Clause 2 - Payments relating to past performance
Health and Social Care Bill

Mr John Maxton (Glasgow Cathcart, Labour)

I remind the Committee that with this we are taking 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.'

Perhaps it would be convenient for the Committee if I let right hon. and hon. Members know that I intend breaking for dinner at 7 pm and resuming at 8 pm. However, that is flexible and if it appears that we can finish today's business within a reasonable time scale—15 or 20 minutes—we will continue until we have finished.

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

Before lunch, the hon. Member for Runnymede and Weybridge (Mr. Hammond) made several points about the amendments, which are essentially concerned with the publication of information. He made further points about the two-week waits for cancer patients and the financial element in the performance assessment framework. We are moving the NHS on to a much sounder basis of performance assessment, as promised in our manifesto, so that all issues of interest to the patient are considered. We criticise the previous Administration because they focused on financial matters to the exclusion of clinical or patient issues.

Right hon. and hon. Members who have had an opportunity to look at the consultation document that we circulated last week will have seen the indicative spider diagrams at the back of that document. They illustrate how different types of performance can be taken into account in assessing health organisations. They show how health outcomes, health improvement, fair access to services, effective delivery of appropriate care, efficiency and the experiences of patients and carers can all be taken into account in judging the progress of individual organisations.

That is an important element in the performance framework that we are setting out for the NHS. We are consulting on the detail of that with the paper that was published last week. It is right that financial performance should be considered, but it should not be the only criterion. That is the big change that we have made, as compared with the previous Administration.

The introduction of the two-week cancer referral target was an important first step in improving the speed with which patients move through the system. I am sure that the hon. Gentleman will recognise that the national cancer plan, which was drawn up last autumn, took us much further forward. We are focusing on the whole process of treating cancer patients—not just on the point of referral, but on the point of treatment, and we are setting targets. That work—led by the national cancer director, who is a leading clinician, with the support of experts from across the field—has been widely welcomed in the health service as laying the basis for better cancer services in future. We have also taken that approach in other clinical areas.

We are laying down, year on year, an increasingly robust framework for performance assessment. It is true that, at the moment, we do not have all the information that we would like to be available for assessment, but every year more data is collected and published than ever before about the performance of the NHS and individual organisations. That is the background to the two amendments.

Amendment No. 67 would require the Secretary of State to publish details of the objectives, criteria and methods of measuring the performance of health authorities within 28 days of notifying them to health authorities. The amendment is unnecessary. First, health authorities are already informed of their objectives for each year in a letter that sets out the priorities for the year ahead, which is publicly available.

Secondly, anyone can request details of individual health authority objectives for the year. As I said earlier, the precise method of measuring health authority performance against some criteria may not be notified to health authorities at the same time as the criteria. I shall not repeat the arguments advanced in earlier debates.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

Is the Minister saying that the Secretary of State will notify objectives or criteria to health authorities only at the time of the annual letter? Will there be no opportunity for him to issue additional criteria or objectives at a later date?

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

I am not saying that the only opportunity to indicate how performance may be measured is at the time of the allocation. The clause allows flexibility for in-year performance to be taken into account. Health authorities may need to be notified of the criteria to be taken into account, but in some circumstances it will not be possible for the exact measurement of those criteria to be made simultaneously or necessarily within the 28-day period in the amendment.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I accept what the Minister said, but a few minutes ago he said, in effect, that the amendment was redundant because health authorities would be notified of the criteria in writing. Is he saying that the Secretary of State will not issue supplementary criteria or objectives? The amendment was designed to take account of circumstances in which the Secretary of State, under the terms of the clause, may wish to issue supplementary, in-year criteria or objectives. Is the Minister ruling that out?

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

No, I cannot rule out that possibility. The hon. Gentleman is right to say that it might be necessary.

Amendment No. 68 would require the Secretary of State to publish annually details of the objective criteria and the method of measuring the performance of health authorities, his assessment of their performance and the further sums paid to them. We could not accept the previous amendment on the basis of policy and we reject this amendment because there is no need for it. The NHS plan set out proposals for the annual publication of the results of performance assessment; it forms the basis of the health authorities' objectives and the measurement of a variety of indicators. Publication will be the responsibility of the Commission for Health Improvement, in association with the Audit Commission. The Commission for Health Improvement will have a role in validating the traffic-light system to prevent the arbitrary allocation of individual trusts to a particular level in that system.

