My Lords, it is a pleasure to open this debate on the future funding of health and social care. I would like to thank all noble Lords taking part in the debate today. Looking at the list of speakers, no doubt we will hear radical views and provocative ideas in an altogether interesting debate. I thank in particular the Minister and the noble Lord, Lord Hunt, on the Opposition Front Bench for taking part today. Perhaps neither of them will be willing to put forward what the views of their own parties would be if they were in Government post-2015, but who knows? They might be persuaded to do so. The procedures of the House mean that the Minister has to wind up the debate. However, any questions put to him about future Government plans for funding health and social care beyond 2016 would be, in my view, inappropriate, and I, for one, would not do so. I hope that we have an open debate which can form the basis of a wider public debate. In my view, that is necessary before the next general election, and only this Chamber could facilitate such a debate. I also thank the Library staff and the many organisations outside, chiefly the Nuffield Trust, for providing detailed briefings to facilitate this debate.
The NHS is the most successful and envied health system in the world. I have had the privilege of working in it for 39 years and 62 days, and I was trained in it for five years before that. Today, over 1 million people are at work in the NHS, over 70% of them female, and many thousands more provide a voluntary free service. Over 1.5 million patients and their families will be in contact with the NHS. Each month, 23 million people visit their doctor or a nurse. Every minute, five 999 calls will be answered by the ambulance service. The NHS has delivered many innovations: drug developments, new devices, CT and MRI scans, ultrasound and innovative surgical procedures. In September, a member of your Lordships’ House will celebrate 25 years of his heart transplant, which is quite an achievement. It has also delivered assisted conception, complex treatments and much more. In fact, in some ways we have failed to harness the potential of the National Health Service to deliver innovations, including healthcare delivery. The majority of people who come into contact with the health service are satisfied with their care. Of course, it fails some people and that is unacceptable, but all this suggests that the NHS is a good ship, and any future plans need to bear that in mind.
Is the NHS the product of brilliant design or of politics and circumstance? Are the continuous changing of structures and reorganisations beneficial or merely ideological? In an odd way, the strength of the system is that it is resilient enough to absorb change to meet changing needs and yet continue to provide care. I do not believe that any other health system in the world is able to do that, certainly not under the insurance model of funding. However, in prolonged austerity, can a service that is free at the point of use survive and continue to do so? If the answer is “yes”, how will it have to change? If the answer is that it cannot survive as a free service at the point of use, who is best placed to make the argument to the public for the alternative? Is it the clinicians, the politicians or the managers?
There does not seem to be much of an appetite to change the model drastically. A poll of public views suggests that there is a willingness to contribute financially for minor, non-clinical services, but the majority want a free service at the point of use and are willing to pay higher taxes if the efficient use of money can be demonstrated. In a recent report from the Nuffield Trust on the NHS as viewed by 65 politicians, many of them previous Secretaries of State, managers, clinicians and others, the majority feel that the founding principles of the NHS are deeply enshrined. Some, however, do not feel that that is so and say that we are sleepwalking towards destroying the NHS. Some, like the noble Lord, Lord Warner, who unfortunately could not take part today—I think he is sorting out the US health service—feel that we should start exploring the basis on which we fund the NHS, which is with a complex mix of hypothecated taxes, user charges, and so on. Other notable voices such as those of Stephen Dorrell, Alan Milburn, the noble Baroness, Lady Williams, and Kenneth Clarke, say that despite the financial challenge, the NHS should remain free at the point of use.
Expenditure on the NHS has risen constantly since its establishment in 1948. In its first year of operation, the Government spent £11.4 billion. In 2010-11, the figure was 10 times greater, at £121 billion. At a growth rate of around 4% per year, in GDP terms that was 3.7% of GDP at the inception of the NHS to nearly 8.9% now. A reduction in funding and cost savings over the next decade will, based on historical cost growth, produce a funding gap of £54 billion by 2021-22. Sir David Nicholson made a speech yesterday suggesting that it might be less, but that is the figure worked out by PricewaterhouseCoopers.
Historically, the drivers of increased NHS spending are population growth, growth in national wealth, cost increases and developments in medical technology. An ageing population with an increasing number of older people is thought to be much less important as an increase in life expectancy merely delays the healthcare costs associated with death. If we follow the trajectory of spending over the past 50 years to the next 50 years, we will spend one-fifth of the nation’s entire wealth on the provision of health and social care. Of course there will be the benefits of better health, quality of life and a positive impact on productivity and economic activity. However, spending at that rate will also produce diminishing returns and therefore costs will always need to be controlled.
To remain free at the point of use, the NHS will have to change. We will need to find a better way of spending £120 billion. Some, such as the noble Lord, Lord Fowler, and Sally Davies, argue for a plan to reduce demand: a strategy of disease prevention. Demographic and behavioural trends will put increased demands on the service. By 2023, the population of England is projected to be 58 million, with those aged over 75 accounting for 10% of the population. There will be an increase in the number of people with long-term conditions such as diabetes, vascular disease and dementia, and there will be more cancer survivors. People with such conditions account for 64% of out-patient appointments and make up 70% of in-patients. For every £10 spent, £7 goes towards the health and social care of these patients.
In 2011, nearly 25% of the population were obese. Behavioural factors such as smoking, drinking, obesity and a lack of exercise will have a significant effect on the health budget. The public and private sectors, particularly the food and drink industries, will have to contribute to preventative strategies, voluntarily or through legislation and taxation. One-third of healthcare costs are consumed by three categories of patients: mental health, vascular disease and cancer. The last two will double in incidence in 10 years and 40% of that incidence is based on the behaviour and attitudes of the public.
Inevitable technological progress will push up healthcare costs as new technology is expensive and will increase life expectancy, particularly of those with the highest healthcare costs. Likely developments in the medium term include better cancer care, better drugs for cancers, focused radiotherapy and ultrasound, the molecular targeting of cancers with drugs, nano-medicine, embedded chip monitoring of disease progression, genomics, better stratification of patients for treatment, proteomics, population genomics for risk identification, personalised care and, in regenerative medicines, cell therapy such as the treatment of age-related macular degeneration, autologous stem cell therapy, gene therapy, tissue engineering, robotic surgery, drugs that will slow the progression of diseases causing dementia, and many others. Other cost pressures will be rising wages, which can be controlled temporarily but not in the long term, and will affect productivity. These costs have stagnated since 2010, probably because of a reduction in labour. Productivity growth of 4% a year, year-on-year, cannot be sustained; neither can cost savings without providing care differently, which will mean managing public and political attitudes. It will also mean the better use of data and technology, which have the potential to transform treatment and the management of care.
What possible options are there for finding funds from other sources? The public view, as we can see following the Ipsos MORI and King’s Fund event, is interesting. The public want free care at the point of need, but may accept charges for inappropriate use or clinically unnecessary procedures. Some would accept increased taxation, particularly hypothecated tax. Many have accepted that the NHS is under pressure, but do not accept that it is justified to change the fundamental principle on which the NHS is based.
I am sure that there will be proponents of other ideas for raising funds or reducing costs. Arguments for co-payment will come to the fore; the experience of New Zealand and France may be of interest in understanding that. There have been novel ideas such as taxing the providers of risk foods and alcohol, as we did those responsible for fixing LIBOR interest rates, to pay the costs of the Armed Forces covenant; charging for GP appointments; and part-insurance, either for the young or the older population, on the California model. The evidence suggests that the public have no appetite for any of the above. Charging those not entitled to the service would be more acceptable if it was incremental. The majority of the public see the NHS as a morally special property and therefore expect it to be adequately funded, even to the detriment of some other public services, if that is the choice.
Any changes to NHS funding would require the public to be convinced that the current system is working as efficiently as possible before considering radical changes. The public want to be involved more and more with the NHS, including on decisions related to funding; changes need to be explained to the public, with a public debate before any legislation. The public have a strong attachment to the founding principles of the NHS and will not accept a radical change to the current model of funding. The only likelihood of success is through an incremental approach. I beg to move.
My Lords, I am grateful to the noble Lord, Lord Patel, for securing this debate. There are two subjects on which I would like to comment. First is the underlying cause of the ever increasing demands on the NHS; they are due, of course, to the ever increasing number of patients with diabetes, eye disease, high blood pressure, strokes, heart attacks, cirrhosis of the liver, cancer, worn-out knees and hips, and so on, as the noble Lord, Lord Patel, has already said. But it has to be pointed out that most of these conditions have a single cause, and that single cause is obesity. The obesity epidemic is the worst epidemic to afflict this country for 90 years; it is killing millions and costing billions and the cure is free: simply eat and drink fewer calories. A great deal of obesity is due to that poison called alcohol, a cause not only of obesity but of many diseases.
This enormous problem has been bedevilled by the Department of Health, Health Ministers and opposition spokesmen, and that quango NICE, all misleading Parliament by stating that all the calories we eat is spent on exercise. This is totally untrue. Exercise is good for the heart, helps keep the cholesterol at a safe level and improves the feeling of well-being, but it is not effective at reducing weight. One has to run 10 miles to take off a pound of fat. Really obese people cannot exercise, and they do not need to in order to lose weight; all that they have to do is to eat and drink fewer calories. NICE has informed me that it is going to correct its misleading advice, but it will not be published until January next year.
Secondly, this enormous obesity epidemic is obviously bankrupting the NHS. It is often said that it is old people who are costing the NHS so much, but in fact it is people who are dying who are so expensive. It so happens that most people who are dying are old, but young people who are dying are just as expensive.
Where is the extra funding to pay for the ever increasing demands going to come from? Perhaps we should try listening to other people and learning from their experiences. Perhaps we could listen to Prime Minister Attlee, who was a very perceptive and brilliant man. Within a year of the inception of the NHS he realised that there was a major problem. In October 1949 he announced, in another place, “We propose to bring in prescription charges in order to discourage people from using the NHS excessively and unnecessarily”. I suspect he really wanted to put the charge on going to see the GP but he realised that that would be political suicide.
We might learn a lesson from the radical changes in the dental services which occurred under the previous Government. A large number of dental treatments had to be paid for by the patient. All credit to the Labour Government for grasping this particular nettle. As the noble Lord, Lord Patel, has already said, we could learn from the French, who pay the doctor up front and, if they cannot afford it, are reimbursed. There is an attraction in the patient paying up front because he is not asking for charity, he is employing the doctor. It changes the relationship. The system in France has worked well.
As Labour Governments have pioneered these kind of changes, they might care to join a cross-party movement to work out a new funding arrangement. One suggestion was to charge patients £5 or £10 to visit the GP and then reimburse those who cannot afford it or who have chronic or recurrent illnesses. All hospital treatments would be free. Another suggestion, which has been discussed for many years, is to have a compulsory health insurance scheme for those who can afford it. It would seem sensible at this time of financial crisis for a cross-party group to be set up to try to work out a solution, free of petty party politics and the shibboleths which have so bedevilled the National Health Service for so long.
