Debates on the financial crisis in Gwynedd health authority seem to have become a regular feature in the Chamber. We had one in June 1988 and another in March last year. The Minister of State has good reason to remember the latter debate because on that occasion, as on this, he had to stand in for his colleague the Under-Secretary of State for Wales, who was then, as now, indisposed. We send him our best wishes for a speedy recovery.
The Minister also deserves our commiserations because once again he has picked up a poisoned chalice. He needs no reminding about the financial crisis and cuts in the Health Service in Gwynedd. For example, the closure of services at Llandudno general hospital has been a matter for public outcry in his constituency. Whatever brief he may have today, the Minister knows in his heart of hearts that the present situation cannot continue. There must be a resolution of the perpetual state of crisis in the Health Service in Gwynedd.
The present position goes back to three years ago when a team of consultants published a damning indictment of the lack of budgetary control in Gwynedd health authority. The authority then had a cash shortfall of £1·3 million. A desperate programme of action was drawn up to bring the authority back into balance, supposedly by March 1990. The consultants said that the plan was feasible but to my mind it was entirely and hopelessly unrealistic.
The programme was based on closing six valuable community hospitals. The consultants thought that that could be achieved within 12 months. How on earth the Welsh Office allowed such a palpably unrealistic time scale to be adopted defies credulity when it was clear that five of the six proposals would be fiercely opposed by the communities affected. The closures also showed a cavalier contempt for the Welsh Office planning paper SPP5 representing a complete departure from its procedures. Even if the five hospitals had been closed 18 months ago as the consultants assumed, the claimed saving would have amounted to about £1 million a year. The shortfall now facing the authority is £4 million a year. So let us have no excuses that the delay in the closures caused the present crisis.
While I am referring to hospital closures, I again protest that Porthmadog, in my constituency, will be left without a single hospital as a result of the changes. It will be dependent on a converted workhouse in a nearby village. I also protest at the way in which Caernarfon has been treated and the closure of the cottage hospital there. It is a much-loved hospital which has served the town well. I know that because it was at that hospital that our two sons died. I remain committed to turn every stone possible to ensure that the health authority and the Welsh Office are not allowed to get away with robbing the town of such vital services.
I ask the Minister to look again at the way in which Caernarfon is being left with no casualty cover whatever following the cottage hospital closure. Will he review the lack of information given to the public about alternative provision? In particular, will he undertake to review the working of the alternative arrangements that the health authority is preparing in the context of long-term plans for the health services in the Caernarfon area, about which the Secretary of State wrote to the authority on 20 April.
Will he also review the provision of GP beds in Caernarfon to see whether it is possible to replace the lost 14 beds at the cottage hospital by using the empty fourth ward in Eryri hospital in Caernarfon for that purpose?
Can the Minister clarify what will be the position when the cottage hospital building is disposed of by the authority? It was built largely by voluntary subscription in the town. If a use for that building can be found that is compatible with the original purposes—perhaps in the context of developing care-in-the-community proposals in the wake of the NHS Bill—could the authority be prevailed on to regard such a proposal sympathetically? Can the Minister guarantee that any funds obtained from the sale of the hospital will be available to improve the Health Service provisions in the Caernarfon area?
The crisis facing Gwynedd health authority is infinitely worse. I understand that Deloittes, the consultants, are again investigating the position. Can the Minister tell the House when we can expect their findings?
The extent and depth of the crisis was brought home graphically to my hon. Friend the Member for Ynys Môn (Mr. Jones) and me last month when we met some 200 employees of the health authority. They poured out their souls to us, describing their despair at the way in which cuts were hitting services. It was not in any way a politically motivated gathering. It was a cross-section of professional health care workers, from ancillary to consultant level, who told us of the extent of the rundown.
We heard of wards being left empty, posts frozen and nurses who worked all day, going home at six o'clock only to return at 10 pm to work a night shift because of the lack of cover caused by frozen jobs. I was told of stroke victims unable to get physiotherapy or speech therapy because of staff shortages. We heard of services, such as the child development unit, in danger of being closed and of cuts in the family planning service. The staff spoke of the breakdown of trust between the top administration and those delivering the services. They felt that they were being asked to shoulder an ever-increasing workload with inadequate staff resources.