The performance assessment framework will show how each health authority and NHS trust performs during the year and present a comprehensive picture of its overall performance against its objectives for the year and against other indicators. Publication by the Commission for Health Improvement will show the public that the assessment results are genuine and independent. The amount that a health authority receives from the performance fund each year will be in the public domain and available on request.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

If the amendment were accepted, there would be a single-source document stating the criteria set, the measurement methods, the Secretary of State's assessment and the payment made. It would thus be possible to compare health authorities and to judge how they performed against common criteria and objectives. The amendment would ensure that such information was readily available; there would be a level playing field and health authorities would have even-handed treatment.

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

The information necessary to assess the operation of the performance fund, the distribution of funds and the assessment of criteria will be in the public domain and enable that exercise to take place. The Government have no intention to deceive about the process and we are not convinced of the need to adopt the amendment. I believe that the information will be available. However, I will consider the points that the hon. Gentleman has made, to make sure that the assurances that I am giving him are correct.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

On amendment No. 67, the Minister has accepted the possibility that the Secretary of State would wish to issue supplementary criteria, or objectives to a health authority. He said that the Government had no wish to conceal anything, but would it not be possible—in the absence of amendment No. 67—that people who had a business to know would not be aware of the criteria to which a health authority was working, if the Secretary of State had issued supplementary criteria, and they were not contained in a published letter? We are asking for an assurance that whenever new criteria or objectives are set, they immediately become public information, so that everyone understands what is driving a particular health authority.

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

Again, I am happy to reflect on that. The hon. Gentleman makes a reasonable point. There are good reasons to resist tying organisations down to specific timetables. The hon. Gentleman was wondering what circumstances one might have in mind, so let us take an example. Last year, the Government set an in-year objective of achieving a 60 per cent. immunisation target for the over 65s. That was not linked to any performance system—other than there was a service payment for GPs to carry it through. It is conceivable that the Government might have chosen a different means of incentivising that, perhaps through a payment to health authorities. That hypothetical example—which is not one that we have considered nor do we have plans to do so—would be a case of a criteria and target being set in year with the exact way of assessing performance being made public somewhat later.

Mr Paul Burstow (Sutton and Cheam, Liberal Democrat)

The Minister's example of the immunisation programme is quite unfortunate as it took me the best part of two months to get a written answer about the extent to which that programme was successful. That reflects the concern of the hon. Member for Runnymede and Weybridge about getting information into the public domain at the earliest opportunity. Would the Minister consider ensuring specifically that community health councils and their successor bodies are notified of changes in year to objectives and criteria? Clearly, as the local agency for evaluating the performance of the NHS, from the patients' perspective, they need to know.

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

Those are perfectly fair points. I have tried to give reasons why the wording of the amendments would not be acceptable. Clearly a patients forum would need to know what is driving a trust or health authority, or setting its priorities. Our intention is that supplementary letters would be publicly available in the same way as the annual letter to the health authority is available. I will go back through the system to assure myself, the Committee and, if necessary, the House, that the information will be in the public domain. I am sure, however, that that would be the case under our normal proceedings.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I am grateful to the Minister for the tone of his response to these amendments. They are intended to allay concerns that the Secretary of State is acquiring considerable powers, which could be exercised to mean that, in time, a larger proportion of total health funding would be distributed on a discretionary basis, instead of through formulae. Although we complain about them, we accept that the calculations are done by officials and are neutral. We are attempting to ensure that the way in which the Secretary of State operates these funds is transparent, and that he is therefore accountable for his actions. Can the Minister reassure the Committee that it is his intention that all health authorities are set the same criteria and objectives? It will then be possible to see an objective or a criterion set, the performance of different health authorities in achieving it, and the payments that are then made to them.

Will the payments be flat rate—so that each authority that meets the objective gets £10,000—or related to the authority's weighted capitation payments under the formula? Will the payments reflect the broader needs of an area, or will they be at the Secretary of State's discretion? If it is the latter, I believe that there will be considerable concern about very large sums being dispensed on the basis of the achievement of objectives or criteria that may differ between health authorities. If the Minister can clear up those questions, we will have made a fair amount of progress.

