas of greatest health need.

The noble Lord said: My Lords, I hope that this is regarded as a fairly straightforward Unstarred Question. My noble friend on the Front Bench is perhaps fulfilling her first duty in her new role. I congratulate her on her new role and wish her well. I hope that she can give us a clear and straightforward answer.

The NHS Plan promised investments and reform to deliver a better health service. I am delighted to see that the Government have responded with the investment announced so dramatically in the Budget. I am also pleased about the structural reform. I welcome PCTs, which will focus on local issues. They are the right organisations to create a better health service for improvement. Those are necessary but insufficient conditions to achieve the Government's commitments and targets. The third element must be to direct resources to those parts of the NHS which so far have been neglected. My contention tonight will be that despite attempts by the Government to redistribute resources, such resources are still not being sufficiently targeted towards areas of greatest need.

The geography of health needs, both in terms of care and funding, is a real issue for this country. I hope that we can discuss that tonight. In illustrating points I

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want to make, I make no apology for the fact that, as noble Lords might expect, examples will be from my own local area, Wigan. Perhaps I should remind noble Lords of my interest as leader of Wigan Council.

The conclusion I shall draw from some of the evidence in Wigan is valid for many other parts of the country which share similar social and economic backgrounds. The crux of the issue is perhaps to define health need. Although there may be some criteria which we think are objective, it is the way in which such factors are weighted which becomes the subjective part of the analysis.

Health data may be the obvious starting point when considering health need. In terms of raw data, Wigan has a standard mortality rate of 118, which is well above average. For potentially avoidable deaths it is 122; for the specific areas in which the Government are targeting reduction, lung cancer and coronary heart disease, the rates rise to 124 and 131 respectively. Life expectancy in Wigan stands at 73.6 for men, which is 1.6 years less than the average for England, and for women, 77.3 years, which is 1.8 years less than the average for England. That demonstrates real evidence of need.

We are all aware that health need may also rise with age. Obviously, elderly people need greater provision and have a greater dependency on health services. However, we need to be cautious in dealing with age as a factor in health. Many places, certainly my own area, would be an example of where life expectancy levels are lower than average, and levels of ill health and dependency rise earlier. In my area, many people who are under the age at which additional funding becomes available are having the same needs met as those for people over the age of 75, 80 and so forth. We need to remind ourselves that resources may be required for people of a younger age.

A further point arises in terms of social factors. The Acheson report recognised that it is necessary to address the social determinants that result in inequalities in the health of the population. With a current rate of 90 per cent of our wards in the worst 20 per cent in the country as regards social deprivation, there is high social need in my area. Poverty is not just a factor in terms of determining prevalence towards ill health. We need to remind ourselves that poverty means that people may well be unable to afford alternative private treatments, which may be available to people who are better off.

A further area, which is probably the least subjective, is that of historical factors. Perhaps I may demonstrate that. One factor would be the pattern of current provision, which is determined by past and current activities. In my area again, 70 per cent of general practice is carried out in single or double-handed practices. That is a high proportion. Many such practices are still housed in inadequate premises. Many are in terraced properties which have been in the doctors' hands for many years. The ability of those individuals to provide up-to-date treatment in the 21st century is some way off. As regards e-medicine, the

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idea of some of those people using computers to aid diagnosis to speed data exchange, and so forth is some way away.

The next historical factor is our industrial heritage. I think my noble friend would agree that in areas with mining or textile backgrounds, industrial diseases, caused by the hard labour in those particular industries, are still prevalent. One subjective factor is what I would call chronic disadvantage, where in terms of health the cumulative impact of a number of factors in an area creates a particular population need. A recent survey, conducted by the health authority in my area, and which had a high response, asked people about their level of health. The results were depressing: people feel they are unhealthy.

With my background I have always thought that local government finances were impenetrable, but health finances are even more mysterious. I still would not claim to understand much. It is difficult to compare the outcomes of the funding methods. The easiest way that I have found is to look at the weighted allocations per head of population to health authorities. Those, I remind your Lordships, were meant to take account of some of those health needs so that we ended up in a perfect world, with an equal amount to spend per head of population.

In the allocation for 2002-03, the average amount for England stands at 817 per head, but in my area, Wigan and Bolton, the health allocation is only 799 per head. That shortfall multiplied by the population means that the local health economy is short of at least 10 million, which is quite a significant amount. That gets translated down into other matters—in my area the number of GPs per 100,000 of population is 42. Even Greater Manchester, which probably has fewer GPs than average, has more. If we had the same as the rest of Greater Manchester we would actually get 20 more GPs. If we had the same as the average for England we would get 50 more GPs.