My Lords, my short speech will build on the work done by the House of Lords report, Ready for Ageing?, which we look forward to debating when we receive the Government’s response, which I expect will be next week. I will say a few things, building on what the noble Lord, Lord Patel, set out so clearly.
It is unarguable that the NHS and social care will face a massive increase in demand and cost. It is axiomatic, even though not done, that we have to have a major service redesign, as Sir David Nicholson said today. However—and this is different—it would be naive to think that the process of massive service redesign, given the time and complexity of doing it, will by itself fund the significant gap consequent on the increase in demand. We will, therefore, have to have a debate, not only about service redesign but also about how we fund the NHS going forward.
For my part, I hope we abide by the principles of the fundamental services being free at the point of use. That requires us to have a wider debate about the welfare settlement of our society, given the very considerable increase in demand and costs consequent on our ageing society. That, in short, is what I will say, so your Lordships can nod off if you do not want to hear the rest.
Those who have glimpsed the report will know it, but I will try to encapsulate the situation on ageing now. In the current decade there is going to be a 40% increase in the number of people aged 85-plus: it is not a future change. The numbers who are 85-plus will increase by 100% in the two decades 2010 to 2030. Largely consequent on that, we will see a quite remarkable increase in the number of long-term conditions experienced by those older people.
We were staggered to find that there is no public forecast data on demand of that sort published by the Department of Health or the NHS. We therefore had to ask eminent academic epidemiologists to do forecasts for us, by applying current and forecast incidence rates to the future certainty of the age cohorts that we know. The illustrations showed increases of between 45% and 90% in the five main chronic conditions in the long term. The number of those with multiple conditions will increase from 1.2 million in 2008 to 1.9 million in 2018, and those needing social care and daily assistance will increase by 90% between 2010 and 2030. It is therefore clear that there will be a massive increase in demand and it would be of great help if NHS England, if not the Department of Health, would put out some clear evidence on why demand increases are likely. It will help an honest public debate across society.
I will not go on but it is obvious that because the number of long-term conditions will increase massively—they drive roughly 70% of health and social care costs—there will also be a massive increase in those costs. I agree with the noble Lord, Lord Patel, that David Nicholson is clear in what he said today but is underestimating the scale of the challenge. Nuffield and others state that £40 billion-plus is more likely to be the sort of funding gap that we will face by 2021-22, if you consider health and social care together.
We should therefore beware of the myths being portrayed, whereby if we do what we have to do—integrate health and social care, increase prevention, shift from an acute focus to a community and primary-focused model, and get more older people out of hospital—that in itself will crack the funding problem. It will not do so because all those changes will take a considerable time, even if there is stronger political leadership on these changes than we have seen from any political party so far. These are big systemic changes that will take 10 years and require investment. The benefits will not always be cashable and there will be double running costs while the changes are being made. Thinking that they will produce short-term savings is naive, although I do not for a second belittle the importance of going for those big changes.
If one looks at the context of continuing public deficits in 2015-16 and high levels of public sector debt, a difficult challenge is facing whichever Government address these issues. They have to be looked at in the wider context, and I agree with the noble Lord, Lord McColl, that the more that we can get at least some attempt at cross-party discussions about the reality of this situation, the better for our society.
My Lords, I thank the noble Lord, Lord Patel, for securing this debate on such an important issue. I declare an interest that I suspect is shared by many other noble Lords: this debate is about my care down the line. I would like to examine the challenges facing us on future health and care funding, the public expectation of the future delivery of these services and how the public can be seen as part of the solution, not the problem.
Our population is ageing and the gap between pension age and life expectancy is increasing. Thus, the ratio of taxpayers to pensioners is decreasing. According to the ONS, the population of over-65s will increase by an average of 1.8% a year between 2014 and 2021. Coupled with other factors such as the rising population, this will create an increase in demand for NHS services of 4% a year. I appreciate that there are other figures but those were the results of my research. Pension entitlement has caused pensioners as a proportion of spending to increase from 17% in 2010 to 21% in 2015. This proportion is likely to increase with fewer working-age people to fund it. However, we must remember that older people generate some £40 billion for the UK economy, and this will increase to £70 billion by 2030.
It is important to contrast the views on welfare entitlement as a whole between generations. Recently, the Economist highlighted that more than two-thirds of people born before 1939 consider the welfare state one of Britain’s proudest achievements, whereas less than one-third of those born after 1979 say the same. Polling by YouGov shows that those aged 18 to 24 are more likely than older people to consider social problems the responsibility of individuals rather than of the Government. They will become the taxpayers who fund our health and social care system in the future and will make the political decisions, yet their views on the state’s responsibilities to individuals are markedly different from those of baby boomers entering retirement now, so things will have to change.
Clearly, there must be a debate on where the public’s priorities lie. By 2061, non-health departments will have had to reduce their proportion of net government spending from 80% to 50%. This 50% would apply to education, pensions, benefits and defence. So how do we fund future health and social care? What behaviour and attitudes need to change? I think we all agree that we cannot continue as we are. If it is funded purely out of taxation, excluding all efficiency savings, for every 1% increase in healthcare spending as a percentage of GDP—that is around £15 billion—it would add to the tax bill of every household in the UK another £570 a year. To put this in context, a 1p increase in income tax would yield only an extra £5.32 billion per annum for the Treasury, so it would require a 3p rise for each extra percentage point. The sums are now beginning to sound really scary.
Obviously, there are efficiency savings to be found, such as extra investment in preventive care and the use of technology, which, as a recent Deloitte report for Scope has shown, achieves average returns of 30%, which would reduce the number of people entering the system at crisis level. Do we cut big-ticket spending items, such as Trident, which is projected to cost £20 billion, or High Speed 2, estimated at £32.7 billion? Do we means-test access to primary care? Do we cut pensions in return for better social care? Do we encourage planning for old age to include care and pensions? Here I must make clear that I am repeating questions that others have asked, not making personal or party recommendations.
We also need to ask what we can do for ourselves. One thing we will not be short of is human resource—and fairly fit human resource. The Olympics last year in London made volunteering acceptable and even cool. Volunteers were given the inspiring descriptive title of Games makers. They were given a role description, managed brilliantly and changed the face of the Games. They were the envy of the world. The voluntary sector is already active. It knows that older people can be the solution and not the problem. What better legacy of the Games could there be than using that sort of model to support the health and care sectors?
The issues are complex and the stakes could not be higher. We need to have a long conversation involving the public, all political parties and policymakers, the voluntary sector and care professionals, and we need to start it sooner rather than later.
My Lords, official warnings of the mounting crisis in the National Health Service are coming thick and fast. Last week, the Government said that the NHS could break down if we continue to run an international service open to all comers from other parts of the world. At one o’clock this morning, the body responsible for the NHS in England published its report, A Call to Action, saying that it is about to run out of cash and may need a minimum of another £30 billion a year by 2020. The royal medical colleges believe that 20 hospitals may have to close to prevent financial ruin. In short, the NHS is fighting for its life. Painful though it is, I welcome this outburst of reality. I only regret that it has taken so long.
There is a culture of denial and indifference in this country that allows serious problems like this to reach a crisis point before we face up to them. Too often, those in authority react by creating new organisations that do not work, prattling about lessons being learnt when it is clear that they are not being learnt, and hunting for culprits who pass the buck to others, who say they did not know anyway.
Last week’s report by the Department of Health breaks new ground. It points to the chaos in our hospitals and GP surgeries caused by overseas visitors who are not entitled to use the NHS, yet do so and avoid payment for their treatment. We do not know how much this racket costs. Ten years ago, a document produced by CCI legal services estimated that between £50 million and £200 million is lost every year through under or non-recovery of charges applicable to overseas visitors. We have never known the true cost because successive Governments did not want to know, and said so. Serious though this issue is, I believe that we have almost advertised our willingness to be taken for an international trolley ride.
I take no pleasure in saying that this is not hindsight on my part. In this House on
Six months later, on
Some say that we can easily afford to run the world’s most generous health service and dispute that it is exploited or defrauded on a significant scale. They are living in a land of make-believe. Professor Meiron Thomas, a cancer specialist, has first-hand evidence. He tells a different story, as do those of us in this House with friends in the medical profession who have experience of tourists who exploit the system.
Doctors rightly have the last say on whether patients need emergency care, but the parameters have surely become too wide. One hospital I know routinely gives free dialysis to foreign nationals on the grounds that their condition would worsen without it. Dialysis can cost more than £30,000 per patient a year. How long can this go on? Under the NHS tariff, private outpatients are charged £250 a visit, in-patients pay £500 a day and a normal pregnancy costs £3,000—with complications, this can rise to £9,000.
Insiders know what goes on. The Health Secretary says that fewer than half of overseas visitors who should pay are charged and that fewer than half of those who are charged pay up. Fraud specialists report a trail of false addresses, false identities and untraceable patients.
The current guidance to GPs and hospitals shows why the system never worked. This document runs to 89 pages. Last year alone, there were seven revisions of it. What are doctors supposed to do if they suspect a bogus patient and read on page 9 that they should consult a lawyer if they are unsure of their obligations, or that, before refusing a patient, they must sign a statement that reminds them of the Human Rights Act 1998?
The NHS is bleeding and needs emergency treatment. The dream of free universal care from the cradle to the grave lasted from 1948 to 1951, but the NHS survived and it is time to face reality. The fraudsters who exploit it have had more than their fair share of our resources, our doctors and our hospitals. We can no longer deny what we know to be true. It is time to say: enough.
My Lords, I, too, congratulate the noble Lord, Lord Patel, on securing the debate. As we have heard from all speakers so far, there is a strong narrative about how precious the NHS is, how high public expectation remains and the problem of rising costs—it’s own health check has just been referred to.
I want to talk a little about care systems and the models that we might need to develop. Experience on the ground tells us that care systems are very fragmented. As systems such as family stability collapse, many people are isolated and struggle to access care and health services. The current system is very skewed towards the delivery of episodic interventions around particular crises. We need to look below that. We need to step back and see how we can create a culture of engagement, support and well-being for people that puts those episodic interventions in a different context and perhaps provides a context in which they would be less necessary and less frequent. I shall raise some questions about models and capacity, not least in relation to the elderly.
I work in the county of Derbyshire. Last year, in the city of Derby, I organised a commission, the Redfern commission, which looked at models of care in our community and how we could contribute alongside the statutory provision. We had a public hearing looking at models of care for the elderly. One of the experts who came as a witness to that public hearing raised three issues. She started by talking about people’s feet and the fact that proper foot care is very important to allow people to continue to have mobility—to be able to shop, do their cleaning and have social intercourse. Very simple things that require microengagement make a huge difference to people’s well-being and health. She also talked about the reluctance of doctors to diagnose depression in elderly patients who suffer a lot of loss. She said that something like 2 million elderly people are diagnosed with clinical depression, but there are probably far more, and it is hard for them to get treatment or even support on the ground. She also raised the lack of provision of advice for elderly people about sexual health.
