This debate should not be necessary. Earlier this year, we debated the circumstances of East London and the City district health authority, partly because of the closure of Bart's and the 30 per cent. reduction in the number of beds planned for the three east London boroughs: Hackney, Tower Hamlets and Newham. They are three of the neediest boroughs in the country, but they do not lack in human spirit and initiative.
The base problem involves capitation. My hon. Friend the Member for Newham, North-East (Mr. Timms) wishes to catch your eye, Madam Deputy Speaker, and he may pursue that point further. The money allocated to the authority in order to purchase health facilities from the providers is tied to a national formula that is clearly inadequate. The situation has worsened in the past few years: we would have had £50 million more per year, but for an adjustment in the capitation formula that does not take account of the needs of people coming to the borough from other parts of the world, the age of the population and the health needs of the area. In the same period, I am told that Surrey received an increase of £30 million as a result of the same adjustment. That capitation formula must be altered again.
Recently, we have faced an even bigger, visible—if not financial—anomaly: the way in which psychiatric need is met. We all know about the scandalous difficulties in the mental health service. However, we forget that, when people go to court, are found incapable of pleading properly and are not sentenced, they pass from the responsibility of the Home Office to that of the health service. In my district, there are about 60 or 65 persons of that ilk or those who have been released from prison, upon whom the health service spends some £7 million. We believe that that funding should be provided centrally, as few health districts elsewhere carry that sort of load—I believe that it is only about half a dozen.
We aim at least to sustain health service delivery in the area. Despite claims in the Budget and the Prime Minister's comments in Prime Minister's questions yesterday, we cannot do so. On 2 December, I asked the Secretary of State for Health—who was boasting about increases in health service expenditure—about the situation in east London. He replied:
The authority also has bids for other funds, which are currently being considered".—[Official Report, 2 December 1996; Vol. 286, c. 686.]
We need those funds because we must sustain existing services with an £18 million shortfall in delivery. The authority has announced cuts of £40 million. We need that additional £18 million—or as much as the Government can supply through the bids. I received a written reply yesterday about the bids for health authorities, which are described as undergoing structural or strategic change. My health authority is undergoing structural change in respect of possible closures, to which I shall refer in a moment.
When Bart's closed, we were told that we would have a new hospital at Homerton. A few weeks ago, the authority published the option of closing Homerton or Newham general hospital—two major hospitals in east London. It was forced to dismiss that option as unfeasible, but it must still find the equivalent savings. Newham is experiencing difficulties because it maintains a huge accident and emergency facility—although I understand that it costs less per head of population than many similar facilities elsewhere. A and E needs must be met by relocating facilities and resources from elsewhere in the hospital.
We are facing extensive cuts. The authority has told general practitioners that they must be more careful about hospital admissions—it employs bureaucratic terms such as "gatekeeping" or "readjustment of entry". GPs have been told that out-patients will not be seen until after April 1997 and that waiting times may increase to 18 months. There will be a reduction in provider contracts of 7,500 bed days, which means less provision to meet consistently growing needs.
There are 40 vacancies among the estimated 400 GP posts in the area. GPs are finding the load difficult to bear and thus are less enthusiastic about their perceived role. Why should they stay in east London, when the prevailing conditions do not allow them to do their jobs as professionals? As a result of the cuts, GPs are being asked to recommend fewer people for admission to hospital. They are then required to provide more at-home care when people are released from hospital, under a policy of "fewer in and quicker out". At the same time as they are providing increased care on the ground, they are told to expect redundancies among practice nursing staff and general domiciliary services. Local authority social services also have difficulty meeting existing need.
The need is so great that the local medical committee—a statutory body—took the unusual step of writing to the Secretary of State. It was not alone: it was joined by three voluntary borough forums of general practitioners, who work co-operatively together and play an essential part in the structure. Some 200 signed the letter that was sent to the Secretary of State on 5 November. As of yesterday, I understand that they have received no reply or acknowledgment of the letter. That is astonishing—it may be the result of delayering in the civil service; I do not know. It is all the more remarkable because, having received no reply, the group then sent a letter to The Times outlining the problems that they face, which was published on 10 December, but they still received no reply.
