With permission, Mr. Speaker, I wish to make a statement on yesterday's judgment on the appointment of commissioners in Lambeth, Southwark and Lewisham.
In August 1979 I gave directions under section 86 of the National Health Service Act 1977 in effect appointing commissioners to manage the affairs of the Lambeth, Southwark and Lewisham area health authority (teaching). My action was intended to ensure that the AHA(T) should keep its spending for the year 1979–80 within the cash limits laid down by my predecessors.
Although the court expressly held that I acted reasonably and in good faith in giving those directions and moreover accepted that the situation that faced me required immediate action, the learned judge found that in giving directions without specifying the duration I acted outside the power conferred by section 86. He also suggested that there was an alternative course that I might have taken. I shall study the judgment in detail when I receive a copy and any question of an appeal must wait until then.
However, my first concern is that proper respect for the courts and the rule of law means that I must give urgent consideration to the early restoration of their powers to the members of the authority. I shall therefore this afternoon be considering with the chairman of the regional health authority and the chairman of the commissioners the steps that might now be taken. All this must be done in a way that ensures that the progress made by the commissioners in establishing financial control will be maintained.
The learned judge said that it was in the public interest that the commissioners should continue to act in the interim and I know that the House will applaud what they have done to bring the financial affairs of the area under control.
The Secretary of State should have come to the House this afternoon, having accepted the judgment, and announced the replacement of the commissioners with the AHA. Was his action today based on the advice of the Law Officers, or did he take this decision by himself?
We would like to know the time scale for the restoration of the AHA and when the Secretary of State will make a further statement to the House. Will the right hon. Gentleman say what action he proposes to take about the closure of the two hospitals by the commissioners and whether or not the reinstated area health authority will be able to open those hospitals and allow them to operate in a free and fair manner?
I am sorry if that remark was too wounding for the hon. Member for Keighley (Mr. Cryer). I have come to the House on the first possible occasion—all that I had seen at this time yesterday were two conflicting press reports—and announced that I intend to meet the chairman of the regional health authority and the chairman of the commissioners in less than half an hour with a view to the return of their powers to the members of the area health authority. That being so I am bound to say that I think that the right hon. Member for Salford, West (Mr. Orme) has done me less than justice.
The right hon. Gentleman asked about closure decisions and mentioned St. Olave's and St. John's hospitals. I must tell the House that the commissioners decided temporarily to close some hospital facilities in order to contain current spending within the resources available. Those were short-term measures, and I have always made it clear that if permanent closures were contemplated any proposals would be subject to full consultation.
It is always open to health authorities to consider alternative ways of keeping expenditure under control that may lead to the ending of temporary closure. I have no doubt that when the members of the area health authority find themselves once again in power they may wish to do that. However, I must make it clear that there can be no question of the area health authority's expenditure exceeding the funds available to it.
It is not for me to tender legal advice to my right hon. Friend, but will he, in view of the clear limitations in section 86 to the period specified by the direction—which limitation was the ratio decidendi of the judgment—rather than appeal consider the issue of a section 17 direction, which places a specific duty, without limitation of time, on the method of the exercise of an authority's statutory function, which direction if not obeyed can be followed by the replacement of the defaulting members under section 85?
My right hon and learned Friend, who was Minister of Health some years ago, is probably more familiar than are most hon. Members with the intricacies of this legislation. He is entirely right in saying that the learned judge suggested that the course indicated by my right hon. Friend would have been open to me.
However, I have to make this point. Faced as I was at the end of July with a clear decision by the area health authority that it did not intend to remain within its cash limits, and faced with the fact that it was by then getting on for halfway through the year and that the authority had been overspending in previous years and had carried that overspending into the following year, I took the view that I should act immediately.
Had I proceeded by way of sections 17 and 85 a further time would have had to elapse between the giving of the direction and the recognition that the circumstances for the operation of section 85 had arisen. In the meantime the overspending would have continued, and I therefore took the view, on the balance of the legal advice available to me, that it was right and proper to take action at once. The only section under which that action appeared to be open to me was section 86.
Cutting out all the legal jargon, do I understand that, in simple terms, the commissioners are to be sacked and the area health authority is to be reinstated? If my interpretation is correct, may I put it to the Secretary of State that the area health authority said that it was unwise to close St. Olave's hospital, in my constituency—the right hon. Gentleman knows the case—which caters for psychiatric and geriatric cases? St. Olave's has nothing to do with the teaching hospitals. It was a disaster to close that hospital, and though we had the sympathy of the right hon Gentleman we did not get his support.
I ask the Secretary of Stale a straight question: may I go back to my constituents tonight and say that it is now all right, and that having got rid of the other shower we will be getting our own people back and that St. Olave's will be reopened?
I have every sympathy with the right hon. Gentleman in his desire to cut out the legal jargon. However, as he will know, as a former member of Government, Ministers have to have regard to the law. [Interruption.] All lawyers can make mistakes from time to time.
