Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I beg to move amendment No. 178, in page 14, line 6, leave out from `shall' to end of line 7 and add:

`be substituted with—

(4) The remuneration to be paid under the arrangements mentioned in subsection (1) above to a practitioner who provides general medical services shall, at least in part be dependent upon the quality and outcome of the services provided and shall not ordinarily consist wholly or mainly of a fixed salary.'.

The clause is four lines long instead of one, so it lent itself to amendment. It is designed to repeal the requirement that general medical services remuneration should not consist wholly or mainly of a fixed salary paid to the practitioner.

When the 1977 Act was written, or when this provision was inserted, the assumption was that the basis of such remuneration would be capitation—that practitioners would be paid a sum per person on their list. The Government's policy is clearly to move away from capitation payments, and broadly speaking we would support that policy. It can provide a perverse incentive to practitioners to get the largest list they possibly can in order to maximise remuneration. A high number of patients on a practitioner's list does not necessarily correlate with a high quality of care provided by that practitioner. There might be prima facie reasons for assuming that the larger the practitioner's list, the lower the quality of the care that he is able to provide.

We understand the Government's desire to allow practitioners to be remunerated by reference to quality and outcomes, rather than simply by reference to the number of patients on their list. However, the clause is not necessary to achieve that objective. I refer the Committee to the explanatory notes, which state:

Clause 20 ends the requirement under 29(4) of the 1977 Act that the majority of remuneration of GPs should have reference to the number of patients the GP has undertaken to provide services under General Medical Services.

That is not what section 29(4) of the 1977 Act states. This is not the first time that I have found the explanatory notes to be misleading, so that a member of the Committee who does not have time to read the base legislation may be misled.

Section 29(4) of the 1977 Act states:

The remuneration...shall not...consist wholly or mainly of a fixed salary

that does not relate to capitation. It does not state that the remuneration cannot be calculated with reference to some other criteria such as quality or outcomes. The notes are misleading, and might lead somebody to believe that clause 20 was required in order to allow the Government to introduce remuneration based wholly or mainly on quality of outcomes into the GMS contract. That is not the case. It is already possible to introduce remuneration based on such criteria.

The amendment specifically includes a reference to quality and outcomes. It requires consideration to be given to those factors as a basis of remuneration. To allow remuneration to be based either wholly on capitation, or wholly on a fixed salary, would be a step backwards. Everything that the Government have said suggests that they want to move away from capitation-based payments to ensure that quality of patient experience and outcomes are the principle criteria in determining the remuneration of a practitioner. Clause 20 would allow practitioners to be paid a fixed salary. It removes from the 1977 Act the prohibition on fixed salaries without reference to capitation, which is neither positive nor helpful and flies in the face of the Government's stated objectives.

I am unsure what is in the Government's mind. Members of the Committee will be familiar with the distinction between personal medical services and general medical services. Under personal medical services, practitioners are paid a salary, while under general medical services, they are remunerated in a variety of ways, though with capitation as a significant element of the package.

During the debates on the Health Act 1999, which introduced personal medical services, the Minister assured the Committee that personal medical services would co-exist alongside general medical services. They would not replace them and there would be no pressure to move from GMS to PMS. Despite the assurances, some GPs are—or will be—under pressure to move from GMS to PMS, particularly single-handed practitioners, and that flies in the face of the assurances given in 1999.

The clause—and its ramifications—suggests that the Government, in addition to a full-frontal assault on GMS—to persuade, entice and cajole practitioners into PMS—are working a flanking movement. They are undermining the principals of GMS by giving themselves the power to make a fixed salary the basis of a GMS service contract, which would give it most if not all the characteristics of a PMS contract. Perhaps the Minister can explain what the distinction between GMS and PMS will be? Perhaps he will give an assurance that, even if the clause is passed without the benefit of the amendment, there will still be a distinctive GMS system.

If the Government have a benign reason, such as the one that they gave in ``The NHS Plan'' and other documents, for wanting to re-negotiate the GMS to make it more quality sensitive, they will have no difficulty accepting the amendment. The Minister should either accept the amendment or admit that the Government have a plan to out-flank GMS with a fixed salary system that will make it almost indistinguishable from PMS.

Mr John Maxton (Glasgow, Cathcart, Labour)

Before I call the Minister, perhaps it would be for the convenience of the Committee if I said that I have changed the provisional selection to include the debate on clause stand part in the debate on the amendment.

