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House of Lords

Monday, 28 January 2008.

The House met at half-past two: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of St Albans.

Companies: Pay Increases

Lord Wedderburn of Charlton asked Her Majesty’s Government:

What advice they have given to companies in the private sector on pay increases.

The Minister of State, Foreign and Commonwealth Office & Department for Business, Enterprise and Regulatory Reform (Lord Jones of Birmingham): My Lords, pay levels in private sector companies are a matter for those companies.

Lord Wedderburn of Charlton: My Lords, I am grateful to the Minister for that very clear Answer. What is the Government’s view on the contrast between average wage increases and the escalating pay rises once again enjoyed by company directors in 2007, when a record 1,445 directors received a salary of more than £1 million? That is 40 per cent more in number than in 2005. That is basic pay, before bonuses, share options or other perks. Does the Minister think that this annual contribution to rising social inequality by corporate executives who sit on one another’s remuneration committees is a suitable practice today? Would it not merit at least a word of advice to some of the super-rich gentlemen who fly around the globe with the Prime Minister?

Lord Jones of Birmingham: My Lords, I remind my noble friend that I was one of the gentlemen who flew around the world with the Prime Minister; I just wish that I was super-rich.

I remind noble Lords that since 1997 nurses have had a 44 per cent increase in their pay; for hospital doctors the increase was 69 per cent; for ambulance staff it was 97 per cent; and for police officers it was 44 per cent. Let us please get this into perspective. Every day, people remind the private sector of its responsibility to set an example to include all in society. Every day, it is aware of its responsibilities. Please do not let us put up a sign over UK plc that people cannot aspire for the sky. We need an economy that the world wants to come to where people earn as much as they can from working as hard as they can and bringing their skill to this country.

Lord Razzall: My Lords, does the Minister accept that the House agrees with his first Answer, that this is a matter for the private sector? Does he further accept that we live in a world in which it was a Tory Prime Minister more than 30 years ago who referred to the unacceptable face of capitalism? Does he not agree

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that it is the role of the Government to give some form of moral leadership in condemning the often obscene salary increases that go to increase the gap between the poor and the rich?

Lord Jones of Birmingham: My Lords, I distinguish for the noble Lord the difference between advice and condemnation. It is the role of the Government to advise and to work with the private sector in getting it to go that way; it is not for government to condemn the private sector in this respect.

Lord Campbell-Savours: My Lords, what is the effect on inflation of excessive pay increases in the private sector?

Lord Jones of Birmingham: My Lords, I remind my noble friend that inflation comes from excessive pay increases when they are not linked in any way to productivity. That is as relevant in the public sector as it is in the private sector. The pay increases of private sector so-called fat cats—there are very few such fat cats but people always exaggerate—are so often linked to bonuses and bonuses only ever come out of enhanced productivity.

Baroness Wilcox: My Lords, I welcome back the noble Lord, Lord Jones. I have missed him. I have been struggling in Grand Committee for two full days without him, so I am delighted to see him back. I welcome him back to the growing list of part-time Ministers that this Government are throwing at this very important department of state on behalf of the people of this country. Does he anticipate any public sector strikes this year linked to pay?

Lord Jones of Birmingham: My Lords, I thank the noble Baroness for her consideration. I shall see her in Grand Committee in about an hour’s time. On whether I expect any strikes, I sincerely hope that we see responsible action, as we often do in the private sector, on pay—there used to be strikes, but no longer. I hope we see it in the public sector too because responsibility plays both ways.

Lord Richard: My Lords, a moment ago my noble friend said that it was the function of the Government to provide advice to the private sector. What advice have the Government provided?

Lord Jones of Birmingham: My Lords, so much of the advice that the Government provide to the private sector is done in private. If noble Lords want a big sign put up over this country that says, “We don’t want to see people being paid a great deal of money, just go and do it in Germany, France or America”, then we will be going the right way about it if we start giving public advice where it is not welcome.

Lord Hamilton of Epsom: My Lords, can the Minister enlighten the House as to what he finds so abhorrent and unacceptable about the Labour Party that he is not prepared to join it, while being a member of a Labour Government?

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Lord Jones of Birmingham: My Lords, first, that is not relevant to the Question; and, secondly, I would just say that that is my business.

