Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I beg to move amendment No. 65, in page 3, line 1, leave out `performed well against any' and insert `met the performance'.

Mr John Maxton (Glasgow, Cathcart, Labour)

With this it will be convenient to take amendment No. 66, in page 3, line 3, leave out from `functions' to end of line 5.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

The clause relates essentially to the same ground that we have been covering: the financial powers that the Secretary of State will have as part of his armoury at the soft end of the spectrum, culminating in the clause 16 intervention powers. There is quite a lot to say about how the clause works, and I shall attempt to restrict my remarks to the narrow issue of the amendment. I hope that the Committee will have an opportunity for broader debate under clause stand part.

Amendments Nos. 65 and 66 would render more objective the process by which the Secretary of State would proceed, and inject an element of natural justice into the proceedings.

The wording of proposed subsection (3C)(b) is extraordinary. It allows the Secretary of State to give a further sum to health authorities if they perform well

against any criteria notified to them.

They do not have to perform in a defined way against such criteria; they do not have to achieve targets; they have merely to perform well. If they want to know whether or not they are performing well, they may be hampered by the words in parenthesis at the end of paragraph (b):

whether or not the method of measuring their performance against those criteria was also notified to them.

The Secretary of State will be handing out money to those who have performed well against a criterion without telling them how he intends to measure the quality of their performance. That would be the start of a rather dangerous and slippery slope.

The amendments seek to tighten that up a little. We shall consider later amendments Nos. 67 and 68, which would further limit the Secretary of State's wide powers of discretion and ensure that NHS bodies understood explicitly the targets that they were required to meet and how they would be assessed on their performance against those targets. They would also have the opportunity to appeal if they believed that they had been wrongly or unjustly assessed, which would ensure that the process was a little more transparent, objective and accountable than under the Bill.

There are two big flaws in the provision. It gives huge power to the Secretary of State to micromanage the NHS at every level, either directly or by the implicit threat of taking over functions or withholding money; and that will lead to the distortion of clinical priorities, because trusts and health authorities will be assessed not on the overall quality of their service, but on whether they meet Government targets. For the past three years we have accused the Government of distorting clinical priorities by forcing NHS trusts and health authorities to focus on doing the Government's bidding. In particular, the waiting lists initiative forces health authorities and trusts to devote resources to dealing with those suffering from minor complaints, who are merely numbers on the waiting list, rather than addressing those in greater clinical need.

The Government consistently deny that they have used financial means to put pressure on NHS management. The clause makes it explicit that NHS managers will in future be clearly told of the Government's political priorities and of the targets that they must meet, and that they will be financially penalised if those targets are not met by not being allocated money from the performance fund.

The consultant urologist at my local hospital wrote a letter to the chief executive, a copy of which was obligingly sent to me. The consultant referred to a specific case and, for obvious reasons, I shall not mention the patient's name. He wrote:

You were fully aware of three other patients of mine who were admitted for major cancer surgery (after a three months wait) only to be cancelled three times each, within thirty minutes of being called to the theatre.

He continues,

these are but three examples of a long-standing problem. One year ago I was put under pressure by the management to treat non-urgent long waiting patients instead of patients with cancer

such as Mr. X.

Anyone who is interested in the NHS—including the Minister—and who talks to doctors and nurses, will know that whatever Whitehall intended, the practical effect of the way in which the system has operated over the past three years has been that hospital managements, not for their aggrandisement nor their financial enhancement, but for the good of their trusts, and needing to access the funds that were available to them conditional upon their meeting waiting lists reduction targets, have manipulated waiting lists. They have moved people off waiting lists when they should remain on them. Derriford hospital cardiology department springs to mind. Clinicians have been forced to prioritise minor waiting list cases ahead of those with clinical priority. The Government Whip may wish to intervene on the matter of Derriford hospital, but I doubt it.

Clause 2 institutionalises that system in primary legislation, and that is a potentially dangerous trend. These amendments—and later ones—seek to introduce a safeguard. They would not undo completely the Government's efforts because that is not within the scope of our ambitions, but would introduce safeguards by requiring the Secretary of State to make the criteria by which he would judge a trust's performance clear, objective and public. People in the country, informed opinion, clinicians and the medical representative organisations would then be able to comment on whether the criteria that the Government seek to impose and would use in allocating money or intervening to take control of the management of trusts, are the right criteria to ensure the delivery of proper health care. For that reason, I commend amendments Nos. 65 and 66 to the Committee.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

The hon. Member for Runnymede and Weybridge has every right to rehearse familiar arguments about the Government's approach to running the NHS and the emphasis that we have put on cutting waiting lists and waiting times. The NHS plan makes clear our plans to go further and cut waiting times in the years to come. We have also made clear that clinical need should take priority.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

What about waiting lists?