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

Although I have some sympathy with what the hon. Gentleman is saying, it is important that we do not use the clause to attempt to rewrite the entire basis of the National Health Service Act 1977. As I said earlier—when I think the hon. Gentleman was briefly absent from the Room—the clause gives considerable discretion to the Secretary of State to consider a broad range of factors in deciding what allocations are made to health authorities. The clause relates specifically to the ability to make performance-related payments and, even more specifically, to making payments related to performance in any particular year.

The entire debate has been based on the premise that the criteria for measuring performance will be published, and we have discussed the timing of the exact measurement of those criteria. Therefore, it follows that there will be published criteria, but it would be irresponsible to go from this narrow provision to making fundamental statements about the whole system of laws surrounding health authority allocations. In the context of the clause, it is our intention that there would be published criteria for making awards.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I am grateful to the Minister. He has said that the same criteria are applicable to all health authorities, and that they are not separate criteria negotiated and agreed with different health authorities. Will he also answer my question about payments?

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

It would be possible under the clause for the Secretary of State to set specific objectives for individual health authorities. Under the current system, several health authorities receive additional funds through a competitive process to implement health improvement plans aimed at reducing coronary heart disease. The funding of those plans is dependent on achieving objectives. The clause might allow in-year performance to be taken into account for those individual health authorities. Thus, as part of this process, it must be possible to identify specific criteria for individual health authorities—and I assure the hon. Gentleman that it would be an open process.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I appreciate the Minister's tone in his earlier remarks. However, partly by what he said, and partly by what he avoided saying in relation to the payments, he has reinforced my worst fears that the intention of the clause is to enable the Secretary of State to approach health authorities and—under clause 3 trusts and primary care trusts—effectively negotiate bilateral deals with them relating to specific aspects that are relevant to them. That is not to say that specific aspects might not need to be covered in one trust and not in another, but I am sure that the Minister will appreciate the accountability anxieties involved in moving to a method of funding the NHS that essentially involves the Secretary of State in a series of bilateral contracts with NHS providers, negotiating deals with them. Perhaps, for example, two trusts might be set similar criteria but paid different amounts if they achieved them. Perhaps the two trusts might be set different criteria. Although that may make sense in some cases, in terms of a public accountability framework, a public spending programme and the demands of equity of access and treatment in services such as the NHS, it might be difficult for the Government to sustain in practice, and it gives me considerable cause for concern.

Mr Hilton Dawson (Lancaster and Wyre, Labour)

I have some sympathy with the hon. Gentleman's amendment, but does he not agree that he would be on much surer ground with the line that he is trying to take if his party recognised poverty as a major cause of ill health in this country?

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

The hon. Gentleman makes a point that the funding formula recognises. As I said a few moments ago, we all recognise that the funding formula is not perfect, but at least it takes into account in a formulaic way different circumstances. What is now being proposed is that a part of the budget of health authorities and trusts will not be subject to such a formula, but will be subject to bilateral negotiations with the Secretary of State—because inevitably that is what it will boil down to—on achieving what may not necessarily be clinical criteria, but whatever criteria the Secretary of State wants to impose. That seems a rather retrograde step that I should have thought would give the hon. Member for Lancaster and Wyre (Mr. Dawson), as well as Opposition Members, some cause for concern.

I was hoping for an assurance from the Minister, because the tone of his earlier remarks suggested that the process would be across the board and that we would be discussing trusts having to reduce their waiting lists by 10 per cent., for example, in order to receive a payment of x. As a result of our debate so far, however, it is not clear whether the Secretary of State would be able to impose different values for x on every trust and that trusts would receive different sums of money by way of reward if they achieved those targets.

In the absence of a formula, such a system is open to abuse. We are making legislation not only for the present, but for the future, and I do not want a system to develop that gives politicians ever greater discretionary control over large areas of funding. At the moment we are dealing with relatively small amounts. However, let us consider personal social services spending, a subject on which the Minister asked me a question at the Dispatch Box a week or two ago, so he obviously knows a lot about it.