Many of these things can be dealt with not through episodic major interventions but through a culture on the ground of support, care and contact. It is voluntary groups—churches especially—that in most communities provide lunch clubs, outreach and all the things that allow people who are otherwise isolated and struggling with medical and social care conditions to be supported. However, 87% of local authorities are setting their eligibility criteria at substantial or higher. I think we need models that look below the surface where people need care and can be sustained more realistically. In a parish in a rural group of parishes, the parish, the diocese and the Simeon Trust have brought together resources to appoint a chaplain. In that rural area, that lady visits 140 people regularly to monitor them, to put them in touch with each other, to help to assess them face to face and to know when support from the medical and care system might kick in, so that people do not get to an acute moment. There is a community system of monitoring, care and contact.
That kind of model needs to be developed. The Dilnot report said that there has to be a new relationship between individuals and the care system. Beneath the radar of the formal care system, there are enormous resources in the voluntary community that can allow that to happen. Will the Minister consider how the Government, local government and the framework of formal systems can enable a small amount of investment to encourage voluntary and church groups doing this face-to-face work on the ground that provides the context for care and well-being to flourish and grow so that the demand for the major interventions that are so costly might be more controlled and probably reduced because of a better sense of well-being at grass roots level? I would be interested if the Minister could comment on that model and how it might be encouraged and developed to create greater capacity in our systems of social care and health provision.
My Lords, I, too, thank the noble Lord, Lord Patel, for having secured this important debate. I declare my interests as professor of surgery at University College London and as a consultant surgeon for University College London Hospitals NHS Foundation Trust.
We have heard that the National Health Service is a vital part of society’s infrastructure in our nation. It provides a unique reassurance by ensuring free and universal access to healthcare. In addition, it provides a most remarkable structure for the provision of public health and preventive strategies, which are vital in ensuring the nation’s long-term health and in containing costs. It also provides a unique environment for biomedical research. Indeed, the research infrastructure that we have heard about has resulted in much innovation and a change in clinical practice for the benefit not only of our own citizens but of people throughout the world. Furthermore, it provides the basis for a vibrant and important life sciences industry which makes a huge economic contribution to the welfare of our country. Beyond that, it is the social solidarity, or glue, that the National Health Service has provided to bind our society together that forms a vital part of the debate about its future.
During this debate we have heard from many noble Lords about the increased financial demands of the National Health Service. Some 50 years ago, it consumed 3.2% of our gross domestic product; last year, some 8.2%; and in 50 years’ time it will be some 20% of GDP if the rate of growth—the 4% per year that we have seen over the past 50 years—is sustained over the next 50 years.
Figures relating to the increasing financial requirements of the NHS produced by the Office for Budget Responsibility show that in 2032 the OBR expects £132 billion to be spent on NHS provision, whereas if the 4% growth that we have traditionally seen in the past 50 years is sustained, the figure will be closer to £170 billion. However, what is striking is the number of people employed in the NHS—currently one in 18 of the working population. If we continue at the same rate of growth with 20% of GDP consumption by 2062, one in eight of the working population will be employed by the NHS. What modelling is done in the Department of Health and the Treasury around this increasing consumption of healthcare resources? Does the noble Earl recognise these figures, and does he, as well as others in government, consider this a sustainable trajectory?
In terms of a solution, one that has been suggested during this debate is to increase taxation. There is a great fondness among our fellow citizens for the National Health Service but even providing one extra percentage point in GDP to be diverted towards health spending would require an increase in taxation of £570 per household per year, and that is a huge increase in taxation. Of course, we know that the demand is going to be much greater. We could settle on giving a greater proportion of public expenditure to health, but 20% of departmental spending is currently already devoted to the National Health Service. Is it sustainable to take more and more from other public services and divert it to health if we do not increase the income available?
A third potential option is to improve the effectiveness and efficiency of the services that we provide, and in this regard Her Majesty’s Government have to be congratulated. The report entitled Innovation, Health and Wealth, published last year, clearly focuses on ensuring that the National Health Service can improve the outcomes that it achieves for fellow citizens in a way that adds to economic growth rather than continuously draining economic resources, although I think that many would agree that it is not a drain of resources to ensure that our nation is healthy.
In establishing the outputs of Innovation, Health and Wealth and, in particular, in establishing the academic health science networks—I declare a further interest as chair for clinical quality at the recently designated academic health science network at UCL Partners—what metrics will be applied to determine whether the networks are successful in terms of the economic rather than just the health question? We know that, as part of the designation process, each of these networks across England has been asked to define high-impact innovations that will be applied across the population and to adopt NICE guidance to improve clinical outcomes, but both those sets of interventions should also have an impact on resource utilisation. Are metrics defined that we will be able to assess over time to determine whether a focus on improving efficiency and effectiveness in the NHS can also result in better utilisation of resource?
My Lords, I also congratulate the noble Lord, Lord Patel, on the timely nature of this debate, and it is an honour to follow the noble Lord, Lord Kakkar. They are a reminder of the great expertise that this House has on this subject.
I have learnt a lot already this morning, and expect to continue to learn more. I am particularly struck by the consensus among the noble Baronesses, Lady Jolly and Lady Boothroyd, who said that things cannot continue as they are. However, I want to come at this from the bottom up, as it were—from how technology and patient expectation will drive changes both to the structure and, by necessity, to the funding of healthcare services, and in particular, how digital and genomic innovation will have an effect on the National Health Service. It is a subject that has been much discussed at the International Centre for Life in Newcastle, of which I have the honour to be honorary president, and I declare my interest therein.
It is not all bad news. We are likely to see huge reductions in the cost of certain procedures as a result of innovation. IT, 3D printing in surgery and new materials are all helping to drive down various costs. I believe that the cost of a cataract operation has come down dramatically because of an increase in the speed of doing it and a decrease in the cost of the materials. This is, of course, bringing operations within the reach of the poor in other countries as well as in this country.
Genomic sequencing has come down from costing billions to thousands in the past decade alone. As we know, however, if we make things cheaper, people will want more of them. I suspect that, through new technology, we will soon be putting enormous demands on healthcare services. We will use our smart phones to find out precisely what kind of lurgy we have, rather than just accepting that we have one; what kind of allergy we have; which drugs work best for our particular condition; and indeed, checking our blood for early precursors of cancer. At the very least doctors will have to get used to dealing with us online. I have a friend who over lunch checked his electrocardiogram with a device on his iPhone and sent it to his cardiologist.
We would be sticking our heads in the sand if we hoped to prevent this end-user innovation, as it is called, turning medicine upside down, as it has done to so many other industries, and if we continued to think of medicine as a top-down business in which the doctor knows best. In the past, treatments have too often been designed to treat the population rather than the individual. For the patient, the change will be great in many ways, and there will no doubt be some savings. For example, we can have many more virtual appointments. As Eric Topol, who has written a book about this, says:
“I expect some 50% to 70% of office visits to become redundant, replaced by remote monitoring, digital health records and virtual house calls”.
This will keep down hospital-acquired infections as well. Overall, however, it will vastly increase costs because personalised medicine means not only more demand but more expensive sorts of demand. That is bound to push up costs well beyond what any pooled system can bear in terms of cross-subsidy, whether from the rich to the poor or through insurance. It will undoubtedly raise ethical issues. If precise genomic diagnosis or drug toxicity information is available to some individuals and not others, it will put enormous strain on the budget of the NHS and the principle of common access to it. There will then effectively be a form of rationing. Added to that, of course, is the growing burden of us all living much longer, as the noble Lord, Lord Filkin, said, and of having up to five conditions when we are old, which I believe is the average, not to mention the obesity epidemic which my noble friend Lord McColl mentioned.
It is obvious that we face rising healthcare costs as a proportion of household budgets. That is why it is vital to turn the NHS as far as possible into an organisation that tries to drive down its costs in a ruthless fashion. The Government have made a good start on this. The NHS is on track to make £20 billion of efficiency savings by 2015 and, we hope, more beyond that. However, as many noble Lords have said today, this will prove to be a drop in the ocean. Not even the NHS’s most ardent champions would at the moment call it a ruthless pursuer of cost-efficiency. It has none of the usual levers such as competition or fear of losing business to other providers that drive up efficiency and quality in the commercial world. No amount of top-down diktat will substitute for those trends. To meet the bottom-up challenge coming from patients and from technology, health funding needs to experience a form of bottom-up reform. Sixty years on from the founding of the NHS, as the noble Lord, Lord Patel, said, we need to be open-minded about all the models available for discussing the future of health reform.
My Lords, it is a privilege to speak in a debate led by the noble Lord, Lord Patel. The noble Lord spoke with his customary wisdom. I have learnt a lot discussing medical problems with him.
There are many healthcare experts speaking today. I am a little more of an outsider. From my perspective, it seems that we constantly read of reports, inquiries and investigations into the problems of our health and care services. Whether it is care assistants, inspections, waiting times or long-term care, every day seems to bring a new story about how our health service is struggling.
Of course, when you consider the great changes of the past 60 years, it is remarkable how the NHS has met the health needs of the nation, and done so in a very cost-effective way. However, that does not mean that this will continue in future. Just this week, we saw how health and social care funding faces three major pressures. Just 24 councils now offer adult care for those with moderate needs, and national eligibility standards will restrict this further. The cost of long-term care will expand significantly, with Ministers this week telling the insurance industry that it must fill the gap left by their proposed cap. Finally, as we heard this morning, NHS England faces a £30 billion shortfall by 2020, with the NHS director for patients saying:
“We are about to run out of cash in a very serious fashion”.
If I did that in my industry, I would be bankrupt.
Each of these tensions is a major challenge to the aim of a comprehensive, universal health and care system. So what can be done? The truth is that if we want good, comprehensive, universal care, we will have to find a way to pay for it. The obvious route is taxation, whether direct or in the form of a levy or giving tax benefits to private health insurance. Yet such new taxes will be hard to sell to the public. Why? Because while the NHS generally delivers good care for a reasonable cost, many patients feel that social care is of a low quality. Others have witnessed inefficiency and poor treatment in their local hospitals. They will not be content to see taxes go up simply to pay for more of the same. Of course, for more management consultants, not hospital consultants, that would be fantastic. So we must demonstrate how we will improve our care system, not just fund it.
To do so, we must develop new skills and structures for workers throughout the National Health Service. I have a personal interest, as my wife has been a midwife and a tutor. She knows first-hand how better and up-to-date training and career development for those on the front line can transform patient care. However, many of our health career structures and much of our training still seem stuck in the 19th century. From care assistants to consultants, from matrons to health technologists, we need to rethink career development in the health service totally. Even our definition of what a doctor is will have to change in the future.
One reason we need to change how we develop our people is that technology is radically shifting how patient needs are identified and treated, as the noble Lord just mentioned, in everything from social care to heart transplants. To take just one example, the Scripps Research Institute is developing embedded sensors in the bloodstream to alert users if they are at increased risk of heart attacks. Such advances create new treatment routes for those seeking better health, which means that new ways of offering care will be needed, such as advising people at risk on how to improve their health, and monitoring their progress. Is that a role for a doctor or a nurse, or a new role entirely?