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

Before the hon. Gentleman intervenes, he should recall that one of the things that he objects to most strongly is the notion of a maximum waiting time for an operation in the NHS. However, I remind him that the concept of an 18-month maximum waiting time in the NHS was introduced by the previous Administration.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

My remarks today, and previously, have been directed at the waiting list initiative. We said at the time—and have said since—that it is more sensible to focus on waiting times rather than lists. The consultant urologist from whose letter I quoted was being asked to reduce numbers on a waiting list regardless of clinical priority.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

I may have misunderstood the letter from the hon. Gentleman's constituent. I understood that his complaint was that long waiters were receiving priority treatment. I agree that clinical priority must win out, but I understood the letter to refer to long waiters rather than numbers on a waiting list.

I shall concentrate on the clause because the idea that it introduces sweeping new powers is not right. Under the Health Act 1999, the Secretary of State already has powers to pay additional funds to health authorities on the basis of past performance. Secretaries of State have always managed the NHS and have wide powers to direct NHS bodies on the carrying out of their functions. As we discussed during our first sitting, the Secretary of State already has wide discretion to determine how much each health authority receives.

Clause 2 seeks to bring extra flexibility to the way in which the Secretary of State can pay additional funds to health authorities, especially through the ability to make in-year payments against in-year criteria of health authorities' performances. I shall give an example, which I hope will be helpful and justifiable. As all members of the Committee know, there are no published waiting times for seeing a therapist. The implication of the NHS plan is that we will need to develop such indicators, as our current measures are limited solely to some consultant-based out-patient services. It is conceivable that the Department will work with the health service to develop useful, robust and well defined indicators of the time taken to see a therapist. Through the performance system, which I will say more about later, the Department might want to incentivise the achievement of improved waiting times to see therapists.

Under the amendment, if the detail of those measures were not in place when a health authority allocation was made, nothing about waiting times to see therapists could be included in performance measures for the year ahead. That could lead to a considerable delay in building waiting time performance for therapists into the allocation of health authority resources. The clause is worded in a way that will overcome the lack of flexibility in the system. I acknowledge that the wording may have caused concern, but it will be useful for me to state what the clause is meant to do and how it will set about it.

I want to give some background by talking about the performance system that underlines the Government's measures and the reasons for the clause. The clause will enable the Secretary of State to make additional payments to health authorities based on their performance during the year in which the payments are made. Current powers allow us to make additional payments to health authorities based only on their performance in previous years.

Clause 2 and clause 3, which is about supplementary payments to NHS trusts and primary care trusts, will be used to implement the new national health performance fund, which will be worth £500 million by 2003-04. Our prime purpose relates not to giving some people more money than others, but to the level of conditionality that applies to money dispersed through the performance fund. The fund will assess trusts as having red, yellow or green-light status. Each trust will receive its fair share of the performance fund with a different degree of conditionality. Green organisations will have access to their share of the fund as of right. Yellow health authorities, NHS trusts and primary care groups and trusts will be required to agree plans, signed by the regional office, setting out how they will use their share of the fund. Red organisations will have their share of the fund held by the new modernisation agency. They will receive their share of the fund, but it will come with strings attached and the agency will oversee spending.

Health authorities will be notified in advance of the objectives that they will need to meet or the criteria that will be used to assess whether they will receive additional payments, but the clause will mean that the Secretary of State can notify health authorities of the precise method of measuring their performance against those criteria after the start of the assessment period.

I do not want to mislead the Committee. Although I have talked about the performance fund and the allocation of fair shares, I should acknowledge that the clauses would allow the Secretary of State to make additional funds available if, for example, he chose to offer incentives for improvement in a particular area in a particular year. We have put much emphasis, in the plan, on people getting their fair share, but the provision would enable the Secretary of State to offer incentives in the form of additional funds for good performance by certain organisations. Equally, the flexibility of the clause allows some choice as to whether that would be assessed against absolute or relative performance criteria.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Will the Minister clarify whether that approach will be objective? Will performance of a given level—whether relative or absolute—measured against certain criteria, unlock certain amounts of money across the board, or is he proposing that the Secretary of State make a series of bilateral contracts with individual organisations?