An example of how this continuing crisis has affected one department can be seen from the case of radiology. In 1983, in the old hospitals, about 1,200 cases were being treated a month by 28 radiographers. Initially after opening ysbyty Gwynedd, the number of radiographers increased to 32, but it quickly dropped back to 28. In 1990, the same complement of staff is having to deal with 5,000 cases a month. Because of the freeze on heads, there are only 24 radiographers in situ. Over the summer, with the holiday period at hand and any further freezing of jobs, the number could be down to 15. Clearly, that is inadequate. A year ago the waiting list was only three weeks, but now it is up to 20 weeks and it is likely to worsen this summer to about 30 weeks. Those who are caught by such a waiting time include patients possibly suffering from cancer of the colon. One member of staff has even suggested that the policy of freezing radiography posts is deliberately undertaken to reduce the number of cases that have to be treated, thereby avoiding expenditure on patients. The situation is grotesque.
During the past three weeks there was a strike by senior secretaries—mercifully it was settled this week—who since last November have been trying to negotiate a settlement, but they have found nothing but prevarication.
All that has had a traumatic effect on staff morale. There seems to be a breakdown of confidence between senior managers and those who provide the services. One specialist told me that he had not seen a senior administrator for six months or a member of the authority, other than the chair, for six years. No wonder morale is at rock bottom.
If asked, the health authority attributes the cause of the dilemma to three factors. The first is underfunding by the Welsh Office. Provision is too low to cover wage settlements and inflation. The allegation was supported by the Deloittes report of 1987, which stated that that had
contributed significantly to the deterioration of the financial position.
Since 1987 that has cumulatively worsened.
Secondly, the health authority says that the capital allocation, based by the Welsh Office on a formula which is unfair, gives Gwynedd, which has more than 80 per cent. of the population of Wales, a capital allocation of under 4 per cent. I understand that the Welsh Office is undertaking a review of the capital allocation methods. Perhaps the Minister can tell us when that will be completed.
The third bone of contention is the revenue allocation formula which is used by the Welsh Office. The health authority feels that the use of an element called the standardised mortality ratio is unfair because the authority is penalised for keeping people alive. If more people died, it would get more money. Clearly that is ridiculous. I understand that in England the weighting given to the ratio is being halved. Will the Minister undertake to make a similar change for Wales?
The health authority contends that it is the most efficient in Wales and it has used Welsh Office figures to show that the cost per standard unit of work at ysbyty Gwynedd is the lowest in Wales. In 1988 it was £713 per unit compared with the Welsh average of £864. However, because that authority is strapped for cash by the Welsh Office, it is having to shut hospitals, close wards, reduce services and worsen the health care available to the people of Gwynedd. The irony is that, once the authority closes the community hospitals, it will not be able to move patients out of ysbyty Gwynedd to those hospitals and that will have a significant effect on their efficiency. A study by Kernick and Davies showed that, if a community hospital is not available, it is likely that half of the patients will need to be admitted to a general hospital.
The important message that emerges from the reasons given by the health authority for its overspend is that, in each instance, it claims that it is the Welsh Office's fault. Time after time health authority people have gone on record to say that. That allegation is not made by a so-called loony-left authority, nor by a politically motivated cabal putting out anti-Government propaganda. The Gwynedd health authority is controlled by hand-picked people; they have been picked by the Welsh Office to do the job asked of them. They are the people, however, who are now telling the Welsh Office that they cannot maintain standards of service because they have not been given the necessary resources.
As I understand it, the Welsh Office has replied by saying that Gwynedd health authority has been given quite enough cash, that it is one of the best-funded health authorities in Wales, and that it should get on with the job and stop squealing. Both claims cannot be right. If the authority has adequate resources, it is obviously using them wrongly by spending too much on bureaucracy and working inefficiently. If that is the case, how much longer is the Welsh Office prepared to tolerate such an inadequate performance? The final responsibility for the health authority rests fairly and squarely on the shoulders of the Secretary of State. If it is doing a hopeless job, he should be aware of that and do something about it.
