Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I beg to move amendment No. 70, in page 5, line 15, leave out `and any directions given' and insert `made'.

Mr John Maxton (Glasgow, Cathcart, Labour)

With this it will be convenient to take amendment No. 71, in page 5, line 40, leave out `and any directions given' and insert `made'.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I shall address the amendments tightly. The wider issue involved is best dealt with in a short clause stand part debate. The amendments would remove the reference to directions so that the Secretary of State could make regulations, but not directions. My understanding—I am sure that the Minister will helpfully correct me if I am wrong—is that regulations under the provisions of the National Health Service (Primary Care) Act 1977 would require a statutory instrument to be laid. They could be debated in Parliament, whereas directions are given by the Secretary of State without the necessity of or possibility of any form of parliamentary scrutiny. The amendments would simply ensure that, where the Secretary of State interferes in matters such as the terms and conditions of employment used by primary health care trusts or health authorities, he does so in a way that is transparent and scrutinised by Parliament.

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

As the hon. Gentleman said, the amendments would remove the power to make directions in relation to employment practices but would leave intact the power to make regulations. The core issue is whether there are circumstances in which it would be appropriate or better to use directions rather than regulations.

We are talking about keeping both options open. To give an example, we are working with NHS staff organisations—that is the primary aim of the clause—to design a job evaluation system to ensure that a modernised NHS pay system respects the principles of equal pay for work of equal value. If the design is successful, and the scheme with all its elements is agreed, it will need to be implemented consistently throughout the NHS.

We could use regulations or directions to ensure that all NHS employers use the agreed job evaluation scheme, which is at the heart of the equal pay for equal value system. However, should problems arise over detailed interpretation in particular locations, we may need the flexibility to deal with the matter by direction. We would rather not have to publish enormously detailed regulations that covered every eventuality because we did not have the power to make directions in specific cases.

Governments have long recognised that in the health service there are times when regulations are appropriate and times when directives are appropriate and it is preferable for the Secretary of State to have the flexibility to choose between the two mechanisms, as necessary.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I am not entirely convinced by the Minister's argument. I can, of course, see the attractiveness to the Secretary of State of having the power to give directions, because they are not subject to scrutiny or indeed to publicity. However, I think it would be convenient to the Committee if I seek leave to withdraw the amendment and continue the substantive debate.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I shall attempt to be brief. The undisguised essence of this provision is to maintain a nationally directed pay system.

Mr Hilton Dawson (Lancaster & Wyre, Labour)

Hear, hear.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

The hon. Gentleman shouts, ``Hear, hear,'' from the Back Benches, rather confirming everything I believed and performing, as he often does, in the stereotype role in which my mind has cast him.

We have in the national health service a productive organisation. It is not merely a body that performs the public function of procuring access to health care and ensuring that it is available free at the point of need. It is also the virtual monopoly provider of health care—probably the single most important good that this economy produces. The NHS produces just under 6 per cent. of gross domestic product. It is a very large, productive enterprise, with 1 million employees.

The Government seem to believe that the best way to run such an enterprise is as a single structure. There is no example anywhere in the world of a productive organisation with 1 million employees producing the equivalent of nearly 6 per cent. of our GDP. Even organisations on a much smaller scale in the commercial world operate on a properly devolved basis. I will not bother to pursue the Secretary of State's assertion to me on Second Reading, recorded in Hansard, that the Chinese army ranked as such a productive organisation and should be considered as a good example. I invite the Minister to look that up.

Whether it is a good or bad thing to want to put in place a single national pay and conditions structure, it is likely to prove a futile exercise. The Government have embarked on a process of proposing paying cost of living supplements beyond the London weighting area. I represent an area just outside London and I will be a grateful recipient of some modest additional assistance towards the great challenge of recruiting and retaining NHS and other public sector staff in that area. I have already been on the receiving end of an outburst from NHS staff in Dorset who will be excluded from these arrangements, yet, as many hon. Members will know, housing in parts of Dorset—Poole, for example—is extremely expensive.

That is not a criticism of the Government's proposal, but simply an observation that, wherever one draws lines, artificially from Whitehall, one creates another problem. If the Minister decides tomorrow to include Dorset, the problem will be the next county—my geography of the south-west is not too hot.