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

I am pleased by the widespread acceptance that the GMS contract based primarily on head counts, has had its day. That is the view outside the Committee and is generally the view of the hon. Member for Runnymede and Weybridge. The way forward is to move towards contracts that recognise the quality of service that GPs provide and reward them appropriately. The measure will not abolish the link between pay and patient numbers: it will merely remove the legal requirement for the majority of GPs' pay to be linked to patient numbers. As has been pointed out, in extreme cases, a direct link between list size and pay can lead to a perverse incentive, particularly for hard-pressed GPs.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I must ask the Minister to correct what he said. Despite what the explanatory notes state, my interpretation of section 29(4) of the 1977 Act is not that it requires the majority of remuneration to be linked to capitation, but that it requires it not to be a fixed salary that is not linked to capitation. That is different. My reading of the section is that it would permit the Government to use a criterion other than capitation for the majority of remuneration. That would include outcomes and quality. That is why the clause is not needed to enable the Government to do what they intend.

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

My advice and understanding are that the practical interpretation of section 29(4) is that more than 50 per cent. of GPs' interests must be calculated on the basis of the number of patients on a list. I shall seek advice about that again, after the Committee, and if my interpretation is wrong I shall write to the hon. Gentleman to correct what I have said. I believe that what I have said is the general understanding, and it is what we are attempting to deal with, to bring about greater flexibility in the development of the GP contract in future.

The fixed salary is the fixed basic income of the GP rather than specific additional payments. I should make that clear, because I suppose that it is possible for more than 50 per cent. of total income to come from other sources. We are concerned with the basic income of a GP. Immunisation service payments would fall outside the calculations that I am describing, for example. We want to work with the British Medical Association to modernise GP contracts. We are going about that now and the clause would remove a constraint.

The hon. Member for Runnymede and Weybridge raised two issues in addition to the interpretation of the 1977 Act. The first was whether the Bill should include a new requirement with respect to outcomes and quality. The second was whether the clause leads to blurring, changing or redefining of the boundary between PMS and GMS or perhaps whether there is a relationship between that boundary and salaried or independent contractor status.

I have thought long and hard about amendment. No. 178. We certainly want a future contract to reflect quality and outcomes much more clearly than the national contract does now. I am not convinced, however, that it is necessarily helpful for the Bill to replace a constraint that has been and will be problematic with a different constraint. The difficulty is illustrated by the amendment, which could allow the quality consideration to be attached to the merest fraction of the payments made to GPs operating under the Red Book arrangement. We accept the spirit of the relevant part of the amendment and have acted accordingly in the NHS plan. There is a consensus on the need for more emphasis on quality and outcomes.

In response to the hon. Gentleman's request for me to clarify as well as I can the difference between PMS and GMS, I remind the Committee that PMS is a voluntary contract entered into by GPs at local level. About 22 per cent. of GPs indicated their desire to go onto PMS contracts from 1 April 2001.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

As the Minister has made that comment, would he reiterate for the record what I think he said in 1999, that PMS will remain voluntary and that GPs, whether single-handed or otherwise, will not to be subjected to pressure to enter into PMS arrangements in future?

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

GPs are not being pressured into PMS arrangements, although I need to be clear that we said in ``The NHS Plan'' that our preference is for single-handed GPs to have a different national contract that would overcome their apparent problems of clinical isolation. Should that not be the case, we would seek to move that group of GPs onto a national PMS contract. That is important and the hon. Gentleman is right to ask me to reiterate.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Just to clarify, is the Minister saying that he hopes to be able to negotiate a new type of GMS contract for single-handed practitioners, but if he is unable to negotiate that to his satisfaction, he will consider imposing a PMS contract on single-handed practitioners? Negotiations that take place under the threat of imposed unilateral action are not usually fair or reasonable.

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

The hon. Gentleman is entitled to his view, but our intention is to negotiate an appropriate national contract that can help overcome recognised problems faced by single-handed GPS. The hon. Member for Woodspring (Dr. Fox) has set out the need to address some of the problems of physical isolation that are faced by single-handed GPs. There is not a huge difference on this issue across the Committee. The essential difference between PMS and GMS contracts is the same as that between the locally-agreed contract which GPs enter voluntarily and the national contract that is for the majority a matter of choice, but is the default national contract under which GPs operate. The clause was not intended to change that basic difference between the national Red Book contract and the local PMS contract, nor is there any intent behind the clause, or in wider Government policy, to force people from independent contractor status into a salaried status. That is important and it is now widely accepted.