Alternatively, perhaps the health authority is not as ineffective and incompetent as Ministers would have us believe. Perhaps health care in Gwynedd is underfunded, which is a direct cause of the crisis. If that is so, the blame again rests entirely on the shoulders of the Welsh Office. After successive years of alleged underfunding, we are now faced with a mega-crisis.
In my opinion, for what it is worth, Gwynedd health authority has not been very clever in its financial control, nor in its ability to justify capital expenditure projects. Gwynedd has been desperately underfunded in terms of capital, possibly because of its inability to present persuasive evidence to the Government. If Gwynedd had received the average capital allocation per head of population for Wales, it would have received an extra £14 million in the past five years. Current expenditure in Gwynedd on health has been 9 per cent. lower than the Welsh average for the past five years. If that expenditure had been in line with the Welsh average, we would have had between an extra £4 million and £5 million per annum and there would have been no crisis.
The leadership of the health authority seems incapable of getting the message across or compiling a coherent strategy to give the Government the confidence to back its judgment with the necessary cash.
Is the Minister satisfied with the performance of the health authority in the past three years? Does he believe that it is putting forward an adequate case for capital investment? Does he believe that the health authority membership understands the strength of feeling in places such as Porthmadog, Caernarfon, Llangefni and Llandudno and taken it sufficiently into account? Are monitoring systems available to the Welsh Office to scrutinise the performance of Welsh authorities adequate? Is he happy that Gwynedd health authority has a coherent, strategic plan to which it is working? In the light of experience in Gwynedd, can he seriously claim that the Health Service is safe in Conservative hands?
The previous Secretary of State for Wales had no interest in the Health Service and during his term of office the situation got out of hand. One way or another, the Welsh Office must bear responsibility if there is a health authority in Wales that it regards as inadequate and in which it has lost confidence. The Welsh Office should sack that authority and start again. On reflection, however, if the Welsh Office finds that it has been underfunding the authority, particularly on the capital side, now is the time to be honest, admit the mistake and give the health authority the money it needs at least to sustain basic services rather than totter from crisis to crisis.
The choice for the Minister is simple: either he backs the authority with more cash, or sacks it for incompetence. The one thing the Welsh Office cannot do is continue to ignore the problem in the hope that it will go away. The need for leadership and positive action is great, and now is the time for it.
Yes, Mr. Deputy Speaker.
The Minister will be aware of the Welsh proverb, dyfal donc a dyr y garreg. He will agree that, on this issue, each donc has been very dyfal indeed.
It gives neither my colleagues nor I any pleasure constantly to highlight the financial crisis which faces Gwynedd health authority. As my hon. Friend the Member for Caernarfon (Mr. Wigley) said, this is the third time in 14 months that we have taken part in a debate of this nature.
The authority has been facing recurrent cash crises for a number of years. We are told by the Minister and others that the authority has plans in hand to deal with its financial problems, yet we find ourselves in a real mess. When will the buck-passing stop?
The Secretary of State carries the ultimate responsibility for ensuring the delivery of a comprehensive health care service in Wales. That is made clear in the legislation that established the service and has been repeated in amending legislation ever since. While the Secretary of State delegates responsibility for the day-to-day provision of health care in Wales to area health authorities, if an authority fails to discharge its responsibility to provide a comprehensive service, the Secretary of State has a duty to intervene.
How can Gwynedd health authority provide that level of service if it closes small hospitals without replacing them with decent community provision, if it closes wards, cancels operations, prepares to sack up to 200 of its staff, faces a massive loss of confidence by consultants and other medical staff and has its management team severely criticised by consultants sent in by the Welsh Office?
Any further delay by the Welsh Office in tackling this problem will be a massive dereliction of duty. The Minister must assure us that he has a plan of action to solve the crisis. If that plan is positive and imaginative, he will have our full support.