We have seen a dramatic growth in the proportion of total personal social services funding, which is funded through ring-fenced grants allocated by the Department of Health and bid for by social services authorities. Can the Minister confirm that it is not the Government's intention to place increasing amounts in funds allocated on the basis of performance and meeting criteria and objectives? Everything that I have heard from the Government suggests that that is part of their agenda. It may not be wrong, but it means that an increasing sum will be allocated on the basis of performance. We are merely seeking to ensure that the allocation mechanism is fair and not vulnerable to political manipulation—political with a capital ``p'' and with a small ``p''. We want the allocations to be fair and transparent, in what I might call—in an old-fashioned way—the best traditions of British public finances. I do not feel that the Minister has given us that reassurance.

I am, however, grateful to him for agreeing to consider the thinking behind the amendments. The wider concerns that I have expressed go beyond the amendments to the broader operation of the clause. Therefore, in anticipation of what the Minister has to say when he has had a chance to explore that thinking, and in the hope that we may discuss the matter further in the clause stand part debate, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I shall not try your patience, Mr. Maxton, by going over ground that we have covered previously. The clause develops the process of centralisation and the potential for micro-management of the service. We all know that he who pays the piper calls the tune. If the Secretary of State has large funds at his disposal—especially if they are to be dispensed in a discretionary fashion, which was the import of the previous debate—throughout the service there will be an ethic of doing what the Secretary of State wants. That may not always be the right thing to do in the view of the clinicians working within the service, and it may not reflect local priorities, which, at one stage, under the Secretary of State's predecessor, the right hon. Member for Holborn and St. Pancras (Mr. Dobson), the Government were anxious to emphasise.

The clause will have two practical effects. First, it may distort clinical priorities, as health service managers focus their budgets on achieving the criteria that have been set. This morning, I quoted an example from a health authority in just such a situation. That will lead, in some cases, to the sickest patients not receiving the highest priority within the service, which in our view would always be wrong.

Secondly, the traffic-light system—the identification of a group of trusts as failing—will lead to a further decline in staff morale. In a minute, I will ask the Minister again, for the third time today, how many trusts he expects to be categorised as red. It is inconceivable that his Department does not have an idea of how many health authorities and trusts are likely to qualify as red in the initial appraisal. I have talked to people in health authorities who know jolly well that those authorities will qualify as red.

That will have an effect on staff morale and the recruitment of clinical staff, nurses and doctors. It may have an even bigger effect on the recruitment of management. Who would want to enter an organisation that is publicly recognised as failing? Typically, in private enterprise, when an organisation is in that position, one would expect people to be brought in to turn it round and to be paid at premium rates. Indeed, in the public sector, in the case of the dome, the Government discovered that it was necessary to pay people premium rates to sort it out when it all went wrong.

It might appear perverse to increase the salaries of managers in failing trusts as against those in successful trusts, but without that incentive it is unlikely that top-flight managers will be attracted to a much more difficult and potentially thankless task in a failing trust rather than staying in a successful green-light trust.

Although much has been written and talked about the likely location of the failing health authorities and trusts that will get the red light, they will not always be in areas of deprivation. It is likely that quite a lot of those trusts and health authorities will be in deprived areas, for the reasons that the hon. Member for Lancaster and Wyre outlined earlier, but it is also the case that on most of the criteria set out in the consultation document, my own health authority in west Surrey, which is not noted as a deprived area, would probably be classified red under the Government's current proposals. That is because of its serious financial problems and the consequent underperformance in many areas, as it attempted to achieve the financial targets that were imposed upon it.

Under the Government's proposals, health authorities and trusts will find themselves veering from one direction to the next as they attempt to meet the Government's criteria. Clinical lead times are relatively long, and I fear that the Government will change the criteria that they ask health authorities and trusts to follow with rather more frequency than might be ideal for the efficient operation of the service.

Let me ask the Minister some specific questions that have not been covered so far in the debate on clause 2. Can he confirm that the grading of health authorities and trusts into red, yellow and green categories will always be as a result of a Commission for Health Improvement evaluation that is carried out on a transparent basis, and not as a result of a discretionary decision by the Secretary of State? Will there be any appeal mechanism for a trust that believes it has been unfairly or inappropriately categorised to institute a review of its categorisation?

