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Lord Higgins: My Lords, the noble Lord has not taken the point. The way in which the inquiry has been set up is totally inappropriate. Lord Penrose is looking into the Treasury and the Treasury has set up the inquiry in such a way that it will be extremely difficult for him to say anything sensible about the broader issues, as the ombudsman made clear. It is quite wrong—it is totally wrong—for the Government to have set it up in that way. It has delayed others, such as the Treasury Select Committee in another place and the ombudsman, going into the issue. The whole thing is, in short, a cover-up.

Lord Hunt of Kings Heath: My Lords, I cannot accept the suggestion the noble Lord has made. It seems to me that the inquiry terms of reference are broad. They are to inquire into the circumstances leading to the current situation of Equitable Life, taking account of the relevant life market background, identifying any lessons to be learnt for the conduct, administration and regulation of life assurance business, and to give a report thereon to the Treasury. It is independent and it is up to Lord Penrose to decide how he conducts the inquiry within those terms of reference.

More generally on the question of pensions, I say to the noble Lords, Lord Oakeshott, Lord Fowler, Lord Blackwell and Lord Hodgson, that of course the Government are not complacent about the current situation in relation to pensions. I am not complacent, nor is my noble friend. We have put in place a structure of state support, increasing retirement pension as the noble Lord, Lord Oakeshott, acknowledged; increasing the minimum guarantee; reforming SERPS to become the most generous state second pension; and introducing stakeholder-funded pensions for those without private funded schemes of their own. I would say to the noble Lord, Lord Hodgson, that pension credits make even small pensions worth having.

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However, I understand the issues facing the pension funds. It is the case that long-term gains in life expectancy, the current situation with the stock market and the move from final salary to money-purchase schemes has produced concerns over people's pension expectation. There is no doubt whatever that people need to build up greater pension savings to provide for an increasing length of retirement. I do not believe that there can be any disagreement about that.

I also agree with the noble Lord, Lord Oakeshott, that what also matters is employers' contributions to those schemes. The move to money-purchase schemes has seen those contributions reduced. I agree that employers' contributions are pivotal and I refer the noble Lord to the fact that Legal and General have estimated that where employers contribute to stakeholder schemes so do around 80 per cent of their employees. Where they do not, only around 10 per cent of their employees make such provision. I say to the noble Lord, Lord Higgins, that I do not accept that stakeholder pensions have been a failure—more than 1 million have been sold—but I believe that we need to encourage employers to contribute.

The issue of compulsion, which the noble Lord, Lord Higgins, raised, is a major step to contemplate. The response to the Green Paper will no doubt argue the merits and demerits of compulsion. The Green Paper will look at pensions policy in the round, including opportunities open to people around retirement, and it will set out proposals to enable people to build up more pension savings. It will also take into account work underway at the Inland Revenue to simplify pension scheme taxation. Furthermore, I say to the noble Baroness, Lady Greengross, that it will pick up many of the issues she raised in her speech.

Of course it is necessary to strike the right balance between competing goals and we have to devise policies for the long term. We recognise the important issues raised by noble Lords today and there will be further opportunity to contribute to the debate on pension provision in the consultation period after the Green Paper has been published.

I have so far focused on health equality, the links between health and poverty and the specific responsibilities of the Department for Work and Pensions, particularly in relation to pensions. Continuing the theme, the NHS has a key role to play in improving health and healthcare for all. That is why the NHS Plan is so critical; that is why we are setting national standards; that is why we are building up capacity in hospital beds and in community and primary care provision; and that is why we are increasing the number of staff employed within the National Health Service.

I did not recognise the extremely gloomy picture painted by the noble Baroness, Lady Noakes, of where the NHS stands at the moment, nor did I recognise her rather rose-tinted analysis of where the NHS stood in 1997. Indeed, I should say to the noble Earl, Lord Howe, that many of the critical challenges we face now

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are as a result of chronic under-investment by the previous government. I give but one example of that—the number of nurse training places. In 1993 the number was reduced to 13,000; we have now got the number up to more than 20,000. We have had to invest considerable resources in the infrastructure because of the previous government's neglect.

My noble friend Lord McCarthy said that the jury is still out on PFI. I should say three things to my noble friend, the first of which is that the traditional approach to building hospitals in the NHS has clearly not worked. He will know, and many noble Lords will have experienced, the dreary process and the years it has taken to build NHS hospitals under the traditional route—the phase 1, the phase 2, the phase 3, the phase 4—so that by the time a hospital has finally been built it has become obsolescent.

PFI is an opportunity to fast-build hospitals in the future, and evidence is coming through of its success. For instance, all the major hospital schemes completed so far under PFI have been delivered on or ahead of time. That compares enormously favourably with the record of the NHS under the previous funding capital regime.