This is an area where the figures show that there is a great deal of health need. One can imagine the extra workload on each of those doctors. They have a large patient list and a great deal of activity with which to deal. The quality of service must obviously emphasise cure rather than prevention. We also find that because people get frustrated waiting to see GPs there is a greater use of accident and emergency departments at local infirmaries because they can get treated relatively quickly.

The problems in my area, and I think nationally, are compounded by the rise in the prescribing budget. In the Wigan and Bolton Health Authority it has risen by 39 per cent over four years. It reflects the workload of the GPs and the health needs of the area. If it rose by the same rate this year as last year, it would cost the local primary care trust 8 million—a huge amount of money.

I agree that money is not the only solution in health. When speaking on health matters in your Lordships' House I have consistently spoken of the need for partnerships. My authority has a good track record on that issue. We are one of the best authorities in terms

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of delayed discharges and we have the greatest use of the flexibilities under the Health Act in the North West of England.

The problem is that underfunding of health is compounded by underfunding in social services. These days, in relation to social services, the extreme pressure is on children's services. Those allied to the health authority are likely, if funding is difficult, to be most under threat.

My message to the Government in winding-up is twofold. First, while the Government have made some effort at redirection, it is not enough. They need to be much bolder. It is always easier to be bolder if there is more money in the pot. So if we have growth in health we can use it to redistribute. Secondly, I hope that the Government will change some of their methods in terms of penalising authorities which perform well and simply feeling that the money must go into those areas which do not perform well.

7.44 p.m.

Lord Chan: My Lords, I congratulate the noble Lord, Lord Smith of Leigh, on securing this debate focusing on health funding for areas of greatest health needs in England.

That focus is necessary because the implementation of the NHS Plan 2000 has so far not made significant impact in regions of great health needs defined by high death rates and increased morbidity of coronary heart disease, stroke, cancer and mental illness in the local population. One reason put forward to explain this is the so-called inverse care law where people from lower socio-economic groups, including some ethnic minority communities, have less access to care facilities; they present at a later stage of disease development; and are less demanding of doctors.

Sir Donald Acheson's report, quoted by the noble Lord, Lord Smith of Leigh, Independent Inquiry into Inequalities in Health, published by the Department of Health in 1998 identified possible steps to improve the health of the less well off. Three areas regarded by the report as crucial were the following. First, all policies likely to have an impact on health should be evaluated in terms of their impact on health inequalities; secondly, a high priority should be given to the health of families with children; and, thirdly, further steps should be taken to reduce income inequalities and improve the living standards of poor households.

Clearly, areas of greatest health needs should be identified by the broader definitions of the Acheson report rather than by the clinical yardstick currently used by the Department of Health on coronary heart disease, stroke, cancer and mental illness.

I am not dismissing the impact of those major diseases on the lives of people. But to use them as the main indicators of health needs would ignore health inequalities associated with poverty in rural communities as well as the effect of poverty on children. Those diseases do not commonly affect children and young families. Unhealthy lifestyles of poverty, including heavy cigarette smoking, increased

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fatty food intake and inadequate fresh fruit and vegetables in the diet will lead to those diseases in later life.

The way forward is to concentrate on local communities and local issues. Here I declare my interest as chairman of a local community association, the Wirral Multicultural Organisation based in Birkenhead. I am also a non-executive director and vice-chairman of the Birkenhead and Wallasey Primary Care Trust.

I begin with local statistics on death and disease used as indicators of health needs. They should be collected and analysed according to districts and local wards. Interventions can then be more effectively targeted to vulnerable people in local wards. Public health services delivered through primary care trusts would be more effectively targeted to people in local wards, with better chances of their benefits being identified, than to larger populations. Improvement in delivery of services is more likely to be achieved locally for specific groups of people than for the general population. Health funding for those wards is also more likely to be available for specific interventions.

The Government have shifted the balance of power and resources from the centre to local primary care trusts in order to improve their delivery of services according to the needs of local people. That change is an improvement in the way the NHS is funded and is welcomed by local people. But for the current financial year 2002-03, most primary care trusts in England have been asked to accept and to work with less funding than they need according to budgets worked out last year. That resource problem exists paradoxically when several sources of regeneration and community development funds from central government are becoming available in areas of deprivation particularly in metropolitan districts.

A plethora of funds exist for specific target groups such as Surestart for pre-school children, Pathways for deprived inner-city locations and, of course, the Community Fund. Those resources are targeted at community groups in the voluntary sector. But community groups need the help of public agencies as equal partners in order for these grants to make a difference in their lives and the lives of their children. Partnership working between voluntary community groups and public agencies such as the primary care trust and local authorities is still in need of development and support.