I do not know whether officers of the Department of Health read The Times or whether the Minister has been briefed about the matter—perhaps he will tell us today when he replies to the debate. In addition, BBC South-East broadcast a 30-minute television programme on 28 November highlighting the plight of the people of east London and the ineffective funding of their health services. I presume that the Department of Health knows about that.
Not only are the professionals in difficulty, but there is pressure on the voluntary organisations. In east London—like everywhere else—there is great concern for those who are ill, who need constant care and who may turn to hostels or to similar organisations to meet their needs. The Newham Care and Repair service, which allows people to be discharged from hospital and returned to their home sooner than might occur otherwise, is to be cut. The elderly derive particular benefit from the service, as their conditions often necessitate structural adjustments in the home and they may require daily care and visits. It is proposed to cut that service—although decisions are still up in the air in view of the £18 million shortfall.
The organisation Turning Point is located in the constituency of my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore)—he may mention it if he catches your eye, Madam Deputy Speaker. An imaginative scheme, Breaking Ground, deals with 15 mentally retarded people with severe health needs. They literally break ground and are recuperated through horticultural activities.
I have mentioned the problem of those who are found incapable of pleading in court. I highlight the terrible instance of a person who was discharged prematurely from Neasden hospital in Hertfordshire—which has its own problems—visited a club run by the borough and murdered one of my constituents. The Laudat Bennett case is well known, but has not been solved properly. I believe that the circumstances that led to the incident are still cause for concern, although increased funding has been provided for psychiatry in the borough.
We face all those difficulties in an area that demonstrably needs more than other areas. I do not think that the Secretary of State understands the effects of the capitation system and the way in which the market works. Each so-called profit centre naturally seeks to make its own economies without knowing the human knock-on effects. Its work is always predicated on contracts, which are sometimes not fulfilled for the future. The Royal London hospital has problems: it usually makes capital gains, but it cannot be sure of the plans.
The biggest problem of all is closures. It is clear from the documents that have been produced by East London and the City health authority that it is considering closing not Newham or Homerton hospital, but St. Andrew's hospital in Bromley-by-Bow. It is an old building—it is an old workhouse—which has 150 beds and serves mainly Newham. The staff are renowned in the area for their teamwork. They do a great job. The hospital provides ancillary services. By accountants' calculations, it could save so many million pounds if it were run down.
There are long-term plans for the replacement of the facilities at St. Andrew's by facilities at Newham general hospital, which has 40 fewer beds. Those plans depend on the private finance initiative, which is not coming along at all fast. The premature rundown of St. Andrew's in Bromley-by-Bow would be disastrous, and would put pressure on the other hospitals in the area. Beds would be removed and the services provided by the laboratories reduced. The corporate nature of the staff is important: they tend to be long-serving because of the type of surgery that they undertake. They work in difficult conditions, but they are greatly appreciated by the people of Newham.
I want to put several questions to the Minister. Did he receive the letter from GPs? Why did he not reply? Are the facts that it contains not correct? As far as I know, they are. Did he not see their letter in The Times? Did he not hear about the half-hour television broadcast that dealt with the problems in east London? How much of the Government's money, which is out for bidding—the complicated document has been placed in the Library—will be available for application by East London and the City health authority? I am told that some of the money that it hopes to obtain has already been included in its calculations: it has been taken into account, even allowing for the £18 million that the authority has to find. We must know the answer to that question before the coming financial year, in order to make proper plans.
It would be a scandal if people were given long-term notice—which they are now, particularly in the voluntary sector. There are fears throughout the health service staff. The Minister knows that one of the greatest assets of our great health service—or what was once a great health service—is the dedication of the staff. They are being asked to do more and more with less and less. Is that right? The Prime Minister says that the health service is getting more and more, but I do not believe it.