The provision of health services in Gwynedd has always been a problem, and I speak as a Gwynedd Member of 20 years' standing. Llandudno hospital, for example, in my constituency has been under some kind of threat throughout most of those years, and even before I became a Member it was threatened.
The problems of Gwynedd health authority are particularly acute at this time because the authority has, properly, tried to put through a rationalisation scheme which would enable it to stay within budget in future years. The rationalisation scheme has meant taking painful decisions about closures of local hospitals which are very dear to the hearts of local people because of the great service that they have rendered in the past.
All of that might be bearable if the prospect of better services in future was bright and clear but, sad to relate, it is not so; and the authority's present problems are exacerbated by its current deficit which it is trying to eliminate by a variety of measures involving a curtailment of services. That—very much in outline—is the background against which this debate is taking place.
The crucial questions are, as hon. Members have noted, whether the authority is adequately financed currently and to achieve better levels of service which are its aim for the future. I say in parenthesis that I have yet to meet an authority that, however generous its allocation, could not do with more money. The demand for finance is endless in the NHS. No authority relishes the prospect of a closure. It knows only too well of the popular outcry that ensues.
The authority claims to be underfunded, so I will make clear Gwynedd health authority's position. The authority's revenue funding this year, taking account of the funding for the review bodies' pay awards, is £69·6 million, an increase of £4·7 million, or 7·2 per cent., in cash terms over last year's allocation.
The authority is forecasting a likely overspend of about £4 million this year. Its problems result from the burden of overspending which built up in previous financial years and which it has not yet successfully tackled. It is, with the help of management consultants, currently working to retrieve the situation and to identify further remedial measures which will allow it to achieve financial balance.
The authority has a statutory obligation to plan its expenditure within its notified allocations, and this is what it is in the process of doing. So long as it can demonstrate that it has a sound strategy for achieving financial balance, it will continue to receive sympathetic consideration from the Welsh Office as regards any reasonable request for temporary financial assistance.
We dispute the authority's claim to be under-resourced. The authority is in fact shown by both the capital and revenue formulae used to assess the relative funding position of Welsh health authorities to be one of the best resourced authorities in Wales.
Gwynedd health authority has questioned the validity of the formulae assessments, and last year commissioned a firm of management consultants to review the formulae. This was subsequently considered by the joint NHS-Welsh Office resource allocation working group which was conducting its own review of the formulae. RAWG recommended, and following consultation with other health authorities my right hon. Friend accepted, that there should be no major changes to the revenue formula and that various changes proposed in respect of the capital formula should be deferred, pending further consideration of the impact of the White Paper "Working for Patients" on allocation arrangements generally. I shall return to funding issues later, but I want to be absolutely sure that I deal as adequately as I can with Caernarfon cottage hospital, which featured prominently in the speech of the hon. Member for Caernarfon (Mr. Wigley) for understandable reasons.
Gwynedd health authority's proposals for Caernarfon cottage hospital entailed the closure of 14 GP beds and the minor casualty service. It suggested that the physiotherapy service planned for the hospital would not be started, the dental service currently provided at the hospital would be reprovided elsewhere, and the speech therapy offices would be relocated in alternative accommodation.
The hon. Member referred in particular to the loss of the minor casualty unit at the Cottage hospital. The writ provided treatment only for minor casualty cases and major accident victims were, and will continue to be, treated at ysbyty Gwynedd. When he considered the authority's proposals, my right hon. Friend was of the view that during GP surgery hours minor casualty cases would be likely to be treated at local GP surgeries, but he accepted that such cases seeking treatment outside those hours would be likely to have to travel to ysbyty Gwynedd, some seven miles away. Gwynedd health authority has given its assurance that ysbyty Gwynedd will be able to deal with the additional demand on its accident and emergency unit as a result of the closure of the minor casualty service at Caernarfon.
I understand that a notice has been placed at the cottage hospital redirecting casualty patients to ysbyty Gwynedd and that public notices of the closure of the unit are appearing in various local papers during the course of this week. The health authority accepts that ideally it should have advertised its alternative arrangements earlier.
