NHS Funding

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

Alert me about debates like this

Photo of John Reid John Reid Secretary of State, Department of Health, The Secretary of State for Health 12:31 pm, 9th February 2005

I have waited a long time to hear with what ingenuity someone could turn a 10 per cent. expenditure increase into a bad news story. Today we have heard an attempt at that. I have to tell the hon. Gentleman that it is not Labour that is out of touch either with addressing people's needs or with improving the national health service; I fear that it is the Conservatives.

I shall deal with some of the points that the hon. Gentleman raised. As usual, there was a dig at vast administrative costs, bureaucracy and waste. There is always a sting in the tail, with an attack on the staff of the NHS—but Labour will defend them. I shall give a couple of figures. In fact, PCT management costs are 1.5 per cent. of total expenditure. The costs of senior managers in the NHS, who number about 38,000 out of 1.3 million staff, are between 3 and 5 per cent., which is about a quarter of the management costs in private health care and about one fifth of the administrative costs in the American health care system, so is it not time that we praised the NHS for its efficiency?

The hon. Gentleman raised the issue of deficits, as he has done before. I have two things to say to him on deficits. The first is that they are forecasts: every year for the past few years there has been a forecast deficit in the NHS, but in fact over the past four years the NHS has been in financial balance at the end of the year.

The hon. Gentleman wants to talk about forecast deficits, but I can tell him that the problem occurs when there are actual deficits. The last time there was a significant actual deficit—£500 million, twice the size of those forecast deficits, in a budget half the current size—was in the last year of a Conservative Government. In other words, the actual deficit then was three times higher than the forecast deficit the hon. Gentleman is worrying about now.

The hon. Gentleman asked me if we would reconsider the market forces factor. We keep it under review, but as he knows, the market forces factor was identified by the resource allocation working party as far back as 1976, so it is not new. Its development is overseen by the Advisory Committee on Resource Allocation, and it is the result of many years of analysis by academics. The population figures from the 2001 census that we are using are, first, more accurate and, secondly, adjusted to pay some degree of attention to forward projections. There are four areas, including that of my hon. Friend Dr. Starkey and the Thames gateway area, and they will be glad to know that we are taking account of that projected need. I was asked whether deprivation would be taken into account. The answer is that the projections take account of actual as well as assumed need. I could go on at length about that but I do not think that we need to take up more time, because for the past five years we have taken independent advice on the matter.

I finish on this point: the hon. Gentleman started off by challenging the methodology for, and thus the legitimacy of, the allocations. Does that mean that he intends to revisit them? Is he going to tell Members that these huge increases may be taken away from them? If so, he should say that today, because that will be another reason for people to be extremely careful about even considering voting Conservative when the election comes along. The truth is that under the plans of a Conservative Government, £1.2 billion will be removed from that expenditure: £4 million will be taken from every single PCT to subsidise the relatively well-off to jump the queue and go to the private sector if they can afford half the cost of their operation. That is an attack on the founding principle of the NHS, and I am sure that people out there will recognise the difference between investment in the NHS and an Opposition party committed to the virtual destruction of the ethos of the NHS.