Baroness Turner of Camden: My Lords, I am sure that my noble friend the Minister believes in democracy at all levels. What role do shareholders play in deciding on the payments of these very high salaries to directors, including bonuses?

Lord Jones of Birmingham: My Lords, I remind my noble friend that they do not get very high salaries; they get very high pay because of bonuses. Bonuses come out of increased profits for shareholders. Shareholders have an interest in ensuring that these so often talented people earn more money for the company. In 2009, there will be an obligation on companies to go much further into their pay policy and how they reach their levels of pay. This Government have put that into legislation, and I am sure that the House would agree that that is a good thing.

Lord Stoddart of Swindon: My Lords, the noble Lord will have noticed that in the private sector the latest figures show that wages have been rising by 3.7 per cent per annum. That, of course, has been done by free collective bargaining. Why is it that the Government are seeking to remove from public employees the right to free collective bargaining, which is enjoyed by the private sector? That is a most strange thing for a Labour Government—or a so-called Labour Government—to do.

Lord Jones of Birmingham: My Lords, I see no evidence of an absence of free collective bargaining. I am very anxious to ensure that everyone in both the public and the private sectors earns as much as the country can afford. I remind the House that if the country does not earn the money, then tax is not paid; and if tax is not paid, we do not get schools and hospitals. That is a virtuous circle; it is not rocket science.

Health: Northumberland

2.44 pm

Lord Redesdale asked Her Majesty’s Government:

Whether they support the proposed cuts in primary healthcare in rural Northumberland.

The Parliamentary Under-Secretary of State, Department of Health (Lord Darzi of Denham): My Lords, Northumberland Care Trust’s proposals are not about reducing or closing services. The main aim is to ensure the continuity of existing general practitioner services and to develop further primary care services for the benefit of patients across Northumberland. It is appropriate that the Northumberland Care Trust should review its personal medical services contracts to ensure quality of services as well as value for money, in parallel with all primary care organisations in the north-east.

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Lord Redesdale: My Lords, do the Government support the Carr-Hill formula, which the Northumberland Care Trust is using? The formula is weighted against rural practices. Indeed, it is envisaged that the cuts would be 24 per cent at the Bellingham surgery. That would mean the closure of that surgery, which covers the largest land mass in England—1.6 per cent of England. If it closed down, those living in Byrness would have a 70-mile round trip just to see a GP in Hexham. Should the Government not review the Carr-Hill formula, considering that Professor Carr-Hill does not himself support it for rural areas?

Lord Darzi of Denham: My Lords, the fair funding formula that the noble Lord refers to is designed by the Advisory Committee on Resource Allocation, which works out the formula across the country. It is of interest that the Northumberland Care Trust is one of the only PCTs in the country that has these deficit challenges. I assure the noble Lord that the fair funding formula considers rurality in its calculations and certainly takes into account a number of factors, including local poverty, distances and geography.

Lord Walton of Detchant: My Lords, I remind the Minister that the Healthcare Commission recently gave a glowing report on the quality of the primary care and hospital services in the north-east of England, including those provided by the Northumberland Care Trust. In this widely dispersed area, was it right to consider cuts that might at the outset have resulted in the closure of general practices? Does the Minister accept that the recent consultations with the trust have happily come up with a much more acceptable formula? Nevertheless, does he agree that there is a widespread feeling in the north-east that this trust is underfunded, particularly given that the health service is on course for a surplus at the end of the financial year?

Lord Darzi of Denham: My Lords, I am grateful to the noble Lord and could not agree more with his tribute to colleagues in primary care in Northumberland and the quality of services that they provide. However, I am sure that we would all agree that value for money is also an issue. It is of interest that, of the 49 primary care providers in Northumberland, 42 are on PMS contracts and seven are on GMS contracts, which runs counter to the national configuration of 60 GMS to 40 PMS. It transpires that there is currently a differential within the PMS contracts of about £5.2 million. The PCT, in collaboration with primary care providers, is looking at exactly the types of services that are provided for that differential.

Lord Campbell of Alloway: My Lords, is the noble Lord aware that the cost to the country does not necessarily mean that the needs of primary healthcare are met throughout this country, not only in rural Northumberland but much nearer to your Lordships’ House?

