Report (2nd Day)

Part of Health and Social Care Bill – in the House of Lords at 6:45 pm on 13 February 2012.

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Photo of Earl Howe Earl Howe The Parliamentary Under-Secretary of State for Health 6:45, 13 February 2012

My Lords, during the passage of the Bill we have had much discussion about the importance of freeing front-line professionals from needless bureaucracy and ensuring that they are able to focus on patient care-not least when we considered the duties of autonomy. This is one area where the House is in agreement. Certainly one aim of the Bill is to reduce bureaucracy and micromanagement, prevent politicians in Whitehall second-guessing the decisions of doctors and nurses, and streamline the architecture of the NHS.

The noble Lord, Lord Hunt, indulged himself in one of his occasional rhetorical forays, which I enjoyed. However, the amendment is rich coming from him. Perhaps I should remind the House that the previous Government did to management costs what the noble Lord accused us of doing. Since 2002-03, the management costs of PCTs and SHAs have increased by more than £1 billion-a rise of more than 120 per cent. The Bill aims to get a grip on a problem that under the previous Government simply got out of control. The noble Lord will know that my department has confirmed an overall running-cost budget of £492 million. That represents a 50 per cent reduction in costs and staff compared to the current cost of functions that will transfer to the board. At board level, the work previously done by 8,000 people will be done in future by approximately 3,500 full-time equivalent people. That is a major reduction.

The amendment tabled by the noble Lord seeks, first, to introduce a new duty on the Secretary of State to prevent bureaucracy and, secondly, to minimise the layers of management tiers within the Commissioning Board. The noble Lord produced a confection of arguments to bolster his case that bureaucracy in the NHS is increasing rather than diminishing. I can tell the House that the opposite is true. In saying that, I should stress that I am not in any way denigrating NHS managers. I have never done that and I will never do it.

Setting aside the noble Lord's knockabout routine and getting back to earth, I agree with the principle behind this amendment. Noble Lords will already be aware of the autonomy duties, which we have recently amended, in no small part due to the Constitution Committee. Those duties ensure that proper consideration is given to whether any requirements or objectives set by the board or the Secretary of State will place unnecessary burdens on the health service or distract from good quality patient care. In addition, the Bill places duties on the NHS Commissioning Board, CCGs and other bodies to exercise their functions effectively, efficiently and economically. That is in new Section 13D of the National Health Service Act 2006 for the board and new Section 14P for CCGs. Together, I believe that these provisions ensure that the duty to maximise efficiency and minimise bureaucracy is embedded throughout the system. We do not need anything further.

The noble Lord, Lord Warner, asked me a question that I have been asked before in these debates. It concerned why we did not simply reform the PCT model. We chose not to try to reform the PCT model because it would not have delivered the empowered clinical commissioners we want to see and, indeed, the Opposition want to see. This Government supported the principle of practice-based commissioning, but there is one thing to say about practice-based commissioning: it was not working. It did not live up to the ambitions that people had for it. Central to this was clinical commissioners' lack of autonomy. Only by conferring functions directly on clinical commissioners, as this Bill does, can that autonomy and responsibility be properly established.

Subsection (a) of the noble Lord's amendment refers rather bafflingly, as my noble friend Lord Fowler, pointed out, to a minimum level of management tiers. I am not quite sure how that would be interpreted by the courts, but I believe that the noble Lord is drawing attention to the published proposals for the board's organisational structure. In line with the vision we set out in the White Paper, the proposals put forward make clear that the board will be a single nationwide organisation that will work across the country to improve quality and outcomes. However, there are some who have focused on the board's proposal for a maximum of five layers of management, claiming that this represents some sort of increase rather than a reduction in bureaucracy. That is not the case. The structure proposed by the board is based on sound and well recognised principles of effective organisational structure. The proposed organisational structure for the board is designed above all to support it in its overarching role to improve health outcomes. What surely matters is the board's efficiency and effectiveness. In fact, as I have already said, the board will operate with a 50 per cent reduction in running costs in comparison with the current system. I am not attracted to the part of the amendment that requires the Secretary of State to influence the number of management tiers in the NHS Commissioning Board. Apart from being inappropriate, it is unnecessary. The Bill already makes clear that the Secretary of State sets the resource limit for the board and new Section 223E of the 2006 Act allows him to impose a cap on administrative spend. Together these provisions ensure that financial limits are placed on the board, which will necessarily influence the way in which it is structured. However, I believe it would be inappropriate for the Secretary of State to go any further than this in influencing the organisational design of the board. The board is the body best placed to determine how to organise itself in the most effective and efficient way. It is therefore our intention to allow it as much autonomy as possible in determining its own membership, structures and procedures.

All our proposals for modernising the NHS, including the provisions in the Bill, are designed to minimise bureaucracy, micromanagement and unnecessary waste to enable the whole system to focus on what really matters, which is patient outcomes. For example, the outcomes framework will directly link quality improvement and outcomes with commissioning; clinically-led commissioning groups will be judged, through the commissioning outcomes framework, on whether they improve patient outcomes and experience rather than process targets; the NHS Commissioning Board will hold GP commissioners to account for their performance against NICE indicators; and CCGs will hold providers to account for driving up quality improvement using contracts and incentives. It is quality and outcomes that matter and with the safeguards already in place to limit administrative spend throughout the system, I believe that the noble Lord's amendment is unnecessary. I hope that he will feel able to withdraw it.