There is often confusion, and a belief that PMS means a move to salaried doctor status. It is worth saying on record again that the vast majority of GPs with PMS contracts are independent contractor status GPs. They have not switched to salaried status: they have changed the nature of their independent contract. I do not see why there should be significant changes other than those that are taking place at grass roots where it appears that a rising number of younger GPs are opting for salaried status. It is too early to tell, however, whether they see that as a permanent arrangement or something for the first years of their practice, taking on the greater obligations of independent contractor status later. From the people I have talked to, it appears that salaried status is seen as transitional. However, essentially that is something permitted by the greater variety of employment opportunities available to GPs.

Dr Peter Brand (Isle of Wight, Liberal Democrat)

The Minister said that PMS was a voluntary arrangement and clearly that is the case in respect of the move from GMS to PMS. Could the Minister reassure us that the reverse move is also possible? Once people have accepted PMS, if there were to be a disagreement with the commissioning body, under PMS the same health authority would also have the power to block the institution of a GMS contract.

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

Yes. I do not have chapter and verse at my fingertips, but my understanding is that PMS GPs have a preferred status in their ability to switch to GMS that would not be available to another GP who wanted to work on a GMS basis. I assure the hon. Gentleman that nothing in the measures that we are taking will change that status, which, as I recall, derives from the National Health Service (Primary Care) Act 1997.

Dr Doug Naysmith (Bristol North West, Labour/Co-operative)

Will my hon. Friend the Minister confirm that it will still be possible for single-handed practitioners to remain under GMS conditions of service, provided that all the problems of isolation and the necessities of keeping up with clinical development are dealt with?

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

We would like to negotiate a new national contract with a greater emphasis on quality that could therefore address such issues. We can never say at this stage whether negotiations will be successful, but the NHS plan makes it clear that we would like to tackle such concerns through a quality-based national contract. That is what we shall seek to do with the profession and its representatives.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I want to focus on one point. I am not sure that the Government have made or would want to make a case for paying fixed salaries. The case for paying GPs by reference to the quality of outcomes, the experience of their patients and the quality of service provided does not need making, as it is self-evidently sensible. The Minister rather glibly glossed over my concern about the need for the clause at all. I re-assert the fact that section 29(4) of the 1977 Act does not prevent the Government from negotiating a GMS contract in which the majority of the payment would refer to quality of outcome, patient experience, clinical indicators and anything, in fact, other than a fixed salary amount. The only reason for the clause would be if the Government intended to pay GPs the majority of their remuneration—50 per cent. plus of it—by a fixed salary. I have not understood from the Minister's remarks whether that is his intention.

The Minister said that the amendment could allow for only 1 per cent. of GPs' remuneration to be linked to quality, while 99 per cent. was linked to something else. That is true, but the amendment makes it clear that no more than half the remuneration would have to be based on a fixed salary. It uses the same language as the 1977 Act, which the Minister has interpreted as meaning no more than half. The amendment would provide that only less than half of the remuneration could be through fixed salary, and that at least some of the remuneration must refer to the quality and outcome of services provided. That is a clearer presentation of what the Minister seems to be saying that he wants to do.

By rejecting the amendment, the Minister leaves us with the suspicion that he intends more than 50 per cent. of remuneration being paid by way of a fixed salary and, by extrapolation, less than 50 per cent. being related to quality or other parameters that we all might consider to be sensible and useful. Will he clarify his intention? Why can he not accept the amendment? The mere fact that it does not require a minimum percentage to be linked to quality does not invalidate there being a reference to quality and outcome in the Bill. The clause, unamended, would allow payments to be made without reference to the quality or outcome of the services provided. If the Bill is to give effect to the Government's stated intentions, it should include a reference to quality.

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

I have considered that last point carefully. It is a matter of judgment for the Committee, but my view, on balance, is that quality need not be included. The Government's wish to have a contract that gives appropriate rewards for quality is shared by the profession. That is not in doubt. We have found in previous legislation that including such factors imposes constraints; it is a matter of judgment whether one should impose a further constraint, but I believe that it is unnecessary.

The hon. Gentleman is in something of a tangle with his interpretation of clause 20 and the 1977 Act. The effective interpretation of the 1977 Act has been that doctors are paid a fixed amount each year, including a sum that is based on capitation and must be more than 50 per cent. of the total remuneration. That is a restriction. The contract is to be renegotiated. I do not know whether a payment related to quality might replace it. It is conceivable that, as with some PMS contracts, a certain part of the payment should relate to maintaining a certain size of list, but one that is not related to capitation. A number of variations are possible.