Lord Darzi of Denham: My Lords, I agree that the quality of primary care provision in Northumberland is exceptional, but it is important that Northumberland’s

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PCT, like any other NHS organisation, lives within its budget. Of the 12 PCTs in the north-east, this PCT has had financial difficulties for years. It is scrutinising its expenditure in consultation with its stakeholders, including primary care.

Baroness Masham of Ilton: My Lords, is the Minister aware that, in rural areas such as Northumberland, vast areas must be covered by district nurses, GPs and ambulances, which costs a lot in travelling expenses. Are these taken into consideration?

Lord Darzi of Denham: My Lords, I agree that funding in rural areas is very different. I referred to the fair funding formula, which seems to work across England reasonably well. It is important to put this in context: in north-east England, most of which is rural, one of the 12 PCTs—the Northumberland one—seems to have had long-standing financial difficulties and it is about time that it tackled its expenditure.

The Lord Bishop of St Albans: My Lords, the Minister seems to be aware that drastic cuts in nursing provision are being proposed by the Northumberland Care Trust. Does that not mean that excellent nursing care for the sick, frail and elderly in remote rural areas will be difficult to maintain and improve, especially as nurses are no longer to be based in rural surgeries but are to be centralised into teams, miles from their surgeries and patients? Does the Minister agree that the resulting loss in continuation of care and knowledge sharing about patients may have a significant detrimental impact?

Lord Darzi of Denham: My Lords, the PCT locally is reconfiguring its community services to ensure that it has the right resources available in the right places across the county. I am assured that the trust is committed to doing more and to discussing these proposals with GP colleagues. I am also informed that it has started more detailed discussions with them. The aim is to provide the best possible health services in Northumberland. It is important that, no matter where people live, there is equal access to community nursing services.

Baroness Barker: My Lords, the Minister said that contracts were issued on the basis of quality of care and value for money. What is the departmental guidance on which of those two factors should take precedence in situations such as the one that he has outlined in Northumberland?

Lord Darzi of Denham: My Lords, in any service or form of healthcare delivery, effectiveness and quality are obviously of prime importance. However, I believe—I hope that noble Lords will all agree—that the cost-effectiveness of the service should also play a significant role in local decision-making.

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Health: Mixed-sex Wards

2.51 pm

Lord Naseby asked Her Majesty’s Government:

Whether they continue to support the policy in England to remove all mixed wards in hospitals except for emergency admissions.

The Parliamentary Under-Secretary of State, Department of Health (Lord Darzi of Denham): My Lords, our guidance requires the provision of single-sex accommodation, not wards. This may mean single rooms or single-sex bays within a mixed ward as well as single-sex wards. Single-sex accommodation should be the norm for elective care and remains the ideal for all admissions. We have made our continuous commitment to this clear in this year’s operating framework, which charges primary care trusts with setting and publishing stretching local plans for improvements in this area.

Lord Naseby: My Lords, I thank the Minister for that Answer. However, he is saying that, after 10 years of this Government, the removal of mixed wards is no longer part of their policy. The issue is totally fudged by his Answer. I have just come back from Sri Lanka where I visited its public wards, which—the Minister may not be aware—are 100 per cent single-sex. If a developing country can do it, and many do, why is it impossible in this country? Does the Minister not understand that it is degrading, insensitive and barbaric that we should have any mixed wards anywhere in the National Health Service?

Lord Darzi of Denham: My Lords, first, I remind the House of the definitions that we are using. The Government are committed to single-sex accommodation, not single-sex wards. Those are two different things. I also reassure the noble Lord that we used to have single-sex wards. That was 15 years ago—I remember practising in them as a trainee. However, medicine has moved on and, as it has, the design of wards in the health service is based on the disciplines, expertise and competencies of the staff working in those wards. As a result, the commitments that the Government made in 1997 were met in 2002 and 2004, with 95 per cent of patients in single-sex accommodation.

Baroness Tonge: My Lords, if the Minister would like to consult the many patient forums up and down the country, he will find that real mixed-sex wards still exist and male and female patients still have to share with each other. As the noble Lord said, that is quite degrading. Would the Minister not agree that government targets have done this damage and are forcing managers to look at the quantity, not quality, of patient care?

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