The NHS Plan has emphasised the need for patients to be represented in decision-making on delivery of care and monitoring of services. But community groups are equally important participants in order to improve standards. In that regard, the Government are to be congratulated on introducing the Race Relations (Amendment) Act 2000 to cover all public bodies including the NHS. One result of that Act is the introduction of racial equality schemes for all NHS trusts.

Redistribution of health funding for areas of greatest health need is an issue to be considered at the local level of primary care trusts. To make a difference

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funding must be targeted at vulnerable people in local wards where a baseline of economic, health and social welfare indicators has been collected and analysed. The problem is that no additional resources are available for this year. Other sources of community funding should be allocated especially for the benefit of children and young families in deprived communities.

Partnership working is needed between local community groups, the voluntary sector, NHS trusts, local authorities and the private sector. Such partnership would encourage community development and the participation of local people in health promoting activities. Participation of local people with different needs and from different ethnic and cultural backgrounds should be encouraged and developed so that no minority group is marginalised. Finally, achievable health improvement targets must be set and monitored annually. I shall be interested to hear the Minister's response to those proposals.

7.51 p.m.

Baroness Pitkeathley: My Lords, I am grateful to my noble friend Lord Smith of Leigh for giving us the opportunity to debate health funding once again. I am especially pleased to be speaking in the first debate to which my noble friend Lady Andrews will reply.

As poor health is largely associated with poverty, we can chart where the pockets of poor health are likely to be by indices of deprivation, as my noble friend reminds us. Where we have poverty, poor housing, lack of employment and fewer people taking up educational opportunities, health needs are greatest.

Those areas are also associated with deaths from diseases resulting from poor diet, lack of exercise, lack of knowledge about what contributes to good health and so on. Of course, those include diseases that are high on the Government's targeted priority list: cancers, coronary heart disease and strokes. The Government are to be congratulated on making those targets of special attention, which will undoubtedly have the effect of redistributing some resources.

Nor should we forget that poverty is also associated with those diseases that are not killers but none the less have a devastating effect on families and communities, such as depression and other forms of mental illness. The establishment of health action zones by the Government shortly after they came to power was and is a major step forward in addressing inequalities in health.

However, we need most of all to spend more resources on prevention and public health. The modernisation agenda that the Government have set for the NHS, together with the vastly increased amount of funding now available, will have an effect on that in two ways. First, it will focus the main delivery of healthcare at the place where it really matters—the primary care level, as the noble Lord, Lord Chan, reminded us; as near to the patient and his or her family as possible. Secondly, it will make public

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health a more important focus for the NHS than it has thus far been. Of course, that will take time, but I travel hopefully.

But the most important change that we can bring about in that area is to educate patients and potential patients about how best to care for their own health. The importance of the patient's role in his or her care has hitherto never been fully recognised and I want to celebrate the Government's commitment to encouraging real patient and public involvement in health through their latest health reforms.

In that regard, I want to draw attention to an important programme run by the New Opportunities Fund, the lottery distributor of which I have been chair since 1998: our healthy living centres programme. Healthy living centres promote good health in the widest possible context. They target groups and areas that represent the most disadvantaged sections of the population. By the time the programme ends, we should have targeted the most disadvantaged 20 per cent of the population throughout the United Kingdom. Healthy living centres will reduce differences in the quality of health between individuals and improve the health of the worst-off in society.

There is no standard blueprint for the healthy living centres that we are funding. Priority areas were identified using deprivation indices relating to unemployment, low income health status and educational participation and attainment. We also ensured that rural areas and pockets of deprivation within affluent areas were identified.

The centres are developing innovative ways to provide solutions to the many challenges that we face when addressing healthcare needs. An important aspect of the programme is that it has been targeted at active local partnerships, including businesses, health authorities, local authorities and other lottery distributors. The voluntary sector, which has the advantage of being closely in touch with the needs of communities, has in many cases taken the lead in putting together those partnerships. The application process is now almost complete and by the time the programme is fully up and running, we anticipate that there will be about 400 healthy living centres throughout the United Kingdom.