Rightly or wrongly, I take reassurance from the fact that my officials have met with the General Practitioners Committee of the BMA and discussed the clause in some detail, as they have done the rest of the Bill. The GPC understands what we propose, and does not share the hon. Gentleman's concern. It is true that they would like a provision on quality to be included in the Bill, which I entirely understand. However, it has not raised with my officials the matter of remuneration being

wholly or mainly of a fixed salary.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I do not wish to flatter him unduly, but the Minister says that the GPC has not raised those concerns with him. If he turns his mind back a couple of years, he may remember that, on more than one occasion, he got the better of the GPC in negotiations. The fact that the GPC has not expressed concerns about what the Minister intends to do does not mean that we should not probe the matter carefully. By nature, doctors tend to be trusting, and they will expect Ministers to be open and honest. I do not think that there is any misunderstanding over clause 4.

I seek a clear statement from the Minister. If he is looking to replace capitation-based remuneration with fixed remuneration, he needs to repeal section 29(4) of the 1977 Act. If he proposes that GPs should have more than 50 per cent. of their remuneration by way of a fixed salary, without reference to capitation or anything else, he needs clause 20. My understanding, from the general tone of the Government's approach to GP remuneration, was that he intends that more than 50 per cent. of GPs' remuneration should be related to the quality of the service that they provide and the outcomes that they deliver. If, therefore, the most significant part of their remuneration will be dependent on the quality of service that they deliver, he does not need clause 20.

Nothing in section 29(4) of the 1977 Act would prevent the Minister from paying a general practitioner 49 per cent. of his total remuneration as a fixed sum, by reference to nothing, and the other 51 per cent. by reference to something like quality of outcome or patients' experiences of the services delivered. Will the renegotiated GMS contract provide for the payment of a fixed salary, without reference to capitation, which constitutes more than 50 per cent. of the total remuneration? If so, the Government are missing an opportunity to do something that their propaganda suggested they would do, which is to place quality patient experience and outcomes at the top of the agenda.

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

In a sense, capitation payments are fixed. They are not fixed in absolute terms, because they depend on the number of people on the practitioner's list, but they are fixed in that they must be more than 50 per cent. of the total. We are trying to remove that obstacle. The provision effectively requires a GP who has twice the number of people registered on his or her list as another GP to be paid twice as much. We are trying to escape the hook of a direct link to capitation. In the future, it is likely that remuneration will be linked less directly to the number of patients on the list. In some PMS contracts, the GP is required to maintain a list of a certain size, but the contract emphasises the quality of services provided to those on the list. It is conceivable that we may wish to cap that type of contract.

In this discussion, where there is no real difference between our objectives and those of the profession, it seems pointless to try to specify what elements might or might not constitute precisely 50 per cent. of the future remuneration. When we come to negotiate, it is likely that the number of patients will be a relevant factor, but we are trying to get rid of the provision that has effectively tied us to a capitation system.

Dr Peter Brand (Isle of Wight, Liberal Democrat)

It is true that before quality can be delivered, a basic practice must be assembled, so there is still a need for a basic practice allowance of some sort. I support what the Government are trying to do, and that is not necessarily because I am so trusting. I have spent my clinical professional life with drug addicts—people who are pathological liars.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Like politicians.

Dr Peter Brand (Isle of Wight, Liberal Democrat)

I have been anticipated. Medical negotiators can certainly cope with the average politician.

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

We know that, but what we want to know is what the hon. Gentleman did before he became a Member of Parliament.

We have reached the stage in the debate where I have set out my view of the legislation and the purposes that lie behind the clause, and the hon. Gentleman has set out his views. I fear that we will simply go over the same ground again and again.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I fail to be convinced by the Minister's argument. My interpretation of section 29(4) of the 1977 Act is that it would allow for a fixed salary, without reference to capitation, equivalent to 49 per cent. of the total remuneration to be paid. I see nothing in clause 20 that would stop a further amount, linked to capitation, being paid, and a further amount beyond that, linked to the fulfilment of other criteria.

The Minister is clearly basing his remarks on the advice that he has been given. I will go away and talk to people who are better able to dissect these things than I am. I do not pretend to be a lawyer. One of the problems under which we labour in this place is that we are expected to provide interpretations and advice for which people outside the House would expect to be paid a great deal more per hour than Members of Parliament or civil servants are. However, I hope that the Minister will think again if I come back to him, before the Bill is considered on Report, with an opinion that gives credence to what I am saying. We are simply seeking to look behind what he is trying to do and find out whether he has an agenda that requires the measure. Such an agenda might give some cause for concern, whereas his stated agenda, which we do not believe requires the clause, does not. We accept that that agenda is being discussed with the profession. Our only concern is to unmask any actual or potential hidden agenda for the future.

The Committee can move on now, but I hope to revisit the issue with the Minister later. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 20 ordered to stand part of the Bill.