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Lord Hunt of Kings Heath: As I had ministerial responsibility for performance rating I am overwhelmed by the level of support that noble Lords have shown for both the concept and the practice. I hope that the Committee will excuse me if I rise to defend performance rating, but I do not recognise some of the complaints that noble Lords have made this afternoon.

There is a huge variation in performance between individual organisations within the National Health Service. For far too long, for years, those organisations were allowed to carry on as they were without any external pressure at all on how they were performing. I do not pretend, as I did not when we debated this matter on Thursday, that the current performance ratings are 100 per cent perfect. Of course I recognise that it is very difficult to create an accurate performance measurement which goes across the whole of the work in each individual NHS organisation. However, I think that the key targets and the range of benchmark figures that will inform those targets provide a pretty fair reflection of how well the organisation is doing.

I have been to NHS trusts that received a poor rating and to NHS trusts that received a three-star rating. I have been struck by the positive attitude that many people have taken towards the ratings. There was real pride in the organisations that achieved a three-star rating and a determination to do better in those that did not do so well. Surely that is the attitude that we want to engender in the health service, an attitude in which everyone is committed to improving overall performance.

I understand some of the concerns that have been expressed, but surely we should allow Sir Ian Kennedy and CHAI to take on board those concerns and to come up with new proposals. Sir Ian has already indicated that he wishes to make changes and we should welcome that. Please, however, let us not leave

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the concept that it is right to rate NHS organisations and to provide the public and staff with an indication of those that are doing well and those that are doing not so well. After nearly 50 years in which the public have had very little opportunity to assess their own local hospital, we now have such an opportunity. We should show our confidence that this is the right way to go forward in the future.

Baroness Carnegy of Lour: I am sure that we have all listened to the noble Lord, Lord Hunt, with interest. He knows why the rating system was invented in this way and he knows how he considers it to be working. But the Audit Commission disagrees with him. It is fairly devastated about how it is working. My noble friend's Amendment No. 282A does not suggest that the rating system should be done away with; it suggests that there should be rating, but that it should be in a form to be determined by CHAI.

A difference of 3 per cent between a three-star and two-star rating, with all its implications, must be shocking to the people who work in the hospitals and shocking to the locality and to patients. It is very unnerving. It clearly is too blunt an instrument. The Government should accept that it needs sharpening up very much.

My mind turns to Which? magazine and how the Consumers' Association tackles assessing comparatively simple products, such as motor cars. It looks at endless categories. Within each category, a great many ratings are considered—even for a motor car—before reaching a conclusion. I bought a car that was top of the pops in its range and it goes beautifully. The Consumers' Association did rather well on that, but it was subdivided into a great number of elements.

If the CHAI is to operate the system successfully and, above all, fairly, in a way satisfying to the public and to patients, it must make it much more complicated and subdivided than it is at present. The Government should not turn the amendment down flat. Amendment No. 282A is an extremely good one. I hope that the Government will accept it, or something very like it.

3.30 p.m.

Lord Warner: The noble Baroness spoke about Which? reports. I am old enough to remember that when they were first produced, there was outrage from many providers of goods and services. I am not sure that that is a particularly good experience of which to remind people. Perhaps it is a remarkably similar position to now.

My noble friend Lord Hunt eloquently reminisced about his experiences in this area. I suspect that after I finish speaking, I shall join him in the dock as I make the case for not accepting the amendments. Let me be clear at the outset: we are unapologetic about targets, as such. We are not claiming that all the targets have been perfect. We are not claiming that the present system is perfect. But targets have helped to cut waiting lists for patients. They have increased the number of coronary heart disease operations from

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41,000 to 56,000 between 2000 and 2003. They have taken us to a point where 97 per cent of patients with breast cancer are treated within 31 days of diagnosis. They have reduced delayed discharge of patients from 7,000 to 4,000 between 2001 and 2003. That is just a sample of big improvements for patients.

I am not saying that that is just the result of targets, but targets and ratings concentrate people's minds. They change the focus in many areas where there have been considerable concerns about performance on the part of patients and, in many cases, on the part of many NHS staff. Performance ratings also help to hold people to account. It is worth bearing in mind that we have listened to some concerns about the number of targets. We know that they can cause concerns, not just to managers, but to clinical staff too. The Government have made great strides to address the concerns.

Through the priorities and planning framework for 2003 to 2006, we have set out in a single document a much more streamlined and focused set of targets—62 in total—for the whole of the NHS and social care for the next three years. Before Members of the Committee say that that is still over the top, let us put it in context. It is fewer than one target for every 1 billion of planned expenditure in health and social care over the next three years. I suggest that that is not out of proportion, given the huge sums of public money being developed for patients' concerns.

Performance ratings are only one of the criteria for applying for foundation trust status. We have not made them the be-all and end-all of the application for that status. They also provide an important means of informing the public about how their local NHS hospitals are performing. It is worth bearing in mind that under the present system, for example, the star ratings system published by the Commission for Health Improvement in July 2003 had 10 indicators with a clinical focus, which included outcome indicators such as death rates and emergency readmissions. It is of interest to the public to know how many emergency readmissions there are after discharge. That tells us something about performance in local areas.

It is no good just sweeping the system away as a totally irrelevant system in terms of telling local communities about the performance of their particular hospitals. We have always acknowledged that the system is not perfect, but it is improving and will continue to improve. We certainly have every confidence that, under the leadership of Sir Ian Kennedy, CHAI will make—it has committed itself to make—a proper analysis of the system so that it can propose changes which more adequately meet some of the concerns expressed by the noble Earl and other Members of the Committee.

We must bear in mind that we have come a long way quite quickly. Therefore, it is not surprising that some improvements can be made. However, we must not deny that the targets and performance rating system have brought real improvements for the users of the health service. Amendment No. 282, which would

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remove the obligation on CHAI to issue performance ratings after its annual reviews, is not appropriate. That would deny the public information about the performance of their local trust.

Amendment No. 282A allows CHAI the freedom to determine the form of performance ratings. Of course it is up to CHAI, as the independent commission, to determine expressly how the performance ratings will look and feel. That has always been our intention. We expect CHAI to do that. We know that it is thinking about changes that it would like to see, but that is covered already by existing wording. The amendment is unnecessary.

Amendment No. 341 would remove the obligation on CSCI to issue performance ratings after its annual review of local authorities. The star rating process has now been in place for some time, operated by the Social Services Inspectorate. To our knowledge, few local authorities have raised concerns about it. The majority of local authorities have seen the process as helpful in determining what they need to do to improve their services—whether three star councils or councils with lower ratings.

Performance ratings are an important means for CSCI to inform service users and the public at large about how local authorities are performing in the provision of social care. Another key consequence of removing the power for CSCI to award a star rating, as the SSI does now, is that it would not be possible to complete the annual comprehensive performance assessment process of all local authority services. That would make it difficult to judge which local authorities deserve freedoms to build on good or excellent performance.

I would not expect the Audit Commission to be thrilled about sweeping away star rating systems in relation to CSCI. Amendment No. 347 would prevent CSCI using the lowest level of rating as a measure of poor performance for advising the Secretary of State of the action to be taken to improve such services. That is an important means by which decisions can be taken to improve the quality of local services.

Amendment No. 360 would remove the power of the Welsh Assembly to award performance ratings as a result of an inspection. That would significantly weaken the framework for review and inspection of social services in Wales and would mean less robust arrangements in Wales than in England. That would be unacceptable to people in Wales.

So, as I have outlined, we think there are good grounds for keeping the present system in place while allowing, as the Bill provides, CHAI to make improvements following the process of thought and consultation that it will be undertaking.

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