To give your Lordships some specific examples, in Tooting, almost 1 million has been allocated to target health inequalities with a particular focus on the health of ethnic minorities. The incidence of health problems such as diabetes, chronic heart disease, stroke and mental illness is higher among those groups, as your Lordships will know. In East Yorkshire, 1 million has gone to a project that targets young people and rurally isolated and excluded people. The award will fund a driver for a bus to bring people to the healthy living centre, a community cafe, a youth project to combat homelessness, a rural advice worker, a credit union, the youth empowerment project and a learning activity project. The richness of the ideas and the variety of approaches taken are amazing, especially with regard to the local partnerships that had been established,

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such as the one in Sheffield that will include the local library services in its provision with the full co-operation of the local authority.

Lest your Lordships imagine that I am using my time as a commercial for the New Opportunities Fund—well, I am, but I hope that I am doing more than that. Lottery funding is by its nature time-limited, although in the case of healthy living centres, it can continue for five years. All of the programmes are most stringently evaluated and I am certain that some of the programmes that I have mentioned and others on which I have not had time to touch will provide exemplars for the Government—and, indeed for future governments—to show that the more resources that we devote to encouraging people to care for their own health, the better will be the health of our whole population.

Deprivation in health is largely the result of social and economic deprivation, as is well documented. Those are the issues that we must address—promoting good health as well as treating sickness—if real progress is to be made in improving the health of our nation.

7.57 p.m.

The Earl of Listowel: My Lords, I thank the noble Lord, Lord Smith of Leigh, for allowing us this opportunity to debate health funding priorities. I am also delighted to be taking part in the first debate to which the noble Baroness, Lady Andrews, will respond.

I will concentrate on child and adolescent mental health services, especially as they apply to looked-after children. I welcome the introduction of the child mental health service framework and the additional funds that it has brought with it. There is a great shortage of mental health professionals. I have been told by Mind, and we heard yesterday, that 66 per cent of foster children and 98 per cent of children in care have mental health problems.

I am especially concerned about the problems faced by looked-after children, children in public care, when they are placed out of their local authority, out of county. Those children have complex needs, whatever placement they are given, whether fostering, residential care or an alternative to secure accommodation. My concern is, first, that they are not overlooked or neglected, as I hear that they occasionally are and, secondly, that they do not incur such expense on the child and adolescent mental health service of the locality that other children in need are overlooked as a consequence. I should appreciate some reassurance from the Minister about what steps are being taken to avoid that.

There is a great shortage of mental health professionals. To cite one example of what the mental health professions can achieve, several sources have told me that since the Government, under Quality Protects, have been supporting fostering, there has been a significant reduction in breakdowns of foster placements. We need more mental health professionals. I am advised that one important means

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of recruiting them is ensuring that medical students are well exposed to work with children and adolescents with mental health problems during their training and that that work is well mediated. As a consequence of that experience, more medical students are likely to choose to enter the field of psychiatry. However, those who choose not to do so will also have benefited from that experience, so that later in their career they can make more informed referrals for children and young people. Therefore, I would appreciate the Minister giving information on what steps are being taken to achieve that goal.

Perhaps I may return to the child national service framework. Does the Minister anticipate that the children's mental health and emotional well-being module will ensure that children and adolescents will be able to access appropriate developmentally trained, multi-disciplinary teams which will provide a timely, locally based and highly responsive service for acute psychiatric problems when they arise? Can the Minister assure the House that additional resources will be made available to enable those teams to carry out their work if they are likely to need greater resources than are currently available locally?

Those are detailed questions and if the Minister wants to write to me about them, I should be very grateful for her response.

8.1 p.m.

Lord Rea: My Lords, I apologise for missing the opening speech of my noble friend and a number of other speakers too, owing to a solid traffic jam at King's Cross which kept me waiting for 25 minutes. I moved approximately 300 yards during that time. Anticipating my Whip, I shall say I should not have been out of the House, and that has shown me.

I believe that the noble Lord, Lord Smith, deserves congratulations on raising a fundamental issue. As a former NHS GP with a special interest in public health, I recognise that reduction of health inequalities is the top priority in improving the nation's health. In fact, that was the topic for my maiden speech nearly 20 years ago in which—disobeying the non-controversial rule—I asked the government when and whether they were going to implement the recommendations of the Black report. Needless to say I got a fairly dusty answer which downgraded the importance of the report and said that its recommendations would be far too expensive.

We had to wait 15 years before that government even recognised that inequalities existed—even then using the term "health variations". However, since 1977 the Government have been clear in their understanding of the link between health and socio-economic factors. The noble Lord in his Question speaks about the equitable distribution of health funding, but I am sure that he would be the first to recognise that the main determinants of health—perhaps he said it in his speech, I apologise—lie outside the health service, with genetic factors and the environment each playing a role.