Technological changes also mean that individuals will seek greater control over their care. Therefore, despite the promises of consolidation of services, there will be more demands, so although the service improves, the savings will not automatically follow. Yes, we should expand personal budgets so that people in continuing care can choose their care packages. But we should go further, removing the divide between health commissioning and social care to create whole person care. This will raise some fundamental issues about what is included in universal healthcare. Does it make sense that we offer little support to people who wish to maintain good health, but expect no contribution from people who visit their GPs 10 or 20 times? The answers to these questions will be controversial, but they must be found if we are to find an equitable, affordable way of meeting expanding expectations and increasing routes to access healthcare.
To address these challenges we need major innovation in people, technology and funding. That will be difficult and controversial. However, if we tackle them head-on, we will be as bold as a Butler in Education, a Beveridge in welfare or a Bevan on the NHS. That is an ambition well worth fighting for.
My Lords, as president of Mencap, I wish to focus on social care and the importance of a well funded system for disabled people. Indeed, one in three social care recipients is a working age disabled adult. Social care is of critical importance for around 143,000 people with a working disability who receive one or more of the social care services in England.
Spending on social care services for people with a learning disability represents 25% of gross expenditure on social care services by local authorities. Let me put this in perspective by talking about Laura, who is 25, and has a learning disability and autism. Social care plays a vital role in her life as an active and valued member of the community. This would not be possible without her personal budget. She uses some of the money to pay for transport to get to her places of work and she uses the rest to take part in activities that build her skills and confidence. Laura is a committee member of Worcestershire self-advocacy group, SpeakEasy NOW. She attends a care farm three days a week, where she helps by looking after the animals and tending the kitchen garden. She studies art for a qualification and has passed London School of Music exams. She also works as an ambassador to a multisensory centre for people with more complex learning disabilities and volunteers as a steward at the Swan Theatre in Worcester. With the right care and support, Laura is making a significant contribution to her local community. She, too, benefits personally, as do many others around her. The support of a loving family has been crucial to Laura, but none of her achievements would have been possible without good social care.
In May, the charities Mencap, the National Autistic Society, Scope, Sense and Leonard Cheshire launched the report, Ending the Other Care Crisis:Making the Case for Investment in Preventative Care and Support for Disabled Adults. It showed that currently 40% of disabled people are failing to have their basic care needs met and the system is underfunded to the tune of £1.2 billion.
The underfunding of social care has catastrophic consequences for individuals, especially people with learning disabilities who are often isolated and in many cases live on the very periphery of society. Well funded social care would lead to a more inclusive society and it would also save on the public purse. The charity’s report shows that every £1 spent on services generates benefits for people and carers, as well as local and central government, worth an average of £1.30. These economic benefits come from preventing people’s needs escalating and having to rely on more costly public services.
It should of course be recognised that the Government have committed further funding for social care through the recent spending review and that is to be welcomed. However, there is significant concern in the sector that the new national eligibility threshold to be set in the Care Bill will simply be too high to bring benefits for many disabled people. The Care Bill and accompanying regulations, as well as present-day actions by many local authorities, suggest that this national threshold will be set at a level equivalent to substantial, as in the current system. That would spell disaster for thousands of disabled people who will be denied the care that they need to maintain their well-being and their independence.
A year ago, Mencap published Stuck at Home, which found that one in four people with a learning disability spent less than one hour outside their home per day. Without adequate funding to enable people to get out and be valued members of their community, I fear this shocking figure will rise.
My Lords, it gives me great pleasure to follow the noble Lord, Lord Rix, whose work for Mencap is widely admired throughout this country and beyond. I congratulate to the noble Lord, Lord Patel, not only on securing this debate at such a propitious time—the 60th anniversary of the National Health Service and the date on which we have been given this extraordinary wake-up call about the £30 billion or more—but on the way in which he introduced the debate in his very wide-ranging and wise speech.
For many years, I have never talked to any person in the health service—clinician, administrator or anyone in a position of seniority—who has not agreed with my contention that we need a plurality of funding in the National Health Service. In the same period, I have never met a single Secretary of State or Minister who has been prepared—I am talking about both parties—to face up to the reality of the challenge. The National Health Service has been regarded for far too long by far too many as a sacred cow whose basic principle of free care at the point of need is never open to challenge, yet a number of speeches in this remarkable debate have shown that it should be challenged. No one did that with more feisty determination than my friend—I deliberately call her my friend—the noble Baroness, Lady Boothroyd, in a quite remarkable and splendid speech. I would take it a little further than my noble friend Lady Boothroyd did: I believe that the time has come to recognise that, with enormous advances in medical science and with increased longevity, we cannot work to a formula that was devised more than 65 years ago. It is just unsustainable.
When I was first elected to another place, no one had had a heart transplant. This morning, we heard of a Member of your Lordships’ House who had a heart transplant 25 years ago. In 1970, I had no constituents who had artificial hips or knees. When I stepped down from the other place, I sometimes thought that every Conservative gathering that I attended was bionic because they all had them. One has to recognise that and in so doing one has to recognise that the money has to come from somewhere but not just from taxation.
We have to look at things that we have not been prepared to look at before: proper charges for people who are in full-time work when they see the doctor, which could do something for absentee rates as well; and bed charges for hospitals, which might increase the dignity of a hospital stay.
A couple of years ago, my wife and I went to a hospital to visit a dying friend, a clergyman. He lay in his bed in rather a dingy ward, although it was not a bad hospital. There was a flimsy curtain around the bed and in ill written capitals above his head was his Christian name. I will not name the hospital or the man, of course, but to me that was indicative and symbolic of what we have to put up with sometimes. Do not forget that I represented a constituency in Staffordshire but I will not dilate on that.
We need a truly world-class service. In many respects we have that but countries such as France and Finland have a plurality of funding, which we do not have but which we must recognise that we need. I would like to support very strongly the plea made by my noble friend Lord McColl—I say to him that I am dieting—for some form of cross-party commission, committee or group. This House is uniquely placed to provide such a group as we have some of the most eminent medical people in the world here; we have people with long experience of administration and politics. If it cannot be an official committee of the House—although I should like it to be one—but it could be a cross-party group that would look, without any fear, at the various possibilities for answering the problem that was so graphically underlined on the news this morning.
My Lords, this debate is extremely timely and I congratulate the noble Lord on introducing it so well and on stealing some of my best lines. It is hard to get away from the fact that we are in for a rather prolonged period of constraint on public spending that will inevitably impact on funding for health and social care. It cannot be denied that we are falling behind as inflation in medical care runs ahead of general inflation.
There is a commonly held assumption that the NHS is a bottomless pit but that is just too simplistic. During the years of relative plenty, when the Labour Government dramatically increased funding, we saw a remarkable improvement in care: waiting lists virtually disappeared; GPs could be seen on the same day in most places; waits in A&E departments came down; patient satisfaction levels rose; and productivity, despite views to the contrary, rose too. The number of operations and other procedures rose by 50% during the decade starting in 2000 and hospital lengths of stay fell by 27% from an average of 10.5 days to 7.7 days. So money did talk but now, as we deal with the Nicholson challenge, we are failing to keep up. We are seeing a rise in waiting lists and a fall in staff numbers. The pips are squeaking and we are beginning to see a fall in standards.
So how do we fill this funding gap? The Wanless report of a few years ago suggested that we would need to find 10.6% of our GDP by 2021, while John Appleby, in his report for the Nuffield Trust, suggested that in 50 years’ time we would need to put 20% of our GDP into the NHS. Fifty-year predictions are just a little fraught but he said it would be affordable—that is an important point—if our total GDP increased threefold, illustrating the point that the better off a country is, the bigger proportion of its GDP it can afford to put into healthcare. We have not been short of ideas about how we might fill the looming gap but few are free of problems. Doing nothing is clearly not an option as we will just see a steady deterioration in standards and quality with a public backlash, voter disillusionment and a change of government, whoever is in office.
That leaves us with three options: become more efficient, find more money or ration what we provide for patients. First, there are always efficiencies in a system as huge as the NHS but there are limits and we are pretty close to them now. So-called reconfiguration of hospitals is a popular idea at the moment. Close a few and the community services will pick up the bill for caring for the patients. I am all for focusing specialised services in a few places, as it certainly saves lives, but, unfortunately, it does not save money. I am all for closing small, inefficient hospitals and moving money into community services, but simply redistributing funds does not give us any gain.
I agree here with my noble friend Lord Filkin but, in the face of the enormous pressures building up, I really cannot see that even more efficiency savings are sustainable for very long. As regards finding more government money, I cannot see much prospect of that either, at least in the short to medium term. It would mean taking a bigger slice of the cake and leaving less for everything else, which would not be very popular. Only when we manage to increase our GDP and reduce our debt would we be able to consider taking a bigger slice of the cake. Then we could look at limiting what we provide in the NHS; that is, we could define a basic package of care but stop funding some types of treatments. Again, that is not likely to be very popular and defining which treatments should not be available in the NHS will always raise hackles. As a way of controlling costs it was found to be pretty ineffective in Oregon a few years ago.
Then there is the possibility of co-payments by patients—we have heard about that. We have already broached that principle in the UK, but experience elsewhere is not encouraging. When they tried it in Germany, they saw a rise in the number of patients who avoided visiting their doctors when they were ill or who failed to fill their prescription. The impact of charges for care will have to be examined very carefully if we are not to see a fall in the number of patients who need care but who avoid getting it for financial reasons.
At the end of the day, we will have to choose between a number of unappealing and potentially unpopular options, but one thing is absolutely clear: doing nothing is not one of those options. It is essential that we have a more open debate with the public about these possibilities. A cross-party discussion is desperately needed, as many noble Lords have said. We certainly cannot keep our heads down for much longer.
My Lords, perhaps like many here, I come at this subject from a very personal and a professional angle. I thank the noble Lord, Lord Patel, for introducing this debate.
I shall speak, first, about the personal: my life was saved by the orthopaedic department in the John Radcliffe Hospital in Oxford, so I owe my life to a well funded NHS. I am also someone who fervently believes in the power of technology to improve public services. It is only through their more effective deployment that we will continue to have a world-class healthcare system at a reasonable cost.
I am talking not about expensive NHS IT projects, top down and heavy, but about open standards, agile development, data and a more digitally minded healthcare sector. I would like to give some examples.
This era is often called the era of big data. We are able to aggregate information from a mass of different sources. The analysis of these data is changing the way in which we work and live. The Government have already encouraged the use of their own datasets, which are from many different sources.
However, we are only at the very beginning of this journey. A wonderful project which has come out of the Open Data Institute here in London illustrates why data are such an important part of this debate. In 201-12, the NHS in England shelled out more than £400 million on statin drugs, from a total drug budget of £12.2 billion. However, in collaboration with Mastodon C, Open Health Care UK—a small start-up developed by a programmer and a doctor—managed to look at every prescription written for statins from every GP in England by using a dataset provided by the Open Data Institute. They looked at the regional patterns and discovered that, if doctors had prescribed the white label version, they would have saved more than £200 million. The variation is remarkable. Imagine the potential savings if this was applied across many other classes of drug.
