NHS Funding

Part of the debate – in the House of Commons at 12:31 pm on 9th February 2005.

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Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health 12:31 pm, 9th February 2005

Thank you, Mr. Speaker. One of the pities is that we did not get an opportunity to see the text of the statement, which includes sub-headings that the Secretary of State did not read out, until he had finished delivering it, because the sub-heading before paragraph 18 contains an important truth:

"What the funding will deliver—inequalities".

Yes; inequalities between different parts of the country. To defend Labour-held seats, the Secretary of State will take away money from primary care trusts that are running deficits today in order to promise jam tomorrow for his spearhead primary care trusts.

The overall level of allocations to PCTs reflects the increase in NHS budgets, and to that extent no new money has been announced today. The NHS needs the assurance that under a Conservative Government or a Labour Government substantial increases in NHS budgets are planned. My right hon. Friends and I have committed ourselves to an increase of £34 billion by 2009–10 compared with the levels that we would inherit in the next financial year. We have made that commitment because we support the NHS and its values, which include the provision of comprehensive, quality heath care for all on the basis of need, not on the basis of ability to pay. We value the work done by NHS staff, and we intend to give them not only the resources, but the support and freedoms to ensure that they deliver the highest standards of care for patients.

A key point is not only to promise, but to deliver high quality care for the 17.5 million people who live with long-term conditions. That will require substantial investment in primary care services, and as we set out to the House in our debate on 11 November, family doctor services are at the heart of that delivery. The Secretary of State said nothing about opportunities to develop family doctor services. Genuine reform is required to back up the development of standards with resources and to give general practitioners the power to commission services and to support patients' right to choose. At the same time, we should ensure value for money by cutting bureaucracy, which currently consumes many resources that should be in the front line.

The Secretary of State's statement fails the test of reform. Over the next three years, for example, scheduled care in hospitals should increasingly be determined by patient choice, and GPs should exercise choice on behalf of patients, with money following the patient. Why does it make sense for that funding to form part of the PCTs' unified allocation in 2007–08? If GPs cannot manage the budget, they should not be expected to hold it, and if they have the power to commission services on behalf of their patients, they should receive their budgets directly.

Through the development of the general medical services contract, we have learned that GPs have populations with long-term conditions, like the asthma and diabetes registers. Should we not progressively move money from the general demographic assumptions that underpin the Secretary of State's proposal to specific factors determining GP budgets? The Secretary of State discussed assumptions about need rather than actual need.

The Secretary of State discussed cancer services, but the lack of progress in commissioning cancer services, which has been illustrated within the past fortnight by the Public Accounts Committee and Doctors for Reform, demonstrates that PCTs are not necessarily delivering progress on cancer services. A combination of clinical networks, GP commissioning and patient choice should deliver services more effectively. Those budgets also do not need to be routed through PCTs. The Secretary of State has failed to set out how NHS funding flows will be reformed. Instead, we have seen an old-fashioned exercise in dividing up the cake.

I have a number of specific questions for the Secretary of State. The previous intention was to move to target allocations by 2010. Is that still the Government's intention? In this financial year, the combined distance from target of PCTs is £1.1 billion. How much does the Secretary of State propose to reduce that total figure by in 2006–07? How much will PCTs that are currently above target be expected to contribute? The Secretary of State implied that there is no ceiling, and therefore every other PCT must contribute to the floors. Will he tell us the percentage contribution towards floors from other PCTs?

Last week, we heard that the Government are not incorporating 2001 census data in the local government finance settlement until 2006–7, but the Department of Health proposes to do so in the next financial year. Why are the Government taking one view on local government and another on health?

As the Secretary of State will know, many areas have fast-growing populations. The removal of type 2 funding for general practice left a serious gap that the Department had to plug. The Secretary of State did not refer explicitly to the growth area adjustment, which is contained in the new formula. Will there be an ability to fund the costs of infrastructure not only in the growth areas designated by the Deputy Prime Minister, but wherever large increases in population occur; and will the money arrive in time to match the population growth? In Milton Keynes, the infrastructure has been insufficient to deal with the increases in population experienced up to now, and the PCT is running a projected £6 million deficit.

The Secretary of State did not discuss the market forces factor, which continues to fail accurately to reflect NHS costs of provision in all areas. Has the Secretary of State considered moving from a general labour market approach to one based on benchmarked costs of efficient providers once the doctors' contracts and the "Agenda for Change" have been fully introduced? The Secretary of State should understand that promises of jam tomorrow are all talk, if at the same time NHS trusts are running deficits and the money that the trusts need is being eaten up in bureaucracy.

The administrative costs of strategic health authorities are more than £600 million, and of PCTs, more than £700 million. By cutting bureaucracy in both, we can get sufficient money through to the front line to meet the £1.1 billion distance from target of PCTs today. Putting resources and accountability into the front line is essential if Government-imposed cost pressures are not to mean continuing deficits.

Since the new year, one third of SHAs have published their forecasts for the end of this financial year based on figures from the end of December. The total forecast deficit from just nine SHAs is £227 million: all 10 PCTs in Hampshire and the Isle of Wight are forecasting deficits; North East London SHA has a £22 million deficit in the year to date; Thames Valley SHA has a £41 million deficit; and Surrey and Sussex SHA is forecasting a £33 million deficit, half of which results from the working time directive, new contracts and the "Agenda for Change".

In my area, Norfolk, Suffolk and Cambridgeshire SHA has forecast a £56 million deficit. That deficit includes PCTs such as my local one, South Cambridgeshire PCT, which is currently 8 per cent. above target. It is forecasting deficits and is above target, but in the Secretary of State's fantasy world it has more money than it needs. Across the country, PCTs are running deficits, demonstrating that the formula is way out by comparison with actual need.

The Secretary of State is promising money tomorrow while the NHS has deficits today. We could clear the deficit if the billions eaten up in bureaucracy got through to the front line. The Department of Health is imposing costs on the NHS with no idea of the effects. The statement does not deliver reform or urgently needed value for money, which it will be for us to do.

I have one final point for the Secretary of State, but Labour Members, and particularly Manchester Labour Members, may be interested. The Greater Manchester SHA board papers state:

"the year to date financial position for the Trust sector continues to worsen".

They also state:

"although trusts and PCTs are forecasting deficits, the SHA continues at this stage to report to the Department that overall financial balance will be delivered" for Greater Manchester. The Secretary of State does not know what is going on, and it is about time that he moved aside for a Government who do.