As our amendments Nos. 67 and 68 were rejected, will the Minister give us an assurance that, by one mechanism or another—the hon. Member for Sutton and Cheam (Mr. Burstow) suggested some form of statutory notification of the local oversight bodies and we have suggested a requirement to publish—the workings of this whole process will be open and available to public scrutiny at the time, so that the date of the information will be available? Finally, will he tell us how many health authorities and trusts the Government expect there to be in the first wave of red-light allocations? Will there be tens or hundreds? Clearly, it will not be hundreds of health authorities, as there are not hundreds of health authorities, but a clear indication of the numbers would be extremely helpful.

The Government told us that competition in the NHS was destructive, yet this model will promote competition between health bodies, encouraging them to vie with each other for the coveted green lights. It will not lead to a model of health service provision that is more focused on patients, but to one that is more focused on doing the Secretary of State's immediate bidding. It will not encourage NHS staff to feel comfortable in their surroundings, and despite the Minister's rhetoric, there are no provisions that will obviously encourage co-operation between NHS bodies. Indeed, it will have precisely the opposite effect.

In my view, the clauses under consideration today do not provide adequate accountability for the increasing sums that will be distributed by the Secretary of State on what appears to be a discretionary basis. While we accept the principle that some allocation of funding on the basis of performance is sensible, we should have grave concerns about the wording in the Bill and the absence of any proper checks and accountability mechanisms for the large sums of money that will be at his disposal.

Mr Paul Burstow (Sutton and Cheam, Liberal Democrat)

I want briefly to pick up a couple of points that my hon. Friend the Member for Isle of Wight (Dr. Brand) touched upon and to develop one or two others that occurred to me as I listened to the debate. I should explain that my hon. Friend is in the Chamber taking part in the debate on the Shipman inquiry. While the performance management system is entirely right for a managed system such as the NHS to develop, we must be careful about the language that we choose to use within that system as it inevitably leads to a great deal of interest in looking for and emphasising failure.

I am not arguing that we should not seek to improve the performance of those who are not delivering the best health outcomes, but we should be aware that our actions can lead to a downward spiral in terms of lower motivation and ultimately, as my hon. Friend said earlier, to a lack of additional resources to address the reasons for the failure of performance. We must not proceed along a path that simply turns this into a question of how many authorities will be in the red-light zone, which in turn will be the headline in the next edition of the Daily Mail. The system should not just punish failure, but should drive up the quality of services. Some of the comments so far imply that our aim is to punish failure.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

Any Government, of any colour, will have a political imperative to ensure that the number of green-light organisations rises while the number of red-light organisations falls. No Government will want to admit that during their tenure of office the number of red lights doubled and the number of green lights halved.

Mr Paul Burstow (Sutton and Cheam, Liberal Democrat)

The hon. Gentleman's helpful intervention leads me on to my next point—I am not sure whether he managed to ask the Minister about this. What lies behind the idea that we need to have fixed proportions, at least initially, within the various colours of light: green, amber and red? It would be far better to base them on merit, rather than on an initial assumption. Given that the Department has already collected most of the data that forms the basis for the criteria and the objectives, has it run the criteria against the existing data? If so, will it at some point publish that information as I am sure that it could inform our deliberations, and it would certainly be helpful on Report and in the other place?

Finally, who will collect the data, how will it be analysed and who will present it? The Minister referred to the central role of the Commission for Health Improvement in the process. I felt that he was arguing that CHI would give the process a degree of transparency and independence from inappropriate ministerial interference. Can the Minister say a little more about the collection of the data? Will it inform the process and enable assessments to be made? Will CHI take that role or will the Department continue to collect the data, as it does now, through the regions and the NHS Executive?

It would be useful to have some clarity on that. If CHI is to collect the data, I hope that the Minister will give us some assurances that it will be under an obligation in the public interest to publish that information at the earliest opportunity.

I am concerned that some data that the Department of Health collects through surveys that it currently undertakes is not always published. Quite recently, in an answer to a parliamentary question that I had tabled seeking information about the loss of nursing home beds between October 1999 and October 2000, I was told that—[Interruption.]