As the Economist wrote recently:
“A study in the British Medical Journal … reckoned that the NHS could save more than £1 billion by switching from branded drugs to generic equivalents”.
Smart use of datasets will become essential in improving our healthcare, as long as the interoperability of systems is put at the heart of those improvements.
As 80% of the NHS costs come from the 20% of the population with chronic conditions, it will be essential to focus resources on how to help them manage their lives more independently. There is a growing evidence base that shows that online tools can help in this. Mindfulnet, Big White Wall and buddyapp.co.uk are just some examples of websites that provide help to people with mental health issues, giving them confidential help and techniques that allow them to manage their own lives. NHS HealthUnlocked is a London-based start-up that works with patient groups and gives 1 million people monthly information to support long-term illnesses such as diabetes and obesity.
More than 70% of us look at our smartphones before we go to the doctor. Every day, millions of people are using health apps on their mobile phones, logging into websites or chatting in online forums. New technologies such as UP by Jawbone, or even Nike+ FuelBand, allow people to gather their own data and make better lifestyle choices. This is where I respectfully disagree with the noble Viscount, Lord Ridley. I believe that such technologies will help prevent health issues and drive down costs.
It is vital that the NHS is able to deliver services of the same quality as citizens find on the web, or we will be in danger of undermining one of our most valued public services. This will require a cultural change in the sector so that all the people working with patients are able to provide high-quality, relevant and modern care and to connect with the innovative solutions being provided outside the NHS.
While I spent two years in hospital, I met some of the most remarkable people— from surgeons to doctors and nurses to healthcare assistants—but, even then, there was a huge gap between what they were able to do and what was happening in the commercial sector. We must ensure that all staff are digitally literate and that the internet is at the very heart of the design of services, surgeries and hospitals. On this the 65th anniversary of the NHS—surely one of the greatest innovations of our country—it is essential that we incorporate another of our greatest innovations, the world wide web, otherwise we will have no hope of meeting future funding challenges.
My Lords, as we know, social care, health and social security expenditure is being driven by the growing number of the elderly. It accounts for two-thirds—£110 billion—of our welfare budget. As local authorities face 50% cuts, we are none the less going to need 65% more hours of care from the same number of working-age people in the next 15 years.
People talk airily about the extra life expectancy since Beveridge’s time—it was then five years after retirement; it is more than 20 years now. They argue that there should be a fixed proportion of adult life for retirement—let us say 30%—and that the pension age should rise accordingly, saving some £15 billion a year. However, the health and social care statistics should give us cause for thought. Those extra years are not enjoyed as years of good health but are years of chronic disability. At 65, we may enjoy a decade of good health, followed by a decade of growing but chronic disability, such as arthritis and diabetes, impairing our ability to walk, to reach, to see and to hear. Finally, there are perhaps two to five years—this has not changed much—of conditions involving heavy dependency, including Alzheimer’s, with substantial personal care needs.
The years of extra life, therefore, are largely extra years of chronic disability, but it is heavily class-specific. The better-off will live longer in good health—and they include those commentators who seek to encourage the raising of the state pension age—but for everyone else, those extra years of life will be added to the years of chronic disability. In my city, in two wards that are one mile apart, there is 11 years’ difference in life expectancy and 15 years’ difference in healthy-life expectancy. The gap is widening. It is deeply unfair to raise the state pension age and reduce the good years of retirement for most of the population.
I doubt that we can significantly extend the decade of healthy-life retirement for most people, but we can make the next decade, of disability, qualitatively better. What must we do? Measures include adapted housing and equity release—only £0.5 billion of the £2 trillion locked away in property of the over-55s is being released each year. Decent state pensions under the new Pensions Bill will provide funding for heating, food and mobility. We also need to fund social care adequately and intervene early.
Can we afford it? We spend £62 billion a year on the state pension and more than £40 billion on pensions tax relief—a shadow welfare state for the well-to-do. It is outrageous really. We have three ages of man—work, early good-health retirement and later disabled retirement. We need to smooth income not just from work to retirement, as we do, but between early retirement and later retirement as well, which we do not do.
Standard tax rate relief on pensions and/or treating pensions like ISAs would release £7 billion or £8 billion a year. If that money was then ring-fenced for later-life social care, redistributing it not only from work to retirement but from younger, healthier, wealthier pensioners to the older and frailer among us, I think that it would command support. Raising the cap on employees’ national insurance, now frozen at the higher rate, would raise a further £11 billion.
There is money; it is about our political choices and our priorities. With a sufficient state pension which is coming, with the redistribution of money from pensions into social care, with the adaption of our homes for safer living, partly funded from equity release, and with a more courageous attitude to integrating hospital, primary and social care, we can cope. Half of the growth of the older old is indeed due to increased longevity, but half is due to the post-war baby boom. In a decade or so we shall be through that baby boom and in a better worker-pensioner support ratio than almost all other European countries—until the next baby boom, that is, which has just begun, but that is a problem for the 2070s and our great-grandchildren.
My Lords, I, too, congratulate my noble friend on securing this debate and on his excellent speech. In fact, there have been many excellent speeches and, as a result, I have completely rewritten what I was going to say. I declare an interest as a former chief executive of the NHS and I have many non-commercial health interests, mainly abroad.
The core issue here is that we have an NHS designed and created in the previous century that is trying to deal with the problems of this century. We have an NHS that is focused on illness not prevention, that separates GPs and primary care, that is designed to treat episodic illnesses—heart attacks, infections and cancers that are not chronic diseases—and we need a different sort of health service. We need a massive change in the way that it is delivered, using technology, using staff differently and changing the infrastructure. I agree with the noble Lord, Lord Filkin, that that is a major change, and that it is the fundamental change that needs to be done, but we can make a start on it. It is important that we have a clear vision of what we want our health and social care system to look like in the future. This debate is not just about funding. Using the wrong model to deal with today’s problems is a recipe for inefficiency. We are not alone. Every developed country has the same issue. If we look across the Channel at, for example, France and Germany—which, incidentally, spend 20% and 25% more than we do—according to the United States Commonwealth Fund, they are less efficient in how they do it than we are. So this is a common problem. It is a big problem but we can make a start on it.
There are no simple solutions but let me mention two possible ones. First, the most interesting study on waste in health systems comes from the United States. It is estimated that 30% to 40% of expenditure in the health system in the United States is waste. The biggest reason for that is not overtreatment and the sort of things you would expect in America; it is a failure to co-ordinate care. It is somebody with multiple problems having to go to one doctor for this problem and to another doctor for that one. It is a failure to co-ordinate that and having repeated inputs into the system. It is also not getting the treatment right first time. Those are the biggest impacts on waste. I suggest to the Department of Health that it might wish to use the same methodology to look at waste within the United Kingdom because I think we will see a lot of similarities.
Paradoxically, we need to focus on quality in order to manage costs. As people working in industry will know, this is the way to do it. The Japanese guru, Kano, talks about three levels of quality. The first level of quality is doing it right first time—actually doing what is needed to deal with the problem, making sure that if you are in hospital that the X-ray or whatever is needed is done in time so that you do not have to spend the rest of the following week there as well. The second level of quality is doing the same thing but with cheaper inputs. The obvious question in the NHS is: to what extent can things that are done today by doctors and people working expensively be done by other people within the system? And the third level of quality is adding something. It is only that third level of quality that adds cost; the first two save cost. We see it across industry and in the best examples in the UK. Many people in the NHS know this and there are many isolated examples. This could be the really big push that I believe is needed to tackle many of these issues.
The second area, which I have touched on, is staffing. Reducing the drug budget by 10% saves 1% of the NHS budget; reducing staffing by 10% saves 6% or 7% of the NHS budget. We need to be much bolder and braver in thinking about who does what within the NHS, particularly when we are aware that new technology allows things to be done. We know how we can do that well. There is plenty of evidence of task-shifting or substitution, using people who are less trained and skilled but properly supervised to do things, not least from the All-Party Group on Global Health which I chair and which published a report looking at this worldwide and demonstrating how this could be done.
So those are two areas where I believe there is a great deal more that we should be doing. Before we get too radical about trying to change the financing system, we should be focusing on changing the NHS. In conclusion, this debate needs to be about the NHS and the social care system we need. There are no simple answers but there are many promising leads. Political, NHS and social care leaders need to do much more to lead and to win the arguments about the future with a sceptical public. There is at the moment, I believe, no clearly articulated vision from either Front Bench. We need one if the NHS and social care are going to continue to serve the UK population effectively in the 21st century.
My Lords, I, too, thank my noble friend Lord Patel for initiating this debate. We have heard many innovative speeches already. I think I am the only professional economist speaking in this debate so I had better stick to economics.
First, all projections for 10 years’ time should be ignored. If you predicted backwards, you would find that you were spending negative sums of money 30 years ago. NHS growth has been very uneven. The NHS grew from 3.5% of GDP to 4.5% over 30 years and then from 4.5% to 9% in 20 years, the fastest growth being since 1997. We have been accelerating growth and we did that because of the determination of the Labour Government to increase the proportion of GDP spent on health. There was a target and that target was achieved. GDP growth was good at that time. GDP growth will not resume at anything like the level we had up to 2007. We will have much slower GDP growth with much more attention paid to reducing the size of the state’s share in total spending. We spend up to 48% now and we are going to reduce that to 44% by 2017, but once upon a time we spent only 36%. We will have to reduce it to something like that, and within that smaller share we will have to find money for the NHS. Productivity will have to grow. I must disagree with my noble friend Lord Turnberg. Productivity did not grow between 1997 and 2010. As the King’s Fund report shows, it fell by minus 0.2% per year. Between 2011 and 2015, it will grow by 5%. That is not my number; it is the King’s Fund’s number.
What is to be done? The first thing has to do with universality, which is one characteristic. The noble Baroness, Lady Boothroyd, was quite right. How do we ration this to only people who are entitled? When I arrived in 1965 I was given a card by the NHS with my number on it and I was told I had to show it. Nobody has ever asked me for the card. Why can we not have that very simple thing? The Labour Party abandoned the idea of an identity card. It would be very simple to have our NHS number, which exists somewhere in the ether, and to be asked to show it whenever we go to the doctor. That would sort out the tourists from the citizens. That is one thing.
Secondly, we have to make people aware of what they are getting. My biggest worry about the NHS is that people are not aware of how much they are costing the organisation. If we are spending, say, £2,000 per capita, give everyone something like an airline loyalty card containing 2,000 points and say, “These are your points for this year”. Every time you used the NHS, you would be shown how many points had been deducted. If you missed a GP appointment, it would cost you twice as much as going to that appointment. No one would need to pay anything, but this would make people aware that there are costs for what they do. As people in middle age typically will not need treatment, they would accumulate points over a lifetime so that they could finally spend those points when they needed them. You could have a lifetime budget of shadow points. This would be very good for people. Since I do not have much more time to speak, I think I can sit down.