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

The criteria would have to be objective. To use a hypothetical example, it would clearly be unacceptable for the Secretary of State to go to Darlington Memorial hospital trust and say, ``I was very impressed by the quality of the garden outside the chief executive's office. This is now a performance criterion for NHS trusts. Have another couple of million quid.'' It would not be acceptable for the Secretary of State to act in such an arbitrary way. Whether one is trying to set up the performance fund itself, or design a system for additional funds for good performance, it would have to be done using objective criteria. However, we cannot currently notify the criteria, or the system of measurement, in year. The amendments tabled by the hon. Gentleman would tie us to doing that at the point at which the allocations were made.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I am not sure whether I agree with the Minister's interpretation on that last point, but we will return to that. He talked about the unacceptability of the Secretary of State being able arbitrarily to intervene in the allocation of funds, and how they should be allocated on an objective basis. Does he recall the Secretary of State alluding, in Health Questions two weeks ago, to the issue of the transitional funding allocation to West Surrey health authority, which is in my constituency? The regional office recommended that a certain amount be paid, and the Secretary of State, or Ministers, overrode that decision and allocated a smaller sum. My interpretation of ``objective'', in the context of the Government allocating money, is that the word describes a process determined by officials against objective criteria. As soon as Ministers start overriding official advice and recommendations, I get very nervous.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

The hon. Gentleman will be relieved to know that there are a great many situations in government where Ministers override official advice. It is part of being in government and being a Minister—we receive advice, consider it and weigh it carefully, but then take our own decisions as to whether that advice is correct and whether we should act on it. That applies, in a number of different ways, to the decisions that Ministers make about the allocation of resources. I sought to reassure the hon. Gentleman that we do not intend our approach to the matter to be purely arbitrary.

I had concluded my general remarks about the relationship between the clause and the performance fund.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Mindful of your earlier strictures, Mr. Maxton, I have thought carefully about whether this point is better made by way of an intervention or a second contribution. I do not understand the Minister's interpretation of the amendment as requiring that the criteria would be notified to health authorities and trusts at the time of the original allocation. I see nothing in the Bill or the amendment that would have that effect. It would be possible for the Secretary of State to notify additional criteria in year. However, it would be reasonable for him to notify, at the same time, the method that he proposed to use to measure performance against those criteria.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

In the example that I gave, it would not necessarily be possible to identify the precise method of measurement at the same time as notifying the criteria. I was saying that although performance on therapist waiting times might be a helpful criterion, it might not be possible, for practical reasons, to give the precise measurement when the criterion was published; one might follow the other. The clause provides us with the necessary flexibility.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Does the Minister not agree that this might have a bizarre perverse effect? Any organisation being told that a criterion for financial reward will be reduction in waiting times to see a therapist, without being told what level of reduction is required to receive the reward, may allocate more resources than the Minister thinks appropriate in order to achieve an as yet unknown target.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

We have to be sensible about this and remember that its purpose is for the Government to be able effectively to incentivise good performance in the national health service. It is difficult to envisage circumstances in which any Secretary of State would deliberately create a situation in which health authorities, or trusts had no idea what they were meant to do in order to achieve a particular result in the performance fund—whether that was additional money or green-light status. Although I see the point that the hon. Gentleman is making, nobody would sensibly use the power in that way. The problem at the moment is that the Secretary of State is unduly constrained.

Ms Kali Mountford (Colne Valley, Labour)

I am grateful to my hon. Friend for giving way. Is it not better for the Government to intervene in order to incentivise and improve services, than merely to ensure that there were no schools closures, for instance, in Finchley or Huntingdon, as we were informed by the hon. Member for West Chelmsford (Mr. Burns) last week?

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

Indeed. My hon. Friend makes a good point. We were given an interesting insight into the nature of decision-making by the previous Government. That is not the way of this Administration. I do not believe, therefore, that the powers could sensibly be used in the way that the hon. Member for Runnymede and Weybridge has suggested. However, the inability to make in-year payments against in-performance is a restraint on the development of effective performance measures.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Is the Minister giving way?