Mr John Maxton (Glasgow Cathcart, Labour)

Order. There is a Division in the House. I am concerned about the amount of time we lose for these Divisions, so with the consent of Members and providing the Clerk is back, we shall resume in less than the normal quarter of an hour.

Sitting suspended for a Division in the House.

On resuming—

Mr Paul Burstow (Sutton and Cheam, Liberal Democrat)

I was questioning whether the Government would be as transparent as they ought to be about the provision of information. I cited the example of an answer that I received yesterday, which is published in Hansard today, in which the Department declined to publish information from a survey of nursing homes covering the year October 1999 to October 2000, on the grounds that that was not part of the usual national collection of statistics. It said that, as a consequence, the survey was merely intended to help Ministers to form a judgment about the local performance of the national health service. For that strange reason, it was unwilling to publish the information—the words used were, ``it would be inappropriate''. Perhaps that is the sort of answer that we shall get on such issues in future.

Finally, there is tension in a system that is managed by criteria that are set at the centre, but that seeks to be flexible in relating to local circumstances. I am thinking of health improvement programmes in particular. To what extent will the Government try to ensure that local health authorities will be effective partners with local government and other stakeholders in the local health economy in delivering health improvement programmes that are fit for the purpose according to local circumstances? That is perhaps harder to achieve with national targets set at the centre: it is about trying to make the health improvement programme fit with what appears to be coming from the centre.

It would be useful if the Minister could say how that tension between local and national priorities will be resolved within the traffic-light performance management system. We certainly subscribe to the view that there is a need to have a performance system. We have some concerns about the linkage of resources to such a system, and in particular, about the impact on the morale of those who find themselves categorised in the red-light zone.

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

I shall not repeat our earlier debate, but reply to some of the specific points that have been raised.The performance system that we have been discussing today, although it goes much wider than clause 2 is not about identifying and stigmatising failure. Rather, it is very much about rewarding and identifying success. The consultation paper that we published last week outlines a series of measures of greater freedom and autonomy that would be enjoyed by the best performing health authorities and trusts. At the same time, the Department would have the power to identify, intervene in and support organisations that are failing. My personal belief is that a performance regime should include incentives to encourage people to do better and provide the necessary support for failing organisations. Clause 2 is intended to help to achieve that.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I should like to make sure that the Minister did not inadvertently mislead anybody when he talked about greater autonomy and greater freedom. I believe he means that organisations that are graded green will have the autonomy and freedom that all have at the moment and those who do not achieve that status will lose some of the freedom that they currently enjoy.

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

Clearly, the exercise of sending out the consultation document at the end of last week was just a waste of time, as the hon. Gentleman for Runnymede and Weybridge has not read it. It says that health organisations will have automatic access to discretionary capital funds without having to bid, greater freedom to decide on the local organisation of services, the ability to address the persistent failure of red-light organisations and lighter touch monitoring by the regional office. It refers to a series of other measures on which consultation is taking place, including ways of reducing progress monitoring and prescribed processes for service development, ways of introducing lighter touch routine monitoring, the ability to develop service strategies without regional office approvals and flexibility over land sales. It covers a whole series of measures which, compared with what is uniformly applied to all trusts today, would provide greater levels of freedom. Therefore, I stand by what I say.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

For the sake of clarification, will the Minister make it clear to the Committee which level of traffic-light grading represents the current position, so that we can see which trusts and health authorities will lose some of their autonomy and freedom and which ones will gain?

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

Those that are categorised as green-light trusts will enjoy enhanced autonomy, but I do not wish to suggest that that is not possible for those that are showing progress as yellow-light trusts. We want to have incentives throughout the system.

The reason why we are consulting with the service on the document is clear. The process will be seen by the service as an attempt to identify the parts of the current management process that appear to be unnecessary hindrances, bureaucratic obstacles or time consuming exercises, which in well-run trusts could be done away with, in whole or in part, to achieve greater freedom. That is what the exercise is about.

I now refer to the specific issues that were raised. First, I was asked whether the grading and the allocation would be the result of a Commission for Health Improvement evaluation. In other words, would the Commission for Health Improvement categorise health organisations? That is not exactly what we intend. We intend that the trusts should be allocated into red, yellow or green categories by the regional office, against published criteria that have been set out and notified and that the Commission for Health Improvement should validate that process. It will require further work, however. We recognise the need for a double check in the system against favouritism, arbitrary decision making or simply wrong decision making. For that reason we would look to the Commission for Health to validate the process.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

Will the Minister confirm that the Secretary of State will have no discretionary power to intervene in that process?