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Genetically determined ill health is mainly "neutral" from a socio-economic point of view, but not so ill health which is due to environmental factors. From before conception to old age the dice are loaded against the poor, the less educated and the less skilled. The work of Professor David Barker and colleagues in Southampton has shown that poor maternal nutrition can lead to a greater likelihood of babies growing into adults who are more susceptible to diabetes or heart disease.

There a range of factors operating from childhood into adult life which can lead to worse health later; namely, faulty nutrition, poor housing, poor working conditions and stress. That is not the prerogative of the busy executive; it is actually much worse among less privileged people where money is short, housing overcrowded and work characterised by lack of control—by having to conform to someone else's timetable and pace. The well-known study by Professor Michael Marmot in Whitehall has drawn attention to that. Perhaps it is not surprising that addiction to tobacco and drugs, which calm uncomfortable emotions, is higher among the less well off.

Dealing with all those factors will involve a long-term haul. I believe that some of us feel that the Chancellor could move a little faster in that. In the meantime, the National Health Service has to pick up the pieces. The Acheson independent inquiry of December 1998 into inequalities in health made it clear that not only premature death but chronic ill health preceding death were more common among the less privileged. That leads to additional work for the providers of both primary and secondary healthcare, particularly if the less privileged are to be cared for as well as they should be. Unfortunately, instead of having extra health facilities with more GPs, nurses and other care workers in the community and higher bed ratios in hospitals, too often the reverse is the case. Provision has improved since 1971 when Dr Julian Tudor Hart described the inverse care law, but Professor Acheson still found it necessary to recommend that:


    "providing equitable access to effective care in relation to need"—

and I emphasise that—


    "should be a governing principle of all policies in the National Health Service".

He further recommended:


    "extending the remit of NICE to include equity of access to effective health care",

and,


    "developing the National Service Frameworks to address inequities in access to effective primary care".

I would like to ask my noble friend, in congratulating her on her elevation to the Front Bench, how far those recommendations have been implemented or what plans there are to implement them.

One of the problems with providing equitable care according to need is that those who need it do not always take it up and demand is strongest from those

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who are articulate but generally in less need. I suggest that when funds are more available, as they are now, it is a good time to do both—to expand services for those in real need, as well as going some way to meet the more politically demanding changes; namely, waiting lists, for instance. I would put that quite a lot lower down in the priority list than seeing to the needs of the underprivileged.

The two main mechanisms which the Department of Health uses to channel funds to less privileged populations are, first, the weighted capitation formula for allocating funds to health authorities, which is called ACRA—the Advisory Committee on Resource Allocation; and, secondly, deprivation payments to general practitioners. Could my noble friend give details on the various changes that have taken place or are proposed to the ACRA formula? Those are not only to take account of the shift to PCT funding of general medical services and GP deprivation payments, but could involve the formula itself, which may need to be adjusted so as more sensitively to allow for the increased overall care needs (rather than demands) of relatively deprived populations in the catchment areas of PCTs. Implementing the Acheson recommendations that I mentioned may require that.

I have two final points. Will my noble friend give any details of the formula which I gather is now being worked on in York to replace and improve the current system of determining deprivation payments to GPs which, though an excellent concept, has been subject to much criticism?

Finally, will my noble friend briefly describe the role of PMS pilot projects in bringing healthcare to hard to reach but needy sections of the population, and any other roles for PMS schemes in the provision of healthcare to those in greatest need that are now being considered? I recognise that my noble friend may have to write to me on some of those points because they are rather detailed.

8.9 p.m.

Lord Clement-Jones: My Lords, perhaps I may also congratulate the noble Lord, Lord Smith, on initiating this bite-sized debate—alas too short—and also welcome the noble Baroness, Lady Andrews, to the Front Bench.

As a number of noble Lords have mentioned, the Acheson report remains at the core of the public health debate. It performed a valuable role in reminding us of the reasons for health inequalities and of what action should be taken. The public health White Paper published the following spring in 1999 said that the story of health inequality was clear—the poorer a person is, the more likely he or she is to be ill and die younger. That is still starkly true.

Subsequently, the NHS Plan published targets on infant mortality and life expectancy and the child poverty target was adopted by the Government. Now we have the Government's consultation on a plan for delivery, Tackling Health Inequalities, published last year on the action needed to achieve the targets. It sets six priority areas related to childhood health;

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opportunity for children and young people; improving NHS primary care services; tackling coronary heart disease and cancer; strengthening communities; and tackling the wider determinants of health inequalities such as poverty and material disadvantage.