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

I was going to give way to the hon. Member for Sutton and Cheam, but he is no longer in his place, so I shall give way to the hon. Gentleman.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I would not readily step into the shoes of a Liberal Democrat. Before the Minister makes further comments relating to the remarks made by my hon. Friend the Member for West Chelmsford last week, let me remind him of the increase in funding per capita to the NHS in the Durham health authority area compared with the increase per capita in funding for the NHS in the West Surrey health authority area since 1997. He may find something that rings a bell with the comments made by my hon. Friend last week.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

The whole point of this, which we discussed last week, is that those allocations are an open process.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Not any more. That is the point.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

I do not believe that that will change. One can see there is funding there through the funding formula. One can see the allocation that has been made to areas that have been identified as health action zones. One can see the allocations that have been made because of the indicator of deprivation. It is a process that anyone can see. Of course it will always be possible for people to say that they would not have taken that decision. That is partly what Government is about—taking decisions, saying how they have been made and justifying them in political debate. No-one can say, however, that it is a procedure that is shrouded in secrecy or lack of transparency.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I hear what the Minister said. He may argue that need in Durham is greater than in Surrey; but costs in Durham are no greater than in Surrey, as my right hon. Friend the Member for South-West Surrey (Mrs. Bottomley) reminds health Ministers at every available opportunity. A patient waiting for elective surgery in south-west Surrey is nine times more likely to have to wait more than 12 months than a patient in the Prime Minister's constituency. Before the Minister goes further in his chosen direction, he might want to think carefully about those issues.

I am mindful that we have raised the issues of transparency and accountability to the public and to Parliament on the one hand, and certainty and objectivity and clarity in the assessment system imposed on trusts on the other hand. The subject can be adequately aired later, during our debate on amendments Nos. 67 and 68. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Dr Peter Brand (Isle of Wight, Liberal Democrat)

I beg to move amendment No. 40, in page 3, line 5, at end insert—

`(c) Subject to paragraph 5A(2) of Schedule 3 to the National Health Service and Community Care Act 1990, payments may be made to improve unsatisfactory performance against those criteria set out in paragraph (b) above'.

We had an interesting debate on the first group of amendments to clause 2, during which the Minister said that the performance fund was not necessarily an additional fund and that it depended on meeting performance criteria. I am worried that we are using the wrong incentive. A good performance incentive for health trusts or health authorities would be that their local communities should enjoy better health; the trusts and authorities should be seen to have delivered that performance, but they should be able to achieve it in whatever way they want. The incentive would be that a hands-off approach could be taken and the trust or health authority would be rewarded for delivering the goods.

As the hon. Member for Runnymede and Weybridge suggested, rewarding on strict criteria would distort the way in which health is delivered. However, those who do not achieve green-light status will know that they will lose money; and that would be extremely dispiriting, especially if the failure were not their fault. In certain circumstances, some health authorities and trusts cannot deliver the goods at the same cost as elsewhere. Perhaps they cannot attract staff. That happens in inner cities because of housing costs; but it can happen in rural areas because there is less chance of private practice for consultants, because better jobs are available elsewhere for those who want to go into higher-level nursing and because it is more difficult to attract good managers. Those trusts may have to rely on locums and others who are not so committed to the service, but those people are more expensive to employ because they can market their services through agencies. The trusts will end up with a service that costs more but delivers less.

The amendment would provide a mechanism so that if a trust failed to achieve the criteria, whether published or not—everyone, including the trust itself, would know when the trust was not achieving them—the Secretary of State could make available extra money to try to overcome that problem. That would help to improve performance, which is the purpose of the modernisation fund. The phrasing of the clause implies that any moneys disbursed would go only to those who succeeded.

That would be an enormous disincentive to the people who, for many reasons, which I have tried to suggest, find it difficult to achieve what is desired. If we were to use education as a comparison, what is proposed would be like announcing that all schools would receive the same amount, and brilliant schools would receive even more. We would never, in social terms, accept that. At least I hope that even a new Labour Government would not accept it. I do not think that we should make that mistake with the health service.

I should like some more explanation about the red-light system. I hate this red zoning business, Mr. Maxton. The previous Secretary of State, the right hon. Member for South-West Surrey (Mrs. Bottomley), said the other day that if she were in a red-light zone she would be very worried. I have a problem with the fact that the greenies get everything and the yellowies may get something, with a few strings, but it is not clear from the Bill that those in the twilight red zone receive anything, even with strings attached. It is right that strings should be attached, if people are not performing properly, but it is not right that funds should not be attached to the support that is provided.