The consideration of future minor casualty provision in Caernarfon is for the health authority to decide, but I am certain that it will take into account the hon. Gentleman's useful suggestions in any plans that it may bring forward.
Turning to the hon. Member's discussion of possibilities of reproviding the GP medical beds formerly at the cottage hospital, let me say that their reprovision was not a proposal put to my right hon. Friend by the health authority, which made it clear that it needed to make the revenue savings associated with their use. Approval was therefore given to their closure on that basis.
Whether any GP medical beds might be provided elsewhere, such as at Eryri hospital, as the hon. Gentleman suggested, is a matter for the health authority and the decision letter made it clear that my right hon. Friend expected the health authority to keep health service provision in the Caernarfon area in the long term under review and to publish its updated plans.
Following my right hon. Friend's approval of the closure proposal, disposal of the cottage hospital building is a matter for the health authority once it has complied with the conditions set down in the decision letter for full closure. The authority will be entitled to retain the capital receipts in order to augment the resources available for its capital programme. Should a voluntary organisation or the social services department make an acceptable offer to purchase the building, I am sure that the health authority would give it serious consideration.
Much has been said about revenue and capital funding, and I shall deal with those issues as far as I can. In terms of revenue funding, the White Paper changes require health authorities to be funded in line with their weighted population share rather than, as now, in terms of the catchment areas that they serve. Therefore, that formula disregards cross-boundary flows of patients but will otherwise be like the present formula in so far as it will reflect the size and age structure of each authority's population and will take account of other factors, such as morbidity, that reflect differences in relative needs. Proposals for the new formula are being developed in consultation with RAWG and will be subject to further consultation with the service as a whole later this year. It is, of course, important that the formula is generally acceptable to the service.
At present, capital allocations are based on the well-known capital formula. White Paper changes, particularly in relation to the new roles of health authorities and hospitals, mean that the formula approach needs to be recommended. RAWG has been consulted on the options for allocating future capital in the light of the new arrangements and a consultation paper will be issued to the service early in the summer.
I am aware of the constraints that Gwynedd health authority feels that the existing capital formula shares approach places it under. I am aware of its desire to see changes in the revenue and capital formula. I remind the House that the existing formulae are accepted by the other authorities in Wales as reasonably fair. The capital formula was unanimously supported by health authority chairmen when it was introduced in 1984.
The new capital formula will be introduced after 1991–92 because, in order to allow stability for planning purposes, health authorities have been advised that capital allocations in that year will be based on the present formula. The exact timing of the introduction of the new capital funding arrangements has yet to be determined. It will depend on the outcome of the consultation process and, as with revenue, there will need to be a transitional period for phasing in the changes.
I hope that what I have said makes it clear that we are developing an approach to the future of revenue and capital funding of authorities in Wales in consultation with the service. However, until the details have been settled it will not be possible to be specific about the effect of changes and the time scale in which they can be achieved.
In terms of the future, hon. Members will know that Gwynedd health authority has engaged management consultants, Coopers and Lybrand, Deloitte, to assist with a review of its finances and services. I stress that the management consultants have not been appointed by the Welsh Office or to dictate to the authority the way forward. The authority is being assisted by the management consultants in looking at the current position and possible options for the future. In June, which is when we expect the consultants' report, authority members are due to consider a report from its officers, drawn up with the assistance of the management consultants. It is likely that the report will set out options for the future which will have to be considered and decided upon by the authority members. Any substantial changes in the service considered necessary in the future will be subject to consultation before they can be implemented.
I would not wish to disguise my or my colleagues' disappointment at the continuing problems of financial control in Gwynedd health authority. None the less, there is evidence that the authority is addressing both these problems and the opportunity represented by the NHS reforms.
I am grateful to the Minister for his response to some of the issues that I raised. Does he recall that we were in exactly this position about two years ago, in 1987? At that time there were commitments, and the authorities still blame the Welsh Office for not having enough cash. How long do we have to go along this road before some positive action, some leadership, is taken by the Welsh Office to find more cash or to sort out the authority?