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NHS Hospital Indebtedness

Oral Answers to Questions — Health – in the House of Commons at 2:30 pm on 18th October 2011.

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Photo of Rob Wilson Rob Wilson Conservative, Reading East 2:30 pm, 18th October 2011

What steps he is taking to reduce NHS hospital indebtedness.

Photo of George Eustice George Eustice Conservative, Camborne and Redruth

What steps he is taking to reduce NHS hospital indebtedness.

Photo of Andrew Lansley Andrew Lansley The Secretary of State for Health

The national health service is forecasting a surplus for 2011-12, but the previous Government left a legacy of up to six hospital trusts whose private finance initiative payments are a risk to their financial sustainability and up to 24 trusts with such high levels of debt, following years of bail-outs, that they might not meet tests of their future financial sustainability. We are working with all of those to identify their individual needs so that we can help trusts to achieve consistent standards of quality and financial sustainability, and I will make an announcement on that later this year.

Photo of Rob Wilson Rob Wilson Conservative, Reading East

I thank my right hon. Friend for spelling out the appalling debt that some parts of the NHS inherited from the previous Government. Can he assure me and the House that this Government will deal with the root causes of hospital debt, rather than with the continuing bungs and bail-outs that the previous Government left?

Photo of Andrew Lansley Andrew Lansley The Secretary of State for Health

My hon. Friend is absolutely right. We are determined to root out poor performance, by which I mean not only that we should deal with waste, inefficiencies and poor value for money in the NHS, but that we must identify where standards and quality of care are being met. Both are equally important, and one depends on the other. He will know from the Royal Berkshire NHS Foundation Trust how important it is to sustain finances and quality through foundation trust status. We are seeking to ensure that many NHS trusts reach foundation trust status, something that the previous Government failed to achieve and we aim to achieve.

Photo of George Eustice George Eustice Conservative, Camborne and Redruth

The Secretary of State will be aware of the indebtedness of the Royal Cornwall Hospitals NHS Trust, and that Cornwall as a whole has suffered a disadvantage for many years as a result of the previous Government’s funding formula, having actually received less than the Department’s target budget for many years. Does he agree that such factors should be taken into account when deciding how to reschedule the debts of such trusts?

Photo of Andrew Lansley Andrew Lansley The Secretary of State for Health

My hon. Friend will know, from our conversations and from my visit to Cornwall and the Royal Cornwall Hospitals NHS Trust, the steps that we are taking alongside other NHS trusts to bring them up to high standards of care and financial sustainability. In that regard, the 3.1% increase in revenue allocations for the Cornwall and Isles of Scilly primary care trust between last year and this year will help Cornwall as a whole towards greater financial sustainability.

Photo of Grahame Morris Grahame Morris Labour, Easington

I am grateful, Mr Speaker. On indebtedness, the National Audit Office has produced a report on NHS procurement in England, which it describes as “fragmented” and “poor value for money”. The report shows that £500 million could be saved each year if trusts came together to buy products more collaboratively. Is this further evidence that the Government are wrong to pursue an agenda of competition, rather than co-operation?

Photo of Andrew Lansley Andrew Lansley The Secretary of State for Health

I am afraid that the hon. Gentleman is completely wrong about that. In procurement throughout the NHS, what we have had is fragmentation, and what we need is better co-ordination. That is precisely why, since the election, for example, we have instituted a consistent bar-coding system, allowing procurement throughout the NHS to be undertaken more effectively; and why under the quality, innovation, prevention and productivity programme, the improvement in procurement —reducing the costs of procurement—is intended to achieve those savings and more.

Photo of Andrew Gwynne Andrew Gwynne Shadow Minister (Health)

Labour is proud of its legacy, with more than 100 new hospitals built to replace the crumbling Victorian buildings that we inherited in 1997, and it is not just the National Audit Office that has blown a hole in the Secretary of State’s assertion that 22 hospital trusts are on the brink of financial collapse due to PFI. John Appleby of the King’s Fund said:

“The…pressures on hospitals are not to do with PFI but…the need to generate £20bn worth of productivity improvements.”

Is not the real issue that the Secretary of State has tied up the NHS in a distracting and wasteful reorganisation that will cost more money than it will save, and take money away from patient care?

Photo of Andrew Lansley Andrew Lansley The Secretary of State for Health

I welcome the hon. Gentleman to the Opposition Front-Bench position. We are looking forward to the exchanges with him and his colleagues, including during questions today.

Twenty-two trusts have told us, in the course of our looking at where the impediments are to their financial sustainability for the future, that the nature of the PFI contracts entered into by the previous Government is a significant problem in this respect. It is absolutely right for the NHS to build hospitals, which is why we are, for example, building a new hospital at Whitehaven in the hon. Gentleman’s constituency. [ Interruption. ] I beg his pardon—in the constituency of Mr Reed; we are building so many new hospitals. The nature of the PFI projects we enter into must be to provide value for money and be sustainable in the future. That is something that the previous Government failed to achieve.