The Secretary of State has said that there may be some additionality in the clause. That is right in the case of something that is innovative and exciting: a pilot project that needs to be worked through and may be more expensive to start with. However, I do not support the rewarding of success with extra money as opposed to extra freedom.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I want briefly to support the point that the hon. Member for Isle of Wight has raised. It is important and shows up a fundamental flaw in the Government's thinking about the working of the system. I look forward to hearing what the Minister will tell us about wanting to appeal to human nature in rewarding the successful, to create incentives, while recognising that we are not engaged in a game in which we pat health authorities or trusts on the head. We are concerned with the ability of people who depend on services to obtain proper treatment when they need it. The people with the misfortune to live in red-light trust areas may well ask how the system will benefit them.

The traffic-light system is likely to devastate staff morale, recruitment and retention. Let us imagine how a trust or health authority that had been designated red, as a failing body, would fare in the competition for scarce staff. How would it encourage its staff to remain, when perhaps the neighbouring green-light trust, free to undertake all kinds of go-go programmes with its earned autonomy, wanted to poach them? The Minister and other hon. Members have talked about co-operation between NHS bodies, which is fine when one is sitting in a Committee Room in Westminster, but we should get real. Out there in the real world NHS bodies poach staff from each other every day. That is how they operate. I am sure that in principle they would like to co-operate, but they are competing for resources, including staff.

The most telling criticisms that I have heard of the traffic-light system concern its likely impact on the ability of those at the bottom of the pile to sell themselves as organisations for which to work, and to present themselves to their unfortunate public as organisations by which one would want to be treated. As long as patients have no choice we need to consider carefully what message we send to someone whose doctor says, ``You need major surgery. The good news is that I can get you into hospital in six months. The bad news is that the hospital you are going to has just been classified by the Government as red and failing, but you have no choice.'' We need to think carefully about the messages that we send and their impact on patients and staff.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

The hon. Member for Isle of Wight is clearly concerned about the position of poorly performing trusts that might require extra money to turn them around. It is worth focusing again on the purpose of the clause and on the wide range of powers that, as we discussed previously, are available to enable the Secretary of State to make payments. Legally, I probably overstated the case earlier, because the Secretary of State is allowed to take a wide range of factors into account in making allocations to each health authority. He has a wide discretion and may consider a range of factors, so I suppose that he does not always have to explain every detail of what he has done, although in practice that is what happened with health authority allocations in November.

The discretion that I have explained means that it is open to the Secretary of State to pay more to a poorly performing health authority—or indeed, given the relevance of clause 3 of the Bill, to poorly performing trusts—if he believes that those additional amounts would help to improve unsatisfactory performance. The ability to make additional payments to a poorly performing trust already exists, without any of the provisions that we are considering. Clause 2 would effectively amend the performance legislation under the Health Act 1999, which enabled the Secretary of State to make additional payments on the basis of past performance. It now enables such payments to be made on the basis of performance in-year.

A performance system that could, in-year, trigger an extra payment for the worst trust, would probably be perverse. It would not send the desired signals. The Secretary of State's discretion to make additional payments to poorly performing health authorities or trusts is best exercised separately, and not, as would apparently be attempted under the amendment, as part of the overall performance regime. Sufficient powers exist and no new ones are needed, so the amendment is not required.

As to the wider points that were made, I am confident that the fears about what will happen to red-light trusts are misplaced. One of my reasons derives from a different area of policy, and my experience as the parent of children who were both at a primary school that failed its Ofsted inspection. My son is still there and my daughter has moved on to secondary school. The system identifies a failing school and requires a response. My children's school was quickly turned around under the leadership of a new head teacher and provides a good education. It has just undergone its Ofsted inspection and I believe and hope, from what I hear, that it will emerge well.

In the health service we have already obtained clear indications that the identification of trusts that are not doing well—together with the support that they receive from what will now be known as the modernisation agency, and in particular the waiting list team and the national patients access team—can turn poor performance around rapidly. For example, last summer several trusts were identified as performing poorly with respect to out-patients. Most of them, with external support, improved very quickly. We have increasingly good support mechanisms available to help turn failing organisations around. Just as having a ``failing school'' label from Ofsted does not damn a school for ever, but enables it to turn around, so a red-light trust, because of the support that it will receive, will be able to address its problems much more quickly than if its failings were not identified and it were offered no support.