Dissembling has become a d-word in the House, although I would not go as far as to accuse the Government of dissembling in this instance. We need to know—through the loophole of finance—that we shall receive a good part of that £18 million to sustain our services. We are told that the health service is expanding, but how can it be when we have also been told to expect vicious cuts? That is debilitating, and is beginning to destroy a health service of which this country has been proud.
It is because of the initiative of general practitioners and others that we have managed to obtain a response from the people in the service. We await the Government's reply. They are responsible to the electors, who pay for the service that we are all proud of and wish to sustain.
I congratulate my hon. Friend the Member for Newham, South (Mr. Spearing) on raising this vital subject. As the finances of East London and the City health authority have been spinning out of control, a kind of madness has set in. Hospital closures are still proposed in the medium term. Recently, the chief executive of ELCHA, Peter Coe, said publicly on the radio that no decisions on the closures could be taken before the general election. Thank God for that.
The absurd people who run the most despised bureaucracy in the national health service have at last realised that there are limits to their bizarre betrayal of local people. I am told privately that their thinking is as follows. The Royal London hospital cannot be closed—I certainly do not want it to close—because the Government are committed to spending £300 million on a new hospital there, even if that distorts local finances for decades to come.
In the medium term, the authority wants to close either Homerton or Newham hospital, but not both. It is a satanic choice: Newham people can die, or Hackney people can die—take your pick. Demographically, the authority would prefer to save Newham hospital, with a functioning accident and emergency unit, but Newham has many problems—so I am told—and Homerton is still new and being built, so its closure would be political dynamite.
That is not the end of the savage irrationality. East London and the City health authority has published a list of cuts in community and hospital care. From Hoxton Health to Lorne house, from counselling for Asian women on health to help for Turkish and Kurdish communities, from City and Hackney MIND to the Hackney bereavement service, from Age Concern Hackney to the Jewish care services for frail older people, cuts are being made.
General practitioners are up in arms. Consultants are blinking in disbelief, voluntary organisations are angry, and the rest of us are stunned. We wait with interest to see whether the Minister is more than complacent today.
I also congratulate my hon. Friend the Member for Newham, South (Mr. Spearing) on securing this important debate.
East London health services have the most overstretched staff, who work in the shabbiest conditions and deal with the highest levels of ill health in the country. It is scandalous that they struggle in the 1990s in decrepit conditions that were obsolete in the 1970s. Whatever measurement we use, Hackney, Tower Hamlets and Newham have the highest concentration of health and social problems in the country.
At a time when the Government tell us that they are substantially increasing the resources for the health service, how is it that in east London we are facing the appalling cuts that my hon. Friends described? A couple of years ago, the Government removed the needs weighting for the 24 per cent. of funds in the capitation formula that relate to community health services. At first sight, that may appear to be an obscure technical adjustment, but its consequences for east London have been catastrophic, and have culminated in this crisis.
In the summer of last year, an article in the Health Service Journal presented the top 10 losers from that adjustment to the formula developed at York university and introduced by the Department of Health. East London suffered the largest cash loss to its target— £13.2 million. The other biggest losers were Manchester, Liverpool, Sunderland, Barnsley, North Durham, St. Helen's and Knowsley, South of Tyne, Tees and Newcastle.
In whose interest did the Government decide that they needed to make the adjustment? Which areas have such a pressing case for help that it was necessary to cut the amount for east London, Sunderland, Middlesbrough and Knowsley? The article spelled it out. The biggest gainer of all, with more than a 5 per cent. increase, was mid-Surrey. The second biggest gainer in the entire country was north-west Surrey. The third biggest was south-west Surrey, and the fourth was east Surrey. Who was the Secretary of State for Health while all that chicanery was going on? It was none other than the right hon. Member for south-west Surrey (Mrs. Bottomley).