My noble friend referred to comments made by the Deputy Comptroller and Auditor General, but the evidence that PFI is better value for money has been provided by the National Audit Office. Many reports on PFI schemes now completed across all areas of government activity show value for money benefits of varying degrees, as indeed they have to.

Lord McCarthy: My Lords, can the noble Lord explain how that is the case? The Minister is saying that the deputy comptroller totally disagrees with his own reports.

Lord Hunt of Kings Heath: My Lords, that matter should be addressed to the Deputy Comptroller and Auditor General rather than to me. The reports that the NAO have produced show value for money, albeit of varying degrees.

Turning to the question of foundation trusts and the comment made by the noble Lord, Lord Fowler, it is true that for a long time I considered that the best way of getting the Department of Health out of micro-management—and it was as keen on micro-management under the noble Lord's stewardship as it has been ever since—was down the public corporation route. I did believe that. But time has moved on and I am not sure now that a public corporation role is the right way forward. I suspect that the danger is that a public corporation might be just as keen on micro-management and interference, judging by the record of public corporations that we have all known and loved, as the Department of Health.

The big difference, and the reason why we can have confidence that through foundation trusts we can seriously devolve to the field, is that we have established in the past few years national standards and an independent inspectorate. That gives us the

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confidence to be able to say that through foundation trusts we can indeed devolve much more than has ever been devolved previously.

I know that noble Lords are worried that we are taking in the first instance a limited number of trusts and that they will have a greater advantage over the rest of the health system. But in a sense—the noble Lord, Lord Clement-Jones, is always asking for pilots—it is surely better that we should use trusts which, being three-star, have proved themselves successful.

The great expectation is that, as further trusts achieve three-star status, they too will become foundation trusts. In time, I hope that there will be many foundation trusts completely under local ownership which will be accountable to the local population and to their members. The hope is that they will be able to innovate and breathe, and be able to deal with the issues referred to by my noble friend Lord Turnberg and the noble Baroness, Lady Finlay, in terms of good relationships between doctors and nurses and other members of staff.

I have no doubt that there is great potential in establishing foundation trusts—in changing the relationship between the Department of Health and the NHS at local level. But it is through our establishment of national standards and through the independent inspectorate, which has received a warm welcome in this debate, that we are able to have confidence in those arrangements.

So far as concerns the new inspectorate, of course we want it so be independent. I should have thought that the appointment of Sir Ian Kennedy as chairman of the shadow commission is a visible sign of our desire to see it robustly independent.

If we are to have a first-class health service, we clearly need to have more effective integration of health and social care. That brings me to the delayed discharge Bill. Delayed discharge from hospital is a serious problem. It can have knock-on effects throughout the whole of the health and social care system. That is why we are bringing the Bill forward. I say to the noble Baroness, Lady Greengross, that I believe it will be sooner rather than the many months that perhaps she was hoping for. I hope that we shall come to it very shortly.

I do not believe that the interests of older people are served by the current blurring of responsibilities. The point of the Bill will be to make clear where responsibilities lie and to provide the financial incentives which local authorities have not previously had in order to make discharge arrangements effective.

Of course, we do not want perverse incentives. In fact, the incentives will be there to encourage health and local government to work together. If the NHS does not perform effectively, it will be penalised through the funding system. There are issues around how this is to be organised. But I say to my noble friend Lady Pitkeathley, and to the noble Baronesses, Lady Barker and Lady Greengross, that we want this to work with the grain of good partnerships between health and local government. We want to work with

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the grain of care trusts in terms of pooled arrangements. But it is very important to ensure that we do not continue with the blurring of responsibility that leads to a failure to act effectively and to the real problem of older people being stuck in our NHS hospitals when they ought to be receiving care in the community.

On the mental health legislation, I make it clear that we shall press ahead with the reform of mental health laws. This is presently subject to a consultation process. When we finish considering those consultations, we will bring forward a Bill during this Session.

In conclusion, the debate has been extremely successful. The issues that we discussed hang together. It has been a very welcome, high-quality debate. I agree with the noble Lord, Lord Higgins. I share his

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enthusiasm for pre-legislative scrutiny. I do not feel that I can respond to his criticism of some of the Bills. All I say to him is that he has had a flavour of the kind of debate that we often have on health Bills, and I look forward to enormously helpful scrutiny of the Bills that I will bring forward later in this Session. Undoubtedly, they will be carefully scrutinised, and rightly so, but I will also commend them to the House. They deserve our wholehearted support.

Lord Grocott: My Lords, on behalf of my noble friend Lady Blackstone, I beg to move that the debate on the Address be now adjourned until tomorrow.

Moved, That the debate be now adjourned until tomorrow.—(Lord Grocott.)

On Question, Motion agreed to, and debate adjourned accordingly until tomorrow.

        House adjourned at seventeen minutes past nine o'clock.

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