I realise that the debate is about Government policy, and not that of the Opposition, but everything that the hon. Member for Runnymede and Weybridge has said implies that central Government should have an approach characterised by disinterest, benign or otherwise, towards the variations in performance of health authorities and trusts. He implies that we should give up on any opportunity to support or intervene where patients are being failed. I agree that we cannot micro-manage the entire service from Whitehall, and that we should not attempt to do so. We will use the powers in the Bill to increase the autonomy of organisations that perform well. However, there must also be provisions for intervention and support for trusts that are failing. To reassure the hon. Member for Isle of Wight, the Secretary of State is already able to back up such support with additional resources if he judges that that is necessary and appropriate.

Dr Peter Brand (Isle of Wight, Liberal Democrat)

I am interested in that response. What would the reaction have been if the previous Government had introduced not just Ofsted and league tables for schools, but financial rewards for those schools that received a good Ofsted report? Failing schools or trusts that are having difficulties may receive additional funds on an informal basis. However, the message to the public is quite different. Success is seen to be rewarded with extra money, while failing trusts appear to be sent to the back of the class.

There are two issues here. One is of public perception, and what it will mean to work in a trust with a green, yellow or red light. The other is that of how much money will be available in the performance fund, which will be additional, and therefore, presumably, not accessible to the red-lighted brigade, and how much money will be available in the modernisation fund.

The Secretary of State says that he already has powers, and that he will have increased powers when clause 3 comes into effect. Why, if that is the case, must we have the divisive clause 2? It is right to reward successful trusts by giving them more autonomy in running their business. We should abandon performance indicators that simply measure activity, and should measure quality of outcome instead. However, we still have to work on that.

I can imagine every hospital having a traffic-light system, and if a hospital is on green, it will have a large green light beaconing out at people, rather like the cone outside St. Mary's hospital, which is beloved of very few. However, unless an amendment such as the one that we have proposed is inserted in clause 2, the rewards will not just be greater autonomy and a plaque on the wall. The financial element will reinforce differences.

If we have a performance fund, let it be a true performance fund, and be accessible to people who need help to perform better. That would allow us to look at things in year. If, for example, two or three consultants retire, that would be a disaster for a trust. It would not meet its performance targets, because locums are so difficult to get. It would not be its fault if it were to fail, yet it would be penalised through having additional moneys withdrawn.

I urge the Minister to think again. I shall not press the amendment, but the Government should consider how the provision will come across not only to those working in the national health service but to the patients and communities who will be affected by it. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I beg to move amendment No. 67, in page 3, line 5, at end insert—

`(3CC) The Secretary of State shall within 28 days of notifying objectives or criteria to Health Authorities publish details of them as—

(i) objectives to be met in performing their functions; and

(ii) criteria relevant to the satisfactory performance of their functions

together with details of the methods of measuring their performance against those objectives and criteria which he will use in assessing them for payments of further sums to them in accordance with subsection (3C) above.'.

Mr John Maxton (Glasgow, Cathcart, Labour)

With this it will be convenient to discuss amendment No. 68, in page 3, line 5, at end insert—

`(3CC) The Secretary of State shall publish annually a report detailing, in respect of each Health Authority to which he has made payments under subsection (3C) above—

(a) the objectives notified to that Health Authority under (3C)(a) above; and

(b) the criteria notified to that Health Authority under paragraph (3C)(b) above; and

(c) the methods of measuring their performance which he has used in assessing them for payment of further sums in accordance with subsection (3C) above; and

(d) his assessment of their performance against the objectives notified in accordance with paragraph (3C)(a) above and the criteria notified in accordance with paragraph (3C)(b) above; and

(e) the further sums paid to them in accordance with subsection (3C) above.'.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Amendments Nos. 67 and 68 continue the theme of ensuring that the Secretary of State's actions in relation to clause 2 and 3 are as transparent as possible. Amendment No. 67 provides that the Secretary of State should, within 28 days of notifying objectives and criteria to health authorities, publish them and the methods that will be used to assess their performance against those criteria. I see nothing terribly radical about that, and I hope that the Minister will take the amendment in the spirit in which we present it. A series of amendments would be needed to make similar arrangements under clause 3, but the amendment sets out the principle, which is that the arrangements made between the Secretary of State and an NHS body should be open to public scrutiny when they are made.

Amendment No. 68 provides that the Secretary of State should publish an annual report setting out the objectives of the criteria notified to health authorities, together with the methods of measurement that he has notified to them, his assessment of their performance against those objectives and details of the further sums that have been paid to them.