The right hon. Gentleman knows that I expressed more than sympathy when he came to see me about St. Olave's Hospital. I gave him a statement about how I saw the long-term future of that hospital, in which I said that it seemed inconceivable to me that that part of London could do without the services for geriatric and psychiatric patients that St. Olave's was capable of providing. I felt that that was a perfectly proper use for the hospital and I drew that matter to the attention of the commissioners. No doubt the matter will be drawn to the attention of the AHA in due course.
The right hon. Gentleman asked me whether the commissioners would be sacked. I remind him that the judge expressed the view yesterday that in the interim it. was in the public interest that the commissioners should continue to act. He held that they were not validly appointed. Therefore, it follows that unless the ruling is reversed on appeal their decisions have not been validly taken. In considering the steps that should be taken to validate both the past steps of the commissioners and any that they may need to take before the return of the members of the authority, the learned judge, at the end of his judgment, drew attention to the possibility of giving further directions to that end.
The whole House will regard my right hon. Friend highly for having come to the House this afternoon and accepted a judge's ruling. Is he also aware that, as a member of the regional health authority concerned, I believe that he took the right action in replacing the authority at the time that he did because it was in open revolt against the Government and the previous Government to an extent exceeding £5 million. Some action had to be taken. I also remind my right hon. Friend that whatever steps he may take now to abide by the legal niceties he should ensure that whoever runs the health administration in the Lambeth, Southwark and Lewisham area health authority will do so in accordance with Government policy.
I am grateful to my hon. Friend for his kind remarks. As I said in my statement, my first concern is to abide by the ruling of the court and to uphold the rule of law. I believe that to be the right priority.
With regard to the future, let me make clear that the judgment in no way changes the position that all health authorities need to control their expenditure within cash limits. Indeed, it makes clear that powers are available to ensure compliance with this requirement. The House may be aware that there is a clause amending the National Health Service Act 1977 included in the Health Service Bill that is now before Parliament. The effect of the amendment will make compliance with cash limits a statutory duty on health authorities. If the area health authority is restored—as I hope it will be soon— it will be under no less a duty than the commissioners to live within the cash limits.
Does the Minister recognise that my constituents, like those of the right hon. Member for Bermondsey (Mr. Mellish), have been subjected to massive cuts in their health services— cuts that have been proved to have been carried out illegally? Does he feel that he has a moral duty not only to reinstitute that area health authority but to provide it with the powers and money to put back those illegal cuts?
I do not recognise any such duty. My duty is to recognise the order of the court, and that is what I am doing. As my hon. Friend the Member for Canterbury (Mr. Crouch) pointed out, the area health authority has a long history of overspending. It is significant that in the several years during which my predecessor, the right hon. Member for Norwich, North (Mr. Ennals) wrestled with the problem of the overspending by that authority, at no stage did he believe it right to increase its cash allocations on the ground that it was underfunded.
It is bound to concern the House when Ministers act as if their powers are much greater than they are. Has the Secretary of State told his right hon. Friend the Prime Minister that he is very sorry to have landed the Government in this trouble? Has it not caused him to reflect upon what his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who was so lavishly praised a moment ago, left in the health service—authorities that he cannot sack and that the electorate cannot sack when they act in ways that exceed their spending rights?
The House has every right to hold me to account. That is why I am here this afternoon. That is the chain of accountability whereby health authorities are made accountable to the House of Commons. I am happy to say that my right hon. Friend the Prime Minister fully shares my view as to the primacy of the rule of law.
Does my right hon. Friend accept that his statement this afternoon shows clearly that we have a Government who are prepared to accept the judgments of the courts with good faith and to act on them speedily? In view of what has happened in the past, will he seek an undertaking from the chairman of the area health authority involved that he recognises that the vast bulk of the money spent by that authority comes from the taxpayer, to which this House has primary responsibility?
To be fair to the chairman of the area health authority, Mr. Stan Hardy, he has always done his best to try to persuade the members of that authority to abide by the cash limits that were laid down by my predecessor and later by myself. I have no doubt that when reappointed Mr. Hardy will do his best to make sure that the authority lives within the limits. I want to help him in that matter and to make absolutely certain that the Department can give him all the backing that he needs, whether by direction, law or otherwise, to see that the authority has regard to the cash limits laid down for it. There would be no permanent basis for the preservation of health services in that part of London if it were done in any other way.
I am sure that the right hon. Gentleman would not wish to mislead the House. He said that the judge had said that he acted reasonably. Is he aware that what the judge actually said was that it had not been established that he had acted unreasonably? That is a different matter.
I should like to put two questions to the right hon. Gentleman. First, are St. John's and St. Olave's hospitals legally closed now, or are they legally open? Will he give us his opinion, based on the legal advice that he receives—inasmuch as that is worth anything? Secondly, in view of his praise of Mr. Hardy, and because Mr. Hardy is available, will he exclude him from his meeting with the chairman of the commissioners and the chairman of the regional hospital board? Will he restore Mr. Hardy's salary, which he chopped off illegally in October?