My Lords, following on from what the noble Lord, Lord Desai, said, one of the strengths of what was initially introduced as an internal market was that it would be able to show people the costs of healthcare in a far more systematic way than hitherto. In my view, it is a tragedy that the internal market has been changed into an external market, and we have lost the growing acceptance of people in explaining—particularly doctors and those who make financial decisions in the health service—what it costs.
I come to the main subject of the debate, the future funding of health, and the very objective and fair explanation by the noble Lord, Lord Patel, of the various options. I have no doubt where I come out: I agree with the Wanless committee, which looked at this in some detail. It is still worth reminding ourselves of some of his report’s words:
“Out-of-pocket payments for higher levels of non-clinical services may provide one means of meeting demands for greater choice and responsiveness … The key conclusion to this Review, however, is that the current method by which healthcare is financed through general taxation is both a fair and efficient one from a macroeconomic point of view”.
I stress another fact: very unusually, we have had a social experiment in paying for the National Health Service. When the previous Labour Government substantially increased health expenditure, which was a very good decision, they paid for it by increasing the national insurance contribution. Far from being unpopular, that was an extremely popular decision.
With that experience, we have to take the next step, which is to break down the Treasury’s reluctance to earmark taxation and have on everyone’s tax form what is spent on the National Health Service out of their taxation contribution. They can break it down further into what comes straight from tax and what comes from national insurance. Most people in this country have felt for many decades that their national insurance contribution pays for the National Health Service. Many people are arguing for a greater contributory element in our social financing. The NHS provides a wonderful vehicle for that; it is popular and people are prepared to contribute more. If we had earmarked taxes on our tax forms and if we then raised national insurance contributions, all that would be seen for what it was on the tax form. In my view, that would gradually shift the national insurance contribution and it would be seen to be the mechanism of funding, but you would still need a taxation top-up.
That is my practical suggestion, and it could be done initially to simply explain the overall cost of the National Health Service that you yourself are contributing. If that was open and earmarked, and people felt that that money was going to the National Health Service, there would be much greater acceptance. The big macroeconomic factor in this climate is not ageing, which I will come on to in a moment, but the fact that we are very likely to have a sustained period of much lower growth than we have had over the past 20 or 30 years.
On the question of ageing, the speech by the noble Lord, Lord Filkin, was very strong. My warning, particularly to those working on the Lords Committee reports on ageing, is that this is a much more complex issue. All the evidence so far that an ageing society has this great cost claim on the NHS was rejected in 1999 by the Royal Commission on Long-Term Care of the Elderly, the Sutherland commission, and three years later the Wanless report concluded that:
“Across all scenarios, the contribution of demographic change to future costs is relatively modest”.
Similar findings have been reported in the USA, Canada and Australia. There is also the supreme irony of regarding increased longevity as a problem when it is one of the great prizes of economic growth.
We should be careful in this whole area and have a little more history. My generation of doctors in the 1960s was faced with men of 50 dying a long, racking death because they had smoked, or in some cases because they had industrial diseases like pneumoconiosis or asbestosis. That is now very rarely seen because of the massive public health contribution of people giving up smoking.
That longevity has brought about a different type of death, too, and we should face that. The warning on that came from obesity. I have no more time to go on to that issue, but every word of the statement by the noble Lord, Lord McColl, is vital in order to realise that this is a new public health scandal. Alcoholism and binge drinking among young people are also a problem. In 20 or 30 years we will pay a very heavy price for this, and we have to start doing something and spending money to stop it now.
My Lords, it is a joy and a pleasure to be able to take part in this debate. I am a consumer, more so than those who have made speeches today who have impressed me with their foresight, warnings and good sense, and I am deeply grateful.
I rise today to refer to an incident. An 88 year-old man who was partially disabled and partly immobile fell in his kitchen, and rang 999. That was at 5.30, but an hour later there was no sign so he rang again. At 7.30 he rang yet again and received no assistance. This old man then rang a care line that he subscribed to locally, and within the hour two ambulance men came along and looked after him.
That old man was me. I lay on the floor of my kitchen for three hours until assistance came. Although I was not badly injured, I just could not get up from the floor and I needed assistance. When the ambulance men came, they looked after me. They were superb and kind, so I thought to myself, “Well now, this is what it’s all about”.
My family have had great access to the National Health Service all their lives. I pay tribute through the Minister to what that service is and does. Of course the problems that have to be solved have been laid before him. Not many of them will be new, but he will be well aware, first, that the House holds him in high regard and, secondly, that he does what he can. What he did when I wrote to him was to tell me that he was not the person responsible for the ambulance service and that there was a different arrangement, which I did not know about, for which I apologise. He told me that I needed to write to the East of England Ambulance Service in the NHS, which I did. The Minister may or may not be aware of this—I am not trying to tie him down—but when he asked me to write to this organisation, I did. I was told that their procedure allowed 25 working days for a response. They guaranteed that I would get some response. I have counted 49 days since the date of the letter. I have had no action from them.
It is little things like that which spoil the image of the National Health Service. During the war, I lay on a hillside with gunshot wounds and my life was saved. Ever since, especially as my health has deteriorated of late, I have been grateful for the service that I have got. Does the Minister recognise that all I ever wanted was an explanation for why I had to lie on the floor for three hours? The answer is simple: resources. That is in the title of the debate today.
I express deep gratitude for all that I and my family have received, but I was particularly taken by the comments of the noble Lord, Lord Cormack, that now is the time to reassess what the health service is and how we proceed. That was also referred to by the noble Lord, Lord Owen, whom I have known for a very long time. I can also see, sitting in her place, the noble Baroness, Lady Boothroyd, who stood on a platform with me 61 years ago—
Sixty-one years ago. I may have just given away the age of the noble Baroness. Well, the noble Baroness is just younger than me and I am now 88 years old, so I have not given it away too much.
My Lords, before the noble Lord embarrasses the noble Baroness, Lady Boothroyd, further—
I remind the noble Lord that there is a time limit of five minutes on the speeches.
My Lords, it is a privilege to follow such a powerful and moving personal testimony from the noble Lord, Lord Graham. I, too, add my congratulations to the noble Lord, Lord Patel, on securing this very timely debate. Why do I say timely? As so many other noble Lords have said today, it is an opportunity to look at some of the underlying causes of the escalating costs of healthcare and what can be done about it. The National Audit Office recently released figures showing that 30% of all non-emergency hospital admissions are avoidable. With resource inefficiency such as that alongside the pressures from our ageing population, technological advances in healthcare and increasing public expectations of the system—we have heard so much about these today—it is clear to me that standing still and having more of the same is not an option, particularly in a prolonged era of less public money.
I speak today particularly as a member of the Select Committee on Public Service and Demographic Change, so ably chaired by the noble Lord, Lord Filkin, who has already spoken very eloquently. The Committee’s report, Ready for Ageing?, put considerable emphasis on the need for major redesign of the way the health and social care system is funded and delivered. I say respectfully to the noble Lord, Lord Owen, that that committee made much of the very important contribution that older people make both to society and to the economy.
We have already heard some alarming figures in today’s debate. I will not repeat them but I refer to the Nuffield Trust’s prediction of the budget shortfall by 2021 if nothing happens, and the fact that 70% of current spending goes on people with long-term conditions. I want to focus my remarks on the ways in which the existing £120 billion budget could be better spent, fully recognising that this is only part of a much wider debate. The Select Committee received overwhelming evidence that a radically new system was needed with a funding model designed to ensure that health and social care funding is aligned so that it incentivises preventative care, early diagnosis and intervention, and active management of long-term conditions, thereby avoiding worsening health and the unnecessary use of acute hospital stays—with the home, in essence, becoming the hub of care.
The committee concluded that a remarkable shift in NHS services was needed, particularly to have older people with long-term conditions receiving good joined-up primary care, community care, social care and effective out-of-hours services; that is, a health and social care system that works well 24 hours a day and 7 days a week. I think we would all agree that we do not see that at the moment. This would be designed to shift funding from acute and emergency services, which currently consume more than half of the NHS’s budget, and allow for more investment in community and social care.
Welcome moves are already being made by the Government to ensure more integrated and co-ordinated care as part of the NHS mandate refresh. These are clearly steps in the right direction. Much more radical thinking, however, will be required. I urge the Government, and indeed politicians across all parties, to consider more fundamental changes in the run-up to the next election. One such change I would put forward—as the Select Committee did—was that there should be serious long-term strategic planning which can look 10 years ahead, with the Government introducing a 10-year spending envelope for NHS and publicly-funded social care.
I do not for one moment envisage that this will be an easy sell to the British people, who understandably fear changes to the local hospital arrangements on which they rely. However, it is a conversation in which we, as parliamentarians, need to engage with the public openly and honestly, as many noble Lords have said today. I, too, was very interested in the recent findings of the King’s Fund and Ipsos MORI deliberative event, which the noble Lord, Lord Patel, referred to at the beginning. It is very interesting to see how little appetite there was for the charging of clinically necessary care. When the former Health Minister, my honourable friend Paul Burstow, was looking at ways in which we could use more widely the resources that we and the wider community have, he put it very succinctly. He wrote that:
“Our current systems are predicated on perverse incentives: people have to prove dependence and refuse informal help to qualify for services. We need to work with the strengths of people and communities to foster resilience, reciprocity and support self-care”.
He also wrote that:
“The future of our care system lies in preventing or postponing people from needing care in the first place”.
Pooling health and social care budgets is one way to achieve this sort of prevention, along with person-centred commissioning and a single point of care for all commissioning.
There are other areas we could focus on—as the King’s Fund has recently indicated—where there is real potential to transform health and social care. I shall mention just one, as time is running out, but they include that of embracing more joined-up procurement so that the vast collective purchasing power of the NHS can be used far more effectively to keep costs down.
My Lords, I thank my noble friend Lord Patel for the way in which he introduced this debate and other noble Lords for their very valuable contributions. Like my noble friend Lord Crisp, I have had to change what I was going to say in terms of the range of things. I declare an interest in that I am a nurse by background, a long-retired nurse who had 60 years’ experience, in one way or another, connected with the NHS. It is true to say that there is evidence of brilliant care being given within the NHS and social care. However, there are also many deficits.
We have talked about a seamless service. Is there a seamless service today? A model needs to be developed from the previous Government’s introduction of the patient pathways. I hope that we will not forget that patient pathways are the most cost-effective and care-effective way of treating people in the future. However, we need to think about prevention being better than cure, as was said by the noble Baroness, Lady Tyler. Public health is defined as the science and art of preventing disease, prolonging life and promoting health through the organised efforts and informed choices of society, public and private organisations, communities and individuals. This requires a change in the culture of the population served to a health and well-being approach to life and a personal commitment to living a healthy lifestyle from birth to the grave. This picks up some of the points made by the noble Lord, Lord McColl.