The Government have cynically siphoned funds away from areas where they are most needed, to spend them in areas where they think that they can buy the most votes. The health needs of Britain have lost out to the vote needs of the Tory party. The Tory party has concluded that it can get away with gerrymandering the health funding formula. That is why we are now facing this crisis. The figures for next year provide us with no comfort at all.
I take no pleasure in recounting those facts, but I make no apology for being angry about the crisis. As I left home in East Ham this morning, my next-door neighbour told me of the problems that she was having getting the treatment that she needs at our local hospital. She said, "I do not blame the doctors," and nor do I. I do not even blame the administrators appointed by the Government to run the service: in this instance, I think that they are doing their best. The fault lies fairly and squarely with the Conservative party, and the Government's record on health in the hardest-pressed parts of the country is a disgrace.
Across east London, partnerships between local authorities, businesses and Government are bearing fruit and generating new optimism. In health, partnership has barely started, and we are still stuck with the problems of the 1970s. With these huge funding cuts, we are poised to take a huge leap backwards.
The London Docklands development corporation—itself as proud a creature of this Government as any—has at times been in despair at the impossibility of making progress in the health service in east London. What is the Government's response? Their response is to make £18 million-worth of cuts, which constitutes the axing of 5 per cent. of the total budget. I appeal to the Minister to take a close look at the problems in east London, and to see whether, even now, there is some way of averting the catastrophe that is looming.
I congratulate the hon. Member for Newham, South (Mr. Spearing) on his success in securing the debate, and am pleased to be able to respond. I acknowledge the hon. Gentleman's persistent and pertinent questioning of my hon. Friend the Minister for Health and me over the past few months on issues relating to the problems that we are discussing; I also acknowledge the interests of the hon. Members for Hackney, South and Shoreditch (Mr. Sedgemore) and for Newham, North-East (Mr. Timms), both of whom are obviously sincerely concerned about the issues.
East London and the City health authority, the local health authority of the hon. Member for Newham, South, is one of the largest health authorities in London, with a population of about 600,000. Like every health authority, it is responsible for studying the health needs of the local population, and ensuring the availability and provision of appropriate care and treatment for local residents.
Health authorities' allocations for 1997–98 were recently announced. East London and the City will receive an integrated allocation of £365.4 million—more money than ever before, and a real-terms increase of £8.7 million, or nearly 2.5 per cent., on its funding this year. That is the 1 1 th highest percentage increase awarded to the 100 health authorities in England; I stress that in response to the points made by the hon. Member for Newham, North-East.
As a student of these matters, the hon. Member for Newham, South will know that what we mean by "integrated allocation" is the general allocation of £348 million, together with other allocations influenced by the weighted capitation formula. On top of all that, the authority will receive £25.6 million in non-formula-based moneys for services such as long-term care. After adjustments, that gives the authority a total cash budget of nearly £390 million for 1997–98. Furthermore, central funding is available for national priorities. The health authority is bidding for those funds, and therefore may well have more to spend next year. That means that East London and the City health authority will have at least £650 for each of its residents to spend on health care next year.
If what the Minister is saying is correct, does he not agree that the money must be being misspent? Speech therapy will now be refused to 375 children between the ages of five and 11, and Moorfields hospital is turning away patients from east London who want eye operations and appointments, because of the reduced funding of the contract for east London and the City health authority. Where is all the extra money going?
The extra money is going into the provision of extra services in some areas. If the hon. Lady wishes to take up the question of precisely where there may be some underfunding, that is a matter for the health authority, and I am sure that she will take it up with the authority.
How the health authority uses the extra money is a matter for it to determine, having regard to all local needs, circumstances and views. I remind the hon. Member for Newham, South not only that more money is going to East London and the City and other health authorities this year than ever before, but that, with the merger of district health authorities and family health service authorities from the beginning of April, and with ever-increasing efficiency, more money on top of that is available for health services and direct patient care.