The hon. Gentleman will understand that at this stage I shall not dig too deeply into the legal consequences of the judgment. I have already made clear that Mr. Justice Woolf held that the commissioners were not validly appointed. It follows that unless the ruling is reversed on appeal their decisions have not been validly taken. I remind the hon. Gentleman that the judge said at the end of his judgment that in his view it would be in the public interest that the commissioners should continue to act. I understand that he indicated that he would be open to hear applications for directions as to how that might be achieved and how the decisions of the commissioners could be validated. Obviously, these are matters of considerable legal complexity, which my advisers have under study. I am making arrangements to see Mr. Hardy at the earliest possible opportunity.
Will my right hon. Friend continue to give full emphasis to the fact that the persistent and gross overspending by this area health authority has been at the expense of all other areas and districts within the South-East Thames region—in particular, many deprived districts such as Medway? There has been considerable support for the savings that have been made by the commissioners. There is also widespread support for the political action taken by my right hon. Friend even though, naturally, it is regretted that those actions were founded on unsound legal advice. Will my right hon. Friend emphasise the need to maintain almost continuous restraint on this area health authority, which is necessary if there is to be any fairness for the very deprived districts in the same region?
My hon. Friend is absolutely right. Indeed, the court made it perfectly clear that the overspending by the Lambeth, Southwark and Lewisham area health authority was at the expense of other areas in the region and that the region had had to divert funds to them. One of the factors that I had in mind in seeking to oblige that authority to remain within its limits was to be fair to the other areas in the region that were relatively underfunded.
I have already made clear that the restoration of power to the members of the area health authority will have to take place on terms that ensure that they, too, fully abide by the obligation to remain within the cash limits. It simply is not possible to run an organisation such as the National Health Service in any other way.
Will the Secretary of State accept that he really cannot take any credit for saying that he has decided to accept the ruling of the court? He has no alternative but to accept the ruling of the court. Does he not accept, therefore, that he has acted with some arrogance, brusquely and illegally, and has created great confusion in one of the largest areas in London as a result of the action that has now been repudiated by the High Court? He has not said whether he is very sorry.
Will my right hon. Friend take heart from the fact that the judge said that he had acted in good faith? If the members of the area health authority had acted in good faith this situation would not have arisen in the first place.
My hon. Friend is absolutely right. There is little doubt that some members of the area health authority were really making a political point rather than concerning themselves with running the health authority in accordance with the provisions of the Act and all the directions given to them.
In his new found enthusiasm for accepting the words of judges, would the right hon. Gentleman care to tell us whether he accepts the finding of fact made by Mr. Justice Woolf to the effect that what put the area health authority into an impossible position was his right hon. and learned Friend's Budget on 9 June last year? Will the Secretary of State get up and say that he accepts that finding of fact?
Secondly, will the right hon. Member answer the question put by my right hon. Friend the Member for Norwich, North (Mr. Ennals)? Did he cause this chaos in South-East London off his own bat or did he take the advice of the Attorney-General first? Whom are we to blame for this?
Thirdly, does the right hon. Gentleman realise—I speak as someone who was administered to by these commissioners— that the commissioners had little credibility before today but as a result of his waffly statement today they will have even less credibility? Is not the only thing to do to get rid of them forthwith and return the old area health authority straight away?
I am sure that the right hon. Gentleman did not intend that intervention to be helpful. I am bound to say that it was not. The whole House knows the financial position that the Government inherited in terms of the National Health Service. I am not sure that there was evidence before the court that would have enabled the learned judge to draw a clear distinction between the addition of value added tax in the Budget and the national figure of £23 million that the right hon. Member for Norwich, North had already indicated was to be removed from the cash limits of health authorities as an offset against the pay increases that had to be given.
I entirely accept that health authorities —not only this health authority but others —have faced a significant squeeze on their spending this year, of which VAT is less than a quarter, because the cash limits which had been laid down by the right hon. Member for Norwich, North proved to be entirely inadequate. Every other health authority in the country has resolved to live within its cash limits but this authority did not. That is why I took the decision to act.
As to what advice I had, I am accountable to the House for the NHS and of course I accept responsibility for what has happened.
On a point of order, Mr. Speaker. On a previous occasion when the right hon. Herbert Morrison made a similar mistake in relation to the fire service, an Act of indemnity was introduced, on the same day I understand, to cover any liability in damages or crime for acts committed during the intervening period of illegality. Today we have been left in some suspense and I wonder whether you, Mr. Speaker, would consider tomorrow, after the Secretary of State has made a further statement, an application under Standing Order No. 9 so that we can discuss indemnifying those who may have broken the law?
On a point of order, Mr. Speaker. I am sorry to interrupt the proceedings, but this is, I believe, a very important point of order. At the beginning of these exchanges, after the spokesman for the Opposition had finished his points, I distinctly heard the hon. Member for Nottingham, West (Mr. English) say loudly and clearly words to the effect "Not on oil sanctions. You always supported the criminals", referring to my right hon. Friend the Secretary of State for Social Services. Perhaps you, Mr. Speaker, could guide the House appropriately and ask the hon. Member for Nottingham, West to confirm whether he did say that and, if so, to withdraw the remark.
Further to that point of order, Mr. Speaker. I took it that the decision not to proceed against the breakers of the oil sanctions was a Cabinet decision in which the right hon. Gentleman had a part. If it was left to junior Ministers, of course, I would automatically withdraw any implication against him.