That paper inevitably raises a great range of issues. There are problems with some of them, not least our doubts about the new structures, or lack of them, for public health services and whether the necessary resource will be available. In terms of major diseases, should we not be looking at diabetes too? We are all well aware of the knock-on effects of childhood obesity, too, and we have debated it often in this House.

In terms of rebuilding communities, how are we spreading best practice in the health field from health action zones and health improvement plans? Looking at the structures for partnership between local authorities, we have argued about the problems of shifting the balance of power proposals which were, and regrettably are, enshrined in the NHS reform Bill.

We on these Benches would much prefer to have the health strategy created on an integrated region-by-region basis at the strategic level. That was recognised in recent government proposals for everything else but health. We welcome the creation of a health inequalities and public taskforce. But what does that consist of? Who sits on the body and what is its work programme?

A cost-cutting spending review on health inequalities is also mentioned in the paper and was recently reported on as indicating that the NHS could be saved 850 million if health gaps were reduced. But what is the status of that review? Has it yet been officially published? Moreover, how will PCTs and strategic health authorities fit with local strategic partnerships and align with local authority planning processes? In all of this, we have the overarching need for proper public participation in health policy and public health and the need to promote preventive health measures.

Finally, we have the issue of indicators which arise from the paper. We also have the third annual report of the Social Exclusion Unit. One has only to weigh it to understand the seriousness of the intent, but how concrete are the indicators set out in it? I say that it describes the actions taken but it does not describe the outcomes in anything like sufficient detail.

Peter Mandelson recently said that we are all Thatcherites now. Your Lordships can take it for granted that I thoroughly disagree with him—and I see nods from the other Benches. He does not even appear to understand the motives of his former colleagues in government, such as Frank Dobson, immediately on coming into office. The legacy of the Thatcher years may have been a more enterprising economy but a great many people were left by the wayside during the Conservatives' 18 years in power, particularly in terms of differences in life expectancy and in infant mortality.

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Some progress appears to be being made by this Government. It appears that differences in life expectancy between the top and bottom social classes has across the UK been reduced for both men and women. But a huge amount remains to be done, as the noble Lord, Lord Smith, rightly claimed. The Joseph Rowntree Foundation report, published in December 2001, emphasises the scale of the continuing problems. Some health indicators have improved but the proportion of babies of low birth weight has not changed over the past five years and the rates of teenage conception remain much higher than elsewhere in western Europe. And, as we are all well aware, mental health is worse.

In September last year, the London Health Observatory pointed out that in London health inequalities in life expectancy and infant mortality are widening not narrowing. In fact, London's infant mortality rate compares badly with nearly all other EU capital cities.

It is quite clear that whatever the national spin on the initiatives being taken and the action plans being published, resources are not reaching the deprived areas. Last November, the very well respected chairman of the former east London and City Health Authority wrote to MPs, GLA members and others stating:


    "As you know last year we received no additional funding for health inequalities, despite the glaring needs locally".

If they are not receiving the money, who is? If the resource allocation formula does not benefit deprived areas such as East London, then who will it benefit? Perhaps the noble Baroness will say whether the formula has changed for 2002-03 in order to benefit these deprived areas to a greater extent.

We recognise the good intentions of the Government but above all they need to be straight about the indicators, straight about what is happening on the ground, and redouble their efforts. In the words of the noble Lord, Lord Smith, they need to be bolder. Above all, they need to ensure that adequate resources are directed to areas of greatest need.

8.15 p.m.

Baroness Noakes: My Lords, I start by welcoming on behalf of these Benches the noble Baroness, Lady Andrews, to the Dispatch Box for her first contribution in a health debate. We look forward to her response and hope that it will be the first of many. I think she will find that the natives are friendly on health matters!

Secondly, I add my thanks to the noble Lord, Lord Smith of Leigh, for initiating this important debate. There has been insufficient public debate about the mechanics and principles of resource distribution, which is why I in particular welcome this debate.

The distribution of NHS funding is one of the most arcane areas within the NHS—and I say that bearing scars as a former director of finance for the NHS. I shall not go over the long history of funding mechanisms in the NHS. Suffice it to say that by 1976 the principle of equal opportunity of access for equal

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need became established in financial terms with weighted capitation formulae which embedded health need into resource allocation; and while the formulae have been improved over the years, that basic approach has stood the test of time for the past 25 years.

Those weighted capitation formulae are used to arrive at target allocations which show how much each health body, now PCTs, should get to allow it to meet the health needs of its population. But we have never actually achieved parity; that is, health bodies getting their fair shares—and no more, no less.