As the hon. Gentleman knows, East London and the City's population is ethnically diverse and characteristic of London's densely populated inner-city areas, and it makes much of that. In response to the point made so forcefully—but, in my view, mistakenly—by the hon. Member for Newham, North-East, let me say that our allocation policy is to target resources where the need for health care services is greatest. [Interruption.] The hon. Member for Newham, South must listen to what I am saying. Hospital and community health service funding is largely based on a national formula worked out on the basis of the size of the local population, weighted to take account of factors such as the number of very young or very old people and the degree of social deprivation that exists. It also takes account of market forces such as the higher costs of staff, buildings and land in the south-east.
Next year, for the first time, the formula includes a specific needs index for community health services—the hon. Gentleman referred to that—bringing 86 per cent. of the national allocation within the ambit of the formula. That will benefit the health authorities in inner-city areas such as east London.
I hope that the hon. Gentleman will forgive me if I do not. I have only five minutes left in which to respond to at least four hon. Members.
Both the changes that have been made to the formula for next year—the introduction of interim needs weighting for community health services, and the refinement of the market forces adjustment—will improve the health authority's weighted-capitation position. That not only means more funds for the authority next year; it means that the authority is no longer above its weighted-capitation position. It is no longer what we call a capitation loser, and can look forward to a larger share of additional health resources over the next few years. As the hon. Gentleman knows, my right hon. Friend the Prime Minister has committed himself to real-terms increases in resources year after year when we are re-elected for the next Parliament.
Before I say more about funding or service planning for next year, let me say something about the health authority's position this year, and the ability of the service to cope for the remainder of the financial year. The authority's initial allocation for the current year was £337 million—£1.63 million more in real terms than in 1995–96. Its forecast at the end of the second financial quarter was that it would end the year with a £13.7 million deficit. That forecast was based on expenditure and trends up to that time; I stress that it is not the position in which the authority is likely to find itself at the end of the year. That is the whole point of forecasts: as part of a proper regime of good financial management and control, they allow action to be taken in good time to keep within the financial balance for the year as a whole.
The health authority has indeed taken action based on its analysis of local circumstances, to ensure that good-quality services continue to be available, and that a sound financial outturn is achieved. In the autumn it bid for, and has received, additional non-recurring funds of £6 million to support strategic change. That is a lump of money that is already going in this year, in addition to the money which—as the hon. Gentleman said—it has bid for next year. That £6 million, together with other measures, means that the authority's residual deficit is now estimated at £2.3 million, or just 0.7 per cent. of its allocation. It is for the authority to manage its affairs for the rest of the year to meet its financial position. The situation certainly does not suggest that local people should be in any way concerned about the continued availability of good-quality services; nor does it suggest a service close to collapse, as some commentators have tried to imply.
What about next year? First, let me say that—as I think the hon. Gentleman will acknowledge—East London and the City health authority has been very open with the local community in planning for the future. Given that health care resources can never be infinite and that health authorities must prioritise among competing demands, it is only right for them to outline some of the difficult choices that they must make as purchasers, and to involve the local community in the making of those choices.
In planning for next year, the health authority set up three task groups, which were charged with looking at acute, mental health and primary and community care services. The process began with an exercise to quantify the implications of continuing with the existing health strategy; that is where the projected deficit of £18 million for next year comes from.
Essentially, we are talking about a re-balancing process. We are looking at national and local priorities, and at the balance between, for example, acute services on the one hand and mental health services on the other. That is how the funding will be rearranged, with the aim of meeting what are regarded as priorities. In addition, the health authority is bidding against the funds that we have made available for next year for the development of services in priority areas. I cannot yet say how much will be allocated, but it will include money for community care, adult intensive care and mental health services, which are a particular problem in that part of the world. I take the hon. Gentleman's point: we shall have to make a decision on that before the end of the year.
I shall certainly look into what the hon. Gentleman said about the letter that was sent to my right hon. Friend the Secretary of State—
That letter was sent at the end of November, and I saw the letter in The Times. Let me tell the hon. Gentleman, however, that far from more and more being got from less and less, in East London and the City more and more is being got from more and more.
It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.