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

The Commission for Health Improvement is set up as an independent statutory body and the process of validation would be part of its role. The hon. Gentleman knows that, in legal terms, a regional office the embodiment of the Secretary of State. That is a minefield, but the intention is clearly for the process to be validated by the Commission for Health Improvement to ensure confidence in the operation of the system.

The second question was whether an organisation might appeal against its grading. We are open to considering the responses to the consultation document but we have not yet envisaged a formal appeal process. In our experience of the publication of performance assessment frameworks, when somebody appears to be performing particularly badly he or she almost always immediately rings up and says, ``Actually, the data that we sent and that you published was completely wrong; if you had used the right data we would have been okay.'' It is reasonable to expect that if a trust finds that it has been graded less well than it would have liked and that there are flaws in the published data, it will be able to discuss that with the regional office, but the emphasis is on dealing with an organisation's problems rather than engaging the service in a major formal appeals process.

The question of public scrutiny came up several times. The data that would be used, whether for the core objectives or the wider set of objectives in the performance assessment framework, will clearly be published data. The Department already publishes data through the performance assessment framework. The data being used for the assessment will therefore be in the public domain.

The hon. Member for Sutton and Cheam asked who would collect the data. The data are overwhelmingly information that is produced by the health service in exercising its normal management; as he knows, the health service generates far more data than is collected centrally and published. Data would be collected by the Department of Health but, as an additional safeguard, the responsibility for publication of the performance assessment framework data will be transferred from the Department to the Commission for Health Improvement so that the latter organisation has the opportunity to assure itself of the validity of the data being published. The existing route for the collection of the data is in practice the only sensible route and would continue to be used.

The final point raised by the hon. Member for Sutton and Cheam was about health improvement programmes. They are an important part of the planning process and we want health improvement programmes to reflect local as well as national priorities. In practice, many of the indicators that we have suggested for the performance assessment framework deal with the sorts of issues that one would expect to be the outcome measures of the health improvement programme. They do not necessarily specify how health improvement should be achieved but will look at the outcomes.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

Once again, the Minister has sat down without answering the question that I have now asked four times: how many health authorities and trusts are expected to be graded red in the first wave?

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

As I said in answering the hon. Gentleman's question when he first asked it, we have not set a figure for that—and, in response to the question from the hon. Member for Sutton and Cheam, nor have we run the data against the consultation document that we have put out.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

Can the Minister explain why the Government have deemed it necessary to say that 25 per cent. will be graded green but not to make any estimate of the number that will be graded red?

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

In the spirit of rewarding success and best practice and performance, we judged that it would be useful initially to state the number of trusts that we thought would make green-light status. We have been anxious to avoid the idea that first we thought of a number of failing trusts and we are now going to find out which ones they are. It fits with our philosophy of running a system, which encourages success and best performance.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I am sorry to press this point, but if the Committee is considering the way in which these arrangements will work, we have to understand whether we are talking about 20 per cent. or 0.5 per cent. Nothing that the Minister has said yet has indicated whether the red light is to be an exceptional measure for a seriously failing trust or whether it is to be a significant percentage of the total number of trusts and health authorities.

In my view, it is impossible properly to evaluate how the system will work in the absence of that information. Perhaps other members of the Committee feel the same. Can the Minister give us any indication as to the expected order of magnitude? Does the Minister expect red-light organisations to represent 1 per cent. or 20 per cent? Can he at least give an indication of the numbers?

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

No I cannot, for the reasons which I gave earlier. The traffic-light system, which we have been discussing, does not depend on clause 2 of the Bill. The discussion has been a useful platform for that discussion, but clause 2 is not required to implement the traffic-light system. It would be quite wrong to say in Committee, however helpful it might be to the hon. Gentleman, that we think that there will be a particular number of red-light trusts as it would affect the entire process.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

The Minister did so for green.

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

I have explained why we have not done it for green and I rest my argument. The hon. Gentleman will have to decide whether or not he agrees with me.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.