Clause 66 - The NHS payment scheme

Health and Care Bill – in a Public Bill Committee on 23 September 2021.

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Question (this day) again proposed, That the clause stand part of the Bill.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

With this it will be convenient to discuss the following:

Amendment 84, in schedule 10, page 197, line 17, at end insert—

“(1A) The NHS payment scheme must ensure that the price paid to any provider of services which is neither an NHS Trust nor an NHS Foundation Trust cannot be different from the price paid to an NHS Trust or NHS Foundation Trust.”

This amendment ensures payment to private providers can only be made at tariff price to prevent competition for services based on price.

Amendment 100, in schedule 10, page 197, line 17, at end insert—

“(1A) NHS England must obtain the agreement of the Secretary of State before publishing the NHS payment scheme.”

This amendment ensures that the NHS payment scheme, which sets out the prices to be paid for NHS services, is approved by the Secretary of State.

That schedule 10 be the Tenth schedule to the Bill.

Photo of Karin Smyth Karin Smyth Labour, Bristol South 2:00, 23 September 2021

It is a pleasure to see you in the Chair this afternoon, Mr McCabe. You missed the start of an exciting debate about the NHS payment system; I am sure you are grateful not to miss the end of it.

The complexities of NHS funding are hardly mentioned in the Bill, and some hon. Members may think thank goodness for that, but I urge them to take a bit more account of clause 66—as my hon. Friend the Member for Nottingham North has said, it is a short one—because we are talking about over £100 billion of taxpayers’ money, rising to 40% of the Government’s annual spend. It is particularly important that we understand how and where that money is spent and to be assured that it is spent effectively and efficiently.

In large part because of the data collection journey that it has been on for some 20 or 30 years, we know that the NHS is the most efficient system we could have, as has been reviewed in numerous reports during that time. We have ways of looking at variations across the country and across a city such as my own, and that can only be a good thing. There are people—I am not suggesting there are any in this Committee Room—who think the NHS is a continuous money pit, is inefficient and could be operated better in another way, and part of understanding that argument is to understand the data and the way in which the money is spent, particularly the costings.

As I said in my earlier intervention on the Minister, about the process that has now been embarked on of producing a payment system, this clause is really important and really quite concerning. We have no idea when this payment system is going to be available.

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

Before the hon. Lady asks more questions, I may be able to reassure her by adding to what I said this morning as I have now discussed this further. I said “expeditiously”; I am willing to go further on the Floor of the Committee Room now and say that I would expect the scheme—I may be creating a hostage to fortune—to be published in the course of 2022. I hope that gives her a little reassurance; she will now hold me to that.

Photo of Karin Smyth Karin Smyth Labour, Bristol South

There is an army of accountants out there suddenly looking at their abacuses and speeding up the work they are doing.

My hon. Friend the Member for Nottingham North mentioned coding. The basis on which we know how much things cost—we can then compare things, look at efficiency and so on—is coding. We know there has been some up-coding over the years, but we also know that it took a large effort to train up and try to reward coders, who are often the lowest of admin staff, to recognise how important they are to the system.

Part of that was a drive for competition, payment by results in foundation trusts and so on, but it seems that that is all going to be swept aside by the Bill in the interests of co-operation—that is another word for collaboration, which is something we all support. I do think that running through this Bill is a problem of throwing the baby out with the bathwater. In the 1970s and early 1980s, the NHS really had no idea what things cost and what value they brought. We had no way of objectively understanding how scarce resources were being allocated. In a publicly funded system, that should worry us all, particularly as we in Parliament are the guardians of the public’s money.

We can argue about how much money will be saved by not having the current system. I am not sure that much money will be saved by abolishing the current system, although the Minister may be able to assure us about this point today. I gently advise the Minister and the Secretary of State to take a great deal of interest in this and consider how the NHS will produce such a system in 16 or 17 months at the maximum, as we have just heard. The data on which the system is predicated—the collection of that data, and the use of it to inform clinical and managerial practice—will continue, but, without the incentives around competition and price and the competing agenda of recovery and the management of large hospitals in particular, it will be quite a tall order.

The Secretary of State and the Minister might want to look at the issue in a bit more detail. The Minister outlined quite a complicated process about how we will get to this scheme and a lot of consultation. Although I am all for democracy, as we embark on our conference season the Minister might want to consider at some point why a scheme should go out to quite so much review and consultation by the providers in the system.