Changing the culture of the NHS is an even more important issue. The prime focus must be on the principle that all aspects of public health are centred on the personal pathways of the population and the provision of health and social care given through those pathways to a healthy population. Changes must be made to the culture of the delivery of health and social care towards those who live independently, supported where necessary by expert professional teams that are educated in the delivery of holistic care to meet mental, physical and emotional needs within the community. Hospitals should be required only for the diagnostics, treatment and research that cannot be delivered in the community. To make all these changes, outstanding leadership skills are required. This can be achieved only by an open and honest approach to the population which helps them to understand that to live longer, healthier lives, changes have to be applied through a much more active and aggressive approach to the prevention of disease and the promotion of health. These changes must be assisted and supported by expert clinicians from all health and social care professions who utilise the good of what is in place while identifying the large gaps that exist. They must make those good not only by correcting the education and training of the workforce but by engaging the assistance of families and communities.
The education and training needs of the NHS social care workforce need to be radically examined to ensure that the overarching focus of care delivery in this country is public health-supported by the treatment of disease. This strategy requires a refocusing of the distribution of funding towards these aims. Florence Nightingale once said that hospital beds should be reduced in London. Perhaps we should look at the way in which our hospital beds are used and ensure that hospital services are cost-effective and care-effective within the framework of the patient pathways determined by the health and social care teams. This should be done to support patient pathways in a seamless way from diagnosis through to treatment. In turn, we must utilise the support of families and communities towards the future health and well-being of the individual on discharge to the community, where high-class care is delivered by professional health and social care teams, families and communities.
I hope that the Minister will be able to look at the point raised about the need for a cross-party multiprofessional group. However, I stress that it needs to be multiprofessional.
My Lords, I declare an interest as president-elect of GS1 UK, as chair of an NHS foundation trust and as a consultant and trainer with Cumberlege Connections.
I, too, thank the noble Lord, Lord Patel, for his opening remarks, but also for allowing us to debate one of the key social issues that we will face over the next few years. I warm to the noble Lord’s optimism, although there is no doubt that the NHS is in the midst of an unprecedented financial challenge. The supply of funding is not keeping pace with the growing rate of demand for healthcare. More people need care and they want it to be better than it has been before, but we know that growing pressures on finance could impact on the quality and experience of patient care. As Sir David Nicholson said today, hospitals are staring down the barrel of having to cut doctors and nurses from their employment, actions that could lead to another Mid-Staffordshire scandal unless the NHS radically reforms. I know that my noble friend Lord Desai warns us, I suspect with good cause, to be wary of long-term financial projections. However, there seems to be a general consensus around the work of the Nuffield Trust, which says that cost pressures on the NHS are likely to grow by around 4% a year up to 2021-22 due to the growing demand for healthcare to meet the needs of a population that is ageing, growing in size and experiencing more chronic disease.
We also need to factor in the impact of social care. There is no doubt, looking at public sector finances, that local authorities have borne the heavy brunt of the reductions. As adult social care is the largest part of discretionary spend within local government, it has inevitably been affected. A&E services were under the cosh this last winter. There can be no doubt that one of the main reasons for this was a reduction in social care provision and in the additional burden that our carers have had to face because of the reduction in support services available to them. Sir David Nicholson’s response was to call for a dramatic reconfiguration of services, including the centralisation of specialist services. I should like to put that point to the noble Earl, Lord Howe. Will Ministers support radical reconfiguration of services? So far, we have seen little sign of that occurring. Will the Minister also ensure that clinical commissioning groups get on with approving radical changes instead of, as seems to be the case at the moment, resisting big change and being protective towards local services?
On that reconfiguration of services, I want to ask the Minister about today’s decision of the Competition Commission to reject the proposed merger of two hospital trusts in Dorset. That must be the most ridiculous decision that has ever been taken in relation to the necessary reconfiguration of services. His right honourable friend the Secretary of State has spent his time in office going around attacking the NHS. It would be nice to think that the Secretary of State might issue a mite of criticism of the Competition Commission for what it has done. The signal this will give to the health service is that reconfiguration of services will not be allowed because of the Competition Commission’s ludicrous intervention. I hope that the noble Earl will be able to say something positive about what Ministers will do to stop the Competition Commission doing this in the future. It will be impossible for services to be reconfigured if in Dorset, a small county, two small district general hospitals are prevented from merging. This is very serious indeed.
Is it all doom and gloom? Will the NHS descend into mediocrity and inevitably become a second-rate service for poorer people? Will charges be introduced, with all the costs and perverse incentives to which my noble friend Lord Turnberg referred? I hope not. Like the noble Lord, Lord Patel, I am more optimistic than some noble Lords. My noble friend Lord Graham, in his marvellous speech, will also recall, as I do, the beloved and late Lord Donald Bruce, who was Nye Bevan’s PPS. He sat just behind the noble Earl when Nye Bevan introduced the NHS Act 1946, when the Commons was using the Lords as its Chamber. Nye Bevan always said that the NHS will always be with us as long as people want it so. It is my contention that whatever the pressures and challenges we face, the British public want it to continue with us.
Of course, it is clear that muddling through is unlikely to be feasible, and spending more will always have to be an option. My noble friend Lady Hollis made a very powerful case for redistributing priorities. The noble Lord, Lord Owen, argued for earmarked taxation. Some noble Lords have argued that higher spending on health and social care should not be seen solely as a debt or a burden but as an improvement and an investment in the economy and the economic and health well-being of people’s lives. I have no doubt that the public will continue to expect the NHS to be a tax-funded system free at the point of need. However, public finances will remain tight.
The noble Viscount, Lord Ridley, doubted the efficiency achievement of the NHS in the absence of a market. All international evidence suggests that the more marketised a health system is, the more wasteful it is. My grounds for optimism are based on international comparisons. The Commonwealth Fund in the US, which is a very authoritative comparator of healthcare systems, ranks the NHS number two. It ranks it number one for effective care and for efficiency. We should not throw that away. Despite all the challenges, the NHS has a lot going for it.
The noble Lord, Lord Cormack, could have made his speech in every decade going back to the 1950s—perhaps he did make that speech in the 1950s. The Guillebaud Committee was set up in the early 1950s when debates took place about whether we could afford the NHS. Professor Bryan Thwaites in the 1980s came out with speeches that the NHS was unaffordable. Here we are, 30 years on from that, still debating this issue.
If the NHS is to survive of course it has to be more efficient and there are three areas where I suggest efficiencies. First, the Government at a stroke could stop the marketisation of the NHS. The amount of money that is going to have to be wasted in compulsory tendering of services is extraordinary—£3 billion has already been spent on the stupidest reorganisation the health service has ever gone through and much more money will be wasted in the future. Secondly, in central government there is heavily centralised procurement. I welcome that. The Government are not allowing individual government departments to procure separately. We should do the same for the health service. We cannot afford to have 500 different organisations procuring. Thirdly, I agree with the noble Baroness,
Lady Tyler, about avoidable admissions, caused either by the public not turning up when they should do or turning up when other facilities should be on offer.
There is much to be gained. The shift to prevention offers much. The need to integrate health and social care is becoming broadly accepted everywhere. People need to shift from being passive consumers of care to active partners in their own health. The system needs to become much more open and transparent. Above all, I put my money on innovation. In this country we have fantastic scientists who are inventing new medical treatment and equipment day after day but we are very slow to use that in everyday practice. The academic health science networks, NHS England’s specialist commissioning facility and the assurance that NICE guidance is aggressively adopted would give us a foundation for an efficient health service where innovation is adopted quickly and the benefits are seen not just in the quality of patient care but also because the global pharmaceutical industry will see that the NHS continues to be a strong place in which to invest in the future. We must want to get to where health and wealth run closely together. If we can do that, the future of the NHS is a good one.
My Lords, first I thank the noble Lord, Lord Patel, for securing this debate. I am particularly grateful to him for presenting the House with the scale of the financial challenges that face our health and care services. Those challenges should not be underestimated and I very much welcome the opportunity to debate them.
Healthcare systems across the world are facing huge and very similar challenges. The noble Lord, Lord Filkin, quoted a number of sobering and inescapable statistics. Our population is ageing. The number of people aged over 65 in England is set to increase by 50% by 2030 and the number of over-85s is set to double. New treatments and technologies, while very welcome, often increase costs. Of particular importance, more people are living longer with long-term conditions. There are now 15 million people in England living with a long-term condition and that number is rising fast. By 2018, an estimated 2.9 million people will have more than two long-term conditions, up from 1.9 million in 2008.
More people need to be supported to manage their conditions well and this means, as my noble friend Lady Tyler and many noble Lords have identified, that the NHS and social care need to find ways of working more closely together. This includes, as the noble Baroness, Lady Emerton, reminded us, managing older people’s care proactively to help keep them out of hospital, as well as ensuring that the care and support people need is ready and waiting for them when they are ready to leave hospital, along the seamless pathways she talked about. It also means making sure that the NHS is there for us all in an emergency, as it should have been for the noble Lord, Lord Graham of Edmonton.
I want to outline the Government’s approach to the financial challenge set out in the recent spending round and then go into more detail on our proposals to bring about the radical change in the integration of health and care services. The spending round set out that the Government are continuing to protect health spending in 2015-16. We are setting up a £3.8 billion pooled health and social care budget to transform service delivery—to which I will return in a moment. We are providing better and more proactive care for the vulnerable elderly. We are introducing a new national minimum eligibility threshold to protect access to social care services—again a topic to which I will return—and we are beginning work on introducing the cap on the cost of care so that no one should have to sell their home to fund care later in life.
In addition to taking these radical steps to integrate health and care, we are making enormous strides towards an ever more efficient and comprehensive health service. We are pressing ahead with investing in technology to reduce clinical mistakes and to guarantee quality of care; investing in cancer services through two new proton beam therapy centres and investing in better mental health care. We are also working closely with partner departments across central government to fund capital projects worth almost £700 million.
Last month in the spending round the Government committed to protect spending on health through to 2015–16. In addition to already committing £12.7 billion of funding to 2014–15, we will be adding an extra £2.1 billion in 2015–16. All this investment will go towards delivering improving services and boosting integration. Although funding continues to rise, meeting rising demand represents a huge challenge. The noble Lord, Lord Kakkar, was absolutely right. Greater efficiency is vital here and I am pleased to say the NHS is already delivering significant efficiencies. Thanks to the dedicated and hard-working NHS staff, the service delivered £5.8 billion of savings during 2011–12 and approximately £5.1 billion for 2012–13. This means that the NHS is on track to deliver up to £20 billion of efficiency savings by 2014–15.
The noble Lord, Lord Rix, and the noble Baroness, Lady Hollis, spoke about the importance of funding social care. We are clear that they are right. In the 2010 spending review, we allocated an extra £7.2 billion from 2011 to 2015 to support social care services and we have committed another £0.5 billion since. We calculated that this would be enough to maintain services if councils achieved 3% efficiency which was an assumption in line with the projections of The King’s Fund, the Local Government Association and the Association of Directors of Adult Social Services. This included money transferred by the NHS to support social care services that benefit health.