Mr Desmond Swayne (New Forest West, Conservative)

My constituency straddles that boundary and I have constituents living opposite each another in the same street who are affected differently because one is employed in Dorset and the other in Hampshire.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

My hon. Friend emphasises our problem. If one takes a rational and sensible approach to the provider side of the national health service—not its function in ensuring equitable distribution of the availability and access to health that it is free at the point of need, but its more nuts and bolts function as a producer of health care—one must realise that its future lies in devolving more power from the centre and acknowledging the different conditions that obtain in different parts of the country. Self-evidently, a nurse living in Dorset will have higher living costs than a nurse living in rural Northumberland. Until the NHS can offer local structures and sufficient flexibility to take those factors into account, as every commercial organisation must do to survive, those recruitment and retention problems and the problems that NHS staff in relatively expensive areas on relatively modest salaries face will persist.

The Government are going precisely the wrong way in seeking regulation-making or direction-making powers to determine the way in which every health authority and every primary care trust and NHS trust in the country deals with its staff. There has to be scope for flexibility if we are to succeed in maintaining, retaining and recruiting the necessary work force in all parts of the country. It cannot be a coincidence that, reversing the trend of the 1950s and the 1960s, the trend in large commercial organisations in the past three decades has been to decentralise power and authority over such decisions and to recognise that production units must operate semi-autonomously. The proposal is a retrograde step and gives the lie to the proposition that this is a decentralising Bill.

Mr Adrian Bailey (West Bromwich West, Labour/Co-operative)

Will the hon. Gentleman acknowledge that, by advocating extra rewards and remuneration for people in high value areas, which are likely to be high value because they offer superior amenities to those in inner cities, he is promoting a course of action that would exacerbate the problems of inner cities in recruiting staff for the health service?

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

In fact, the inner-city areas often have the high property prices and the high cost of living that cause NHS staff such problems.

Mr Adrian Bailey (West Bromwich West, Labour/Co-operative)

Not in the black country.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

The hon. Gentleman may be aware that we are in the greatest inner-city area in the United Kingdom. He should get on the tube tomorrow and pop down to talk to people in NHS trusts in east London about the problems of recruiting and retaining staff on NHS salaries. If he does so, he will understand the problems caused by the relatively high cost of accommodation in that area.

There is no blanket solution and that is precisely why I have great fears about the Secretary of State in Whitehall trying to decide the NHS pay and condition structure across the whole country. It is the wrong direction to take; all modern commercial and organisational experience is against centralising power and making single sets of rules and decisions apply across a 1-million strong, geographically disparate organisation. Whether we like it or not, the cost of living varies enormously in different parts of the country and the bottom line is that people on NHS salaries who live in areas with a low cost of living have a much higher quality of life and standard of living than those in areas where the cost of living is high.

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

The hon. Gentleman may benefit from reading the proposals in ``Agenda for Change—Modernising the NHS Pay System'', which we are negotiating with the unions. It provides precisely the right balance between the national framework for employment, which the clause will ensure is followed in every trust, and the local flexibility needed by individual employees in the NHS.

The problems are an inflexible employment structure, even on existing national Whitley contracts, a working week that ranges from 35 to 39 hours and big variations in payments for unsocial hours. That makes it difficult to introduce team working and to break down demarcations between professions, both of which are essential to the modernised NHS. The previous Government dealt with the problems by sweeping away such considerations and allowing full local contracts. However, in practice there is an even more complex and inflexible system at local level. That is the impetus for change in the NHS suggested by the hon. Gentleman's theories.

Our pay modernisation proposals envisage local flexibility within a consistent national framework. For example, in the current negotiations we want NHS trusts to be flexible in assigning jobs, but there will be a consistent national system for allocating them to a pay band. The exact point within a pay band to which someone is allocated should take into account local market forces and factors of the type we discussed. The right way properly to remunerate a flexible work force is to agree a national framework with NHS staff representatives, but to allow local flexibility. That must be part of our agreement, but we do not have the power at present to ensure that those employment conditions apply consistently in every trust in England. That is what the clause would provide.

Question accordingly agreed to.

Clause 6 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Jamieson.]

Adjourned accordingly at thirteen minutes past Seven o'clock till Thursday 25 January at half-past Nine o'clock.