Those distances from target are fundamentally unfair. Quite simply, some PCTs do not receive their fair share of the available funding to meet the health needs of their population. The noble Lord, Lord Hunt of Kings Heath, recently said that the current figures in relation to PCTs,


    "reveal a range from minus 14 per cent to plus 14 per cent".—[Official Report, 18/3/02; col. 1210.]

That may not sound very much, but it means that the most advantaged PCT is 33 per cent better off than the least advantaged.

Every year there is a calculation called "pace of change", which is the amount that health bodies receive towards their target allocation. It is a highly subjective amount and it is never debated; and yet that is what determines how close allocations actually come to funding on the basis of health need.

About 17 per cent of PCTs are at least 5 per cent from their target—and in health authority budgeting terms, 5 per cent is a lot of money. I should like to issue a call to arms for all PCTs to get both pace of change and fairness in funding out into the open.

The Secretary of State said that when next year's allocations are announced this autumn, they will be accompanied by a further two years of allocations to give three years of funding indication. Will the Minister say what approach the Government intend to take to pace of change within the three-year period? Will the distances from target be eliminated by the end of the period? If parity is not to be achieved with the extra resources being put in, will she say why not?

The allocation process has now started to move away from equal opportunity of access to healthcare on the basis of relative need. It has started to incorporate health inequalities more explicitly. In 1999, Mr John Denham, the then Minister of State for Health, told the Advisory Committee on Resource Allocation to produce a new approach which should,


    "support the Government's wider social agenda and in particular our policies on social exclusion, fairness and reducing health inequalities".

The objective of the new formula is to,


    "contribute to the reduction in avoidable health inequalities".

It is far from clear that producing a new allocation formula that has health money following health inequality will reduce health inequality. I see no such evidence or argumentation from the Government. The Government's belief in the power of money to solve the problems of the NHS is not one that we share.

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When will the report of the advisory committee be available? We look forward to debating how health inequality money will be calculated and whether it can be used to achieve better outcomes.

How will health action zones—themselves targeted at health inequality—fit into the new scheme? Will responsibility for reducing health inequality be with PCTs or health action zones? Who is to say whether health funding has reduced inequalities rather than other essential policy areas, such as housing and employment?

In the last two allocation rounds, some money was devoted specifically to remedying health inequality in certain authorities, including Wigan, thanks to a new bit of magic in the formulae—the loss-of-life years adjustment. Do PCTs know what to do with the extra funding? Can the Minister be sure that when 70 million was handed out last year, it did not disappear into the black hole of NHS funding used to fend off deficits and reduce waiting lists? If it is too difficult to answer that question in respect of last year, perhaps the Minister will say what health inequality outcomes PCTs are expected to work towards with this year's allocation?

We have expressed considerable reservations about the capacity of PCTs with regard to many of their functions—including public health and the delivery of health improvement plans. Is the Minister sure that PCTs, even when funded, can and will contribute to the Government's health inequality agenda?

8.22 p.m.

Baroness Andrews: My Lords, I am grateful for your Lordships' warm welcome—particularly in view of the expertise that is gathered around me. I am glad to know that the natives are friendly and particularly pleased that my first appearance at the Dispatch Box is to respond to a debate on such an important topic and one close to my heart. My noble friend Lord Smith of Leigh, in his excellent overview, described the geography of health in a way that is totally familiar to me, coming from Wales, and to many others in the Chamber.

I am grateful for all the contributions this evening. The biggest health improvement that our country can make is to be serious about tackling health inequality. I take the point made by the Rowntree Trust report to which the noble Lord, Lord Clement-Jones, referred.

There has been a consensus over many years that different parts of the country have different health needs, which have been reflected in the formula that the noble Baroness, Lady Noakes, described. The very young and the elderly are not evenly distributed. The age factor accounts for much of the weighting that makes a difference—although I take the point made by my noble friend Lord Smith that it is not necessarily age that determines illness or immobility. The formula includes some reference to sickness levels, as well as to contextual factors such as unemployment, pensioners living alone and lone parents.

We recognised that the existing formula was not sufficient. It was criticised for failing to get health services to the greatest areas of need, so the

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Government undertook a wide-ranging review of the allocation formula. By 2003, following a review of the existing weighted capitation formula used to distribute NHS funding, reducing avoidable inequalities will be a key criterion. I am glad that so many of your Lordships have welcomed the NHS Plan. I emphasise that it is not separate from inequality policy but is central to it.