One very important way in which to deliver efficiency is to create a genuinely joined-up service, correcting the failure to co-ordinate care that the noble Lord, Lord Crisp, spoke about so well. With some of the biggest users of the NHS being those who also use social care services, we need to make fundamental reforms to the system to ensure better integration between services. In delivering these efficiencies to date, the NHS and social care have clearly made huge strides in working more closely together and getting more value from the public money that they receive. Too often, people still fall through the cracks. The changes announced in last month’s spending round represent a significant opportunity to do more; rather than continue simple transfers from the NHS to social care, the spending round announced a £3.8 billion pooled health and social care budget. This is a radical step forward in reducing the silos of separate local budgets and will be a powerful driver of local integration. The aim is that the pooled fund will be directed at activities that have a clear benefit across both the health and care systems, and it will be given only on the basis that services are commissioned jointly and seamlessly between the local NHS and local councils.
Health and well-being boards, as well as being the local hub for planning service provision, will play a significant role in spending pooled budgets. To access this funding, local partners will need to agree a collective plan for how it should be used, including distribution within the health and care system. Plans will cover how areas will protect social care services; achieve seven-day working in social care and health to support patients being discharged and prevent people being unnecessarily admitted at weekends, which is an abiding problem; ensure better data sharing between councils and the NHS, with a requirement for the NHS number to be used as a unique identifier; and ensure a joint approach to assessments and care and support planning. Some £1 billion of the money will be linked to outcomes achieved, with half being paid at the beginning of the year and the remainder in the second half of the financial year. There will be a strong element of local determination in setting these outcomes. Many local authorities and NHS partners are achieving much greater integration between health and care services, thereby improving care for people and optimising the use of resources. The new pooled budget will help to make this a reality across the country.
A number of noble Lords have drawn attention to the wider picture and have referred in particular to the predictions by NHS England of a significant funding shortfall by 2020-21. I am not sure that it would be wise of me to ignore those predictions, as the noble Lord, Lord Desai, sought to advocate. Clearly, we are experiencing the biggest financial challenge that the NHS has faced. Work to set the NHS on a sustainable footing in the long term has already started. I have mentioned that it is on track to deliver £20 billion of efficiency savings by April 2015, and that is a start—but more must follow. We are pleased that NHS England is undertaking this work to better understand and respond to the long-term challenge for the NHS, and has committed to the development of a 10-year strategy. I welcome the realistic tone of the document that it has just published. NHS England will lead that work to build on the gains and efficiency in the NHS in 2015-16 and beyond; its publication today is an important first step, and it is looking for genuine engagement and the kind of open debate called for by the noble Lord, Lord Turnberg.
The noble Baroness, Lady Boothroyd, spoke about the acute difficulty with funding that faces us. We know that demographic change and more people living with long-term conditions, as well as the rising cost of drugs, will continue to put pressure on the NHS. So those demands are accepted by all, and we agree with NHS England that the NHS needs to transform the way in which it does things to become more efficient. It must be able to make the decisions that it thinks are in the best interests of patients, which is why we set up NHS England to work with local doctors, nurses, patients and the public about how their NHS works for them. The consultation on migrant and visitor access should elicit some important messages from the clinical community as well as the general public. I shall refer in a moment to what the noble Baroness said on that subject.
The noble Lord, Lord Filkin, suggested that integration and prevention alone will not solve the funding problem. I agree with him that it is not the whole solution but it is an extremely important part of the solution, which is why we have taken the opportunity of creating the pooled fund that I have mentioned. But we are not relying on that alone; we are maintaining our commitment to protect the NHS budget, despite precarious public finances, and the QIPP programme is on track to deliver up to £20 billion of annual efficiency savings by 2014-15—and we will continue to drive efficiency beyond that.
The noble Lord, Lord Turnberg, expressed doubt about moving services into the community and whether this would actually save money. I believe that it will and should save money; moving care into the community is not about doing the same things in another location—it is about managing conditions well to avoid the need for acute care. There are some good examples of where that has happened. Evidence from the four whole-place community budgets suggests that savings from integration could be very substantial. In their business cases, the pilots that we have run suggest that the net savings that could be achieved over five years are: Cheshire West and Chester; £26 million; Greater Manchester, £3.8 million; Triborough, £190 million; and Essex, £90 million. Those are significant figures by any standards.
The noble Lord, Lord Kakkar, asked me whether the department or the NHS models future trends on demography and disease. We most certainly do. My department, the NHS and other health bodies model all those trends. We agree with NHS England that the NHS must continue to change if it is to get ahead of these trends and, indeed, influence them. As my noble friend Lord Ridley recognised, this can be done. We have made a good start in delivering efficiency savings, but it is important to take on board the fact that savings in the first two years have been reliant on reducing bureaucracy and having pay restraint, as well as making local improvements in operational efficiency. The NHS now needs to focus on the transformational change of services away from hospitals and into the community.
I shall come on to the issue now raised by the noble Lord, Lord Hunt of Kings Heath, around reconfiguration. Certainly, the Government support reconfiguration. The NHS has always had to respond to patients’ changing needs and expectations. As lifestyles, society, technology and medicine continue to change, the NHS needs to change as well. Both the Government and NHS England are clear that this will not mean cutting, charging for or privatising services. Local empowerment is the key here. It is not fruitful or wise to go for topdown redesign. Local empowerment is the key to allowing services to respond to the needs of local people. Decisions about the future design of services need to be made as part of an ongoing conversation between commissioners, providers, local authorities, and the communities they serve. Clinical quality and local need should be at the heart of those decisions. As the noble Lord knows, we have made it clear that we expect proposals for significant change to meet four tests. There should be strong public and patient engagement; the proposals should support choice for patients; there should be a clear clinical evidence base; and there should be support for proposals from clinical commissioners. We have encouraged necessary reconfiguration through the NHS mandate.
I, too, noted the decision by the Competition Commission today around the mergers in Dorset. All mergers of NHS organisations must be in the interests of patients. The Competition Commission has a specific role to play in this, and that is the legal position. We note the commission’s provisional findings, which will be discussed with the two foundation trusts and other interested parties before a final view is reached.
The noble Lord, Lord Kakkar, spoke powerfully about the life sciences industry and how vital it is to the NHS—and, indeed, innovation more generally. We are absolutely committed to innovation and healthcare, both to deliver the best possible care to patients and as an important driver of economic growth. Innovation can also help to drive down costs. The healthcare and life sciences section of the Government’s plan for growth 2011 highlights that health research and innovation have a key role in the national economy as well as in improving health and care.
NHS England has an important leadership role, such as continuing to support the strategy for UK Life Sciences, and in spreading innovation throughout the NHS in line with their commitments in the innovation, health and wealth strategy.
In our current consultation on revisions to NHS England’s mandate, we propose updating its objectives on growth. The aim would be to help drive forward the Prime Minister’s initiative, announced in December last year, to sequence 100,000 whole genomes over the next three to five years by supporting its implementation and delivery and by preparing the NHS for the adoption of genomic technologies.
The noble Lord asked me what metrics would be applied to determine whether AHSNs are successful. I agree that there need to be robust and transparent outcome measures, and that is why there is a three-year academic evaluation commissioned jointly by the Department of Health and NHS England, which is currently out to tender. In addition, we are designing the five-year licence and building into it robust and vigorous outcome metrics, national baselines and locally appropriate lead indicators. That is due for completion by
My noble friend Lord Ridley said something unarguable: that the NHS needs to remove more inefficiencies. I completely agree with him and will draw attention to two specific examples: procurement, to which the noble Lord, Lord Hunt, referred and technology, which was spoken to so well by the noble Lord, Lord Battacharyya, the noble Baroness, Lady Lane-Fox, and the noble Lord, Lord Crisp.
On procurement, the NHS undoubtedly needs to look at every pound it spends to see whether it is giving value for money. Procurement spend accounts for around £14 billion of the NHS budget and we need to make sure that this money is being effectively spent. We will publish plans this summer to save up to £1 billion by 2015-16 through more efficient procurement.
On technology, I listened with care to the expert views of the noble Baroness, Lady Lane-Fox. We are committed to a paperless NHS by 2018 to improve services and make real efficiency and productivity savings. Better use of technology will save time for doctors and nurses, improve patient safety and has the potential to save billions. External studies have estimated that cost savings of £4 billion can be achieved, but these figures are illustrative at the moment and are subject to further work and examination.
My noble friend Lord Cormack suggested that we had reached a time when we needed a plurality of funding for the NHS. I understand the arguments that he put forward but I should make it clear that the Government have no plans to introduce any additional charges for NHS services. The NHS constitution states clearly that NHS services should be free at the point of use, except where charges are expressly provided for in legislation. Any decision to introduce new charges would need to be sanctioned by Parliament.
The noble Lords, Lord Rix and Lord Battacharyya, spoke about social care eligibility and the national threshold. In line with the recommendations of the Dilnot commission, the Government are committed to introducing a national minimum eligibility threshold. This will ensure that everyone has a minimum entitlement to social care, wherever they live, but councils will be free to provide services beyond the minimum level and there is no sense in which we are asking councils to be less generous.
The noble Baroness, Lady Hollis, spoke about local authorities facing 50% cuts. I recognise that local government has faced tough constraints on budgets but I do not recognise the 50% figure. Over the past four years of the current spending review, local government spending was forecast to fall by 14% in real terms and DCLG has calculated that this will fall in 2015-16 by a further 2.3%. It was that context that led us to take the decision to make significant additional resources available from the health budget to social care.
I am afraid that time is now against me. I have much more to say, particularly to my noble friend Lord McColl, who raised the extremely important subject of obesity, to the right reverend Prelate the Bishop of Derby on harnessing the voluntary sector to deliver more care, and to the noble Baroness, Lady Boothroyd, on NHS charges for migrant and visitor access. However, I fear that I will have to address those points in a letter.
I hope that this debate has brought it home to all of us, as it has to me, that the challenges facing us in ensuring that we have a sustainable, high-quality NHS for tomorrow and the long term, will occupy us for some time. They are issues that the Government in no way seek to avoid in our stewardship—which we are privileged to have—of this precious and valued national asset, the health service.
My Lords, first and foremost, I thank all noble Lords who have taken part in this stimulating and brilliant debate. I am not biased, but it has been one of the best debates this Chamber has ever had. Some really serious thought has been given to how we might avert the crisis that may be happening in the NHS. Kenneth Clarke said, surprisingly, that:
“Every Secretary of State for Health will find they are trying to walk up a downward-going escalator”.
Despite that, he continued to say that it would be sad,
“if we gave in to the siren voices saying that an NHS largely free at the point of use can’t last”.
The NHS will last and we just have to find the means of making sure that it does. There is an issue about the demand and supply side. We need to address the demand side, a point made by many noble Lords, as well as on other issues. I see that the lawyers are gathering, and if I do not give in to them, I fear my fate.