It will probably be apparent to the Committee why we seek to go down that route. It is an over-used phrase, but we want to ensure a level playing field. We want all trusts to be treated equally and fairly and, whenever criteria and objectives are notified, we believe that other trusts should have the opportunity to ensure that they are similarly treated. We believe also that performance against those criteria or objectives should be spelled out after the event; that the financial rewards accruing to those who have performed well should be publicly known; and, we hope, that it bears a discernible relationship to the performance that has been achieved.

We are anxious that the objectives should be publicly scrutinised because the Government's record on setting objectives for the national health service has distorted proper clinical priorities. I have already given one example from my constituency. Another example, included in the consultation documents as one of the possible criteria for success, is of the two-week maximum waiting time from urgent referral by a general practitioner to the patient being seen by a hospital specialist for a patient with suspected cancer.

That is ideal for a service with no resource limits, because the time between referral by a GP and being seen by a specialist is a time of great stress for the patient. Unfortunately, the number of surgeons able to carry out cancer operations is limited. By setting an arbitrary two-week limit, the Government have massively skewed the use of the available human resources from treating cancer to getting patients with urgent referrals through the front door. The president of the Royal College of Surgeons said:

clinics are being snowed under with inappropriate referrals for breast cancer.

She pointed out that 90 per cent. of women with suspected breast cancer were found to be clear of the disease.

Dr. Joan Austoker, of the Cancer Research Campaign, said:

The two-week rule has completely backfired. It has led to a waste of resources, and a waste of specialists' time.

That means that it is not just a waste of money but a waste of the time of people who could be treating patients, operating on patients and saving lives.

I know from talking to the consultant neurologist in my own hospital that that is happening all over the place. In order to meet this two-week target, people are required to spend a greater proportion of their time telling patients the bad news that because a particular consultant now has to spend twice as much time in out-patient clinics, it will be twice as long before a patient already diagnosed as needing surgery can be operated on. That is a misallocation of resources. In setting criteria for access to this money, we are afraid that the Government will inadvertently—I am not suggesting that it is deliberate—create a misallocation of resources within the NHS that will ultimately be to the detriment of patients.

One of the suggested criteria in the consultation draft is the financial performance of the NHS trusts. The bare-faced cheek of it! A Government who pilloried the previous administration for setting financial targets and measuring financial achievement of NHS trusts and health authorities now propose the meeting of budgetary criteria as a condition for accessing money needed to deliver health services.

A memo issued by a health authority somewhere in England on 9 January says:

Recent developments in the unfolding financial position of the Health Authority, including an assumption that we will not receive the last three quarters of the Performance Fund, has led to our looking very critically at areas which are contributing to further financial risk within the Authority. An area of considerable concern is individual patient placement, where we have seen a significant rise in the number of placements made...We will, over the coming months, introduce tighter management processes and will be looking towards working with the Trusts and PCTs...in the management of individual placements.

In the meantime, however, there is an immediate need to ``stem the flow'' of individual placements and to this end the Health Authority is not prepared to authorise further placements until there is a reduction in the current number of patients placed.

That is going on in the health service in order to try to comply with Government-set targets, in this case to deal with an overspend of £2.5 million. Clause 2 will enshrine a body of Government targets, including quite possibly financial targets, that health authorities will have to meet to access the funds that they need to deliver services to the people living in their areas.

Dr Peter Brand (Isle of Wight, Liberal Democrat)

I do not want to disabuse the hon. Member, but as a doctor I had to make decisions like that and I have seen letters like that in the 70s, 80s and 90s; it were ever thus. The real point is whether health authorities and trusts have the power to say publicly that their allocations are not adequate. It is an inescapable fact that it happens.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I thank the hon. Gentleman for making that point. I am mindful that there is only a minute and a half to lunchtime.

The purpose of the amendments is to ensure that these arrangements are placed in the public domain for all to see. That will mean there is a degree of transparency which we hope will inevitably lead to a degree of objectivity and avoidance of the worst distortions that have been created when trusts or health authorities seek to comply with essentially artificial criteria set by Government which become the basis of decisions that are very important to them, such as the allocation of funding.

I commend the amendments to the Committee. I consider that the Government have nothing to fear from them if they intend to proceed as the Minister outlined. In the interests of ensuring greater scrutiny, greater accountability, transparency and an element of objectivity in these arrangements, they will greatly improve the Bill.

It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Four o'clock.