Good progress is being made. A new formula will be ready for the next round of allocations which will be announced in the autumn. ACRA will report to the Secretary of State in September. The allocations will cover the three years from 2003-04. I have no information about second and third round funding levels. Perhaps we can keep in touch about that. Most significantly, subject to Parliament, allocations will be made direct to the new locally based primary care trusts instead of through health authorities. The noble Lord, Lord Chan, mentioned the important new role of PCTs in delivering on highly local health needs. We are optimistic that that will work. The balance of power will be devolved to reflect local needs and funds will be managed locally, which will significantly assist the resource allocation process in achieving a fairer and more responsive outcome. That must be put against an increase in health authority allocations, which are 2.7 billion higher than last year.

My noble friend Lord Smith described the serious health needs of Wigan and Bolton and gave some striking statistics. The Government have been able to ensure that in the current financial year, Wigan and Bolton health authority will receive an increase of 45 million over last year—a real terms increase of 7.48 per cent. That is the largest in the North West and means that Wigan and Bolton are near the top of the list in terms of extra cash this year. I hope that that improvement, together with the anticipated change of formula, will make a difference to the North West and to Wigan and Bolton in particular.

Under the pace of change policy to which the noble Baroness, Lady Noakes, referred, local decisions are responsive and reflect NHS guidance. We remain committed to bringing health authorities and PCTs to their target fair shares as soon as practicable. However, we must be fair and consistent across the country. Those are difficult decisions. The Secretary of State takes a long time to consider them. It is a question of maintaining continuity and balance in targeting resources. I reiterate that our objective is securing faster health improvement among the poorest people in society. It is important to ensure that health cash goes to those in greatest need.

Apart from the review, we are making good progress. In the 2001-02 allocation, we introduced a health inequality adjustment based on the concept of years of life lost—which itself reflects the greatest disparities in mortality rates and generates a ranking system. We have added an extension to infant mortality. It is not perfect but is a first step. The health inequalities adjustment targets resources at the most deprived areas in the North, Midlands and South of England. An additional 18 million was put in this year, which brought the target to 148 million.

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Turning to primary care, the noble Lord, Lord Rea, whom I am pleased to see arrived despite a horrific journey, was kind enough to give us warning of some of his questions. Even so, I cannot answer them in sufficient detail, but I shall be happy to write to him. He referred to how to attract doctors into deprived areas and how to create incentives. A 55 million package is being invested to improve primary care premises in deprived parts of the country. We are also giving golden hellos to doctors to encourage them to work in under-doctored areas. We are making progress; for example, there is the personal medical services pilot scheme that has been positively evaluated and which is designed to provide additional, flexible support in areas where we need more direct services to vulnerable groups such as the homeless and ethnic minorities. At the moment there are 26 PMS pilots out of 1,300 in Wigan and Bolton.

The noble Baroness, Lady Pitkeathley, and the noble Lord, Lord Chan, spoke tellingly of the importance of devolving healthcare to ensure that it is the responsibility of the individual. The healthy living centres will certainly promote that. It is essential also that we work in partnership with the local and voluntary communities. The example of libraries has been mentioned and much can be done there.

Health inequalities are avoidable and they are fundamentally unfair. The Government are committed to tackling them. In February 2001 the Secretary of State for Health announced two new health inequalities targets. The first gives a commitment to narrow the gap between a fifth of the areas with the lowest life expectancy and the population as a whole and the second most important is to narrow the gap in infant mortality across the social groups.

Many noble Lords mentioned the relationship between medical needs and environmental factors. When one considers the range of policies that have been introduced—everything from Sure Start to our poverty targets for children, to environmental policies, and to the neighbourhood renewal schemes—we are approaching the problem fully focused with a coherent set of policies. The Social Exclusion Unit's report plays its part in that. That is why the Government undertook a major national consultation exercise, which has prompted 600 written responses alone and has been positive in elucidating from people what they believe is the most important matter. The noble Lord, Lord Chan, referred to the voice of the people. We expect to publish the interim document on that consultation shortly. It will inform the cost-cutting review, which is of additional significance because it enables us to look across the policies. We expect the outcome of the cost-cutting review this year.

It is extremely important to put everything into the context of the additional funding that has gone into the NHS. It will make such a difference to the problems to which noble Lords have referred. In 2001-02 we have already seen an addition of 5 billion in the NHS. Those increases are having a major impact on waiting times. I recommend the annual report of

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the chief executive of the NHS for an encouraging list of improvements and historic, real increases over the next five years.

We want to build capacity. We would not invest in PCTs unless we believed that there was the capacity. We want to ensure that the many descriptions of need that have been identified stand a better chance of solution than they have had in the past. I thank the noble Lord, Lord Smith of Leigh, for raising the Question.


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