Health and Social Care (Community Health and Standards) Bill

Part of the debate – in the House of Lords at 10:00 pm on 13th October 2003.

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Photo of Lord Warner Lord Warner Parliamentary Under-Secretary, Department of Health, Parliamentary Under-Secretary (Department of Health) 10:00 pm, 13th October 2003

I think we just fundamentally disagree, and I will set out the arguments as convincingly as I can.

NHS foundation trusts will be given the opportunity to access capital from both the public and private sectors and to use a wider range of financing options than is currently available to existing NHS trusts. Because accessing capital will in future be tied more closely to individual financial performance, it will enable each NHS foundation trust to better tailor capital planning to its individual circumstances, offering the opportunity to finance a wider range of healthcare delivery focus projects than it can at present. Examples of such projects might include new diagnostic centres, patient information systems or environmental improvements.

However, as we have tried to make clear already, NHS foundation trusts will be able to borrow only what they can afford to repay under a prudential borrowing code drawn up by the independent regulator. They cannot take the view that Father Christmas has come to town and just splurge on whatever comes to mind.

The independent regulator must, by virtue of Clause 3, exercise the functions in a manner that is consistent with the performance by the Secretary of State of the duties under Sections 1, 3 and 5 of the National Health Service Act 1977. This includes the duty to provide a comprehensive health service that is free at the point of use. So there are constraints on the regulator as well by requiring him or her to act in accordance with the Secretary of State's duties.

In drawing up the prudential borrowing code, the independent regulator will have to take account of the impact of any borrowing on the wider NHS as part of his Clause 3 duty. NHS foundation trusts will not be robbing Peter to pay Paul, and we think Amendment No. 247 is unnecessary.

The noble Baroness drew attention to the remarks I made at Second Reading. But we cannot just sweep away the fact that the Government are changing the agenda in terms of both the revenue and capital that is available to the NHS. While I do not want to make narrow political points, I suggest to the Benches opposite that their thinking may be a bit conditioned by their own experience in government. I shall give a couple of statistics rather than a long line of them.

In the six years from 1997–98 to the end of 2002–03, NHS capital increased by 42.3 per cent in real terms. In the last five financial years of the Conservative government, it went down by 22.9 per cent in real terms. I am using those figures not just to make a narrow political point but to suggest that one's view about whether the other parts of the NHS may be "robbed" by NHS foundation trusts must, to some extent, be influenced by one's knowledge and experience of how much capital is in total available to the NHS. I am trying to say that the experience under this Government is different from that which Ministers will have had under a Conservative government.

If we look at the growth of capital that is envisaged over the next five years—and there is no reason for thinking that this will not take place—and at the 11 years from 1997–98 to 2007–08, the period covered by NHS foundation trust changes, capital will increase by 246.1 per cent in real terms, more than doubling in a decade. So the total volume of capital that is available to both NHS foundation trusts and NHS trusts is far, far greater than has been the case in the past. The revenue allocations are going up by around 7.5 per cent in real terms.

I am not saying that some people in the NHS would not like more money; I am saying that the financial climate influences the outcomes in relation to the subjects covered by the amendment.