Perhaps I could say something here about how the issue affects our local system. When we start to iron it all out and see the impact assessment on the impact—classic NHS terminology—on our local communities, there will be, for want of a better phrase, a bun fight in all our local communities. Again, as my hon. Friend the Member for Nottingham North outlined earlier, when we talk about payment by results it is, of course, acute sector trusts that are the major drivers. Mental health, learning disabilities, community services, and GP services are outwith some of that funding scheme.

Many providers then wanted to come on to the system because they felt that it was more rewarding financially and better for their bottom line. The fact that those services are outwith the scheme remains a problem. I can see why the Government want to change that, but it is not quite as simple as they might want to make out. My hon. Friend has talked much about whether we start competing on price, but now that we know that competition on price is not being permitted, that does throw out a lot of other issues, particularly those around the procurement system.

With regard to amendment 84, the Minister made reference to independent sector treatment centres and incentives for getting the private sector in under previous Governments. We can all banter about the politics of that, but the key task for the Labour Government was to incentivise and change practice in a monolithic system, to drive down waiting lists and times. The question that I leave hanging for the Minister is, given the movement to a new payment system, how will the patient voice, waiting times and waiting lists be managed and incentivised in a central block payment system, which is what I think we are looking at?

Furthermore, with regard to our amendment, the private sector, having no responsibility for education, training and the large crumbling estate, should be able to offer any kind of services at a lower price than the NHS by any logic of efficient running. Ensuring that it is not offered more is the very minimum that we should be demanding. Given that the private sector should have a lower-cost base than the public sector, perhaps it should offer a cheaper price.

Does the Minister have a view on whether paying by results will be anywhere in the new system? Are we to continue following the changes made during covid, by which I mean the block grant system, which allows for baseline costs, a bit of variation for the population, and perhaps some deduction for efficiency and top-ups for various programmes—a bit like the old days when we mysteriously drew down pots of money from the centre for various programmes across the country? What is the balance between that block funding, payment by results and programme funding? Will there be an assessment of the impact of this change, particularly on reducing lengths of stay, as a measure of efficiency in the system, or on reduced waiting times and waits for diagnostics?

It would be good to nail down a few of these key principles in the Bill. The Secretary of State should really approve any scheme and give Parliament a look in; we should understand, as local representatives, what the impact is on our local system and whether we are gaining or losing money, or whether this is just £100 billion-plus going into a central pot and then seeing what happens—that cannot be sustainable.

Private providers should certainly have no say in the rule-setting, as this is a public service; if it is not a market, it is not a market. We are going to be able to debate this only when we know what it is. Given that the Minister has given a big push to the abacuses across the country, with a deadline of somewhere in 2022, for a Bill that we are expecting to put into a new system for April 2022, this situation is not satisfactory for us as representatives. There must be some way—perhaps this will be debated when the Bill leaves this place—for us to understand the broad principles and criteria. We know that there is going to be guidance from NHS England, but if it is going out for consultation, re-consultation and re-consultation, then redrafting and at some point the Secretary of State is going to see it, at some point Parliament should have a say or have a look at that and we, as local representatives, should understand what the impact is on our local communities.

We should also understand what the impact is on the balance between the acute sector, and the community and primary sector—and mental health and learning disability services. Another real concern about the Bill, which I will keep referring back to, is the cartel between the acute trusts and this new integrated care board, and the cutting out now of GP primary care commissioners, and the rolling back on the aims of the primary care trusts to switch the movement of the NHS to be focused not just on the money and where the big money is being spent, but on the service for patients and the public.

The crucial point for the Government will be: how are they going to use the financial mechanisms that exist to recover the backlog and put the NHS back on an equal footing? We have been asked to pay more for the new part of social care as well. As we continue to ask our constituents, the taxpayers, to pay more for what is a good, efficient service that does use its money well—we know that and we want to keep knowing that—how are we going to be able to persuade them of that in the future if we have this amorphous block allocation of money and no incentive to keep focused on efficiency and, in particular, on data collection?

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

It is a pleasure, once again, Mr McCabe, to serve under your chairmanship. I fear I may not persuade Opposition Members not to press amendment 100—but you never know, so I will try my luck. The hon. Lady made a number of points and I responded to one when she kindly took an intervention; the only caveat I should add is that that, as she has alluded to, is subject to the passage of this legislation. I would not wish to pre-judge the mood of this House. With that in mind, the aim would be to publish in 2022, in time for the start of the 2023-24 financial year, to allow those systems to do the work they need to do.

The shadow Minister, the hon. Member for Nottingham North, asked, “Why use clause 37?” I think he was referring to the clause rather than me as being a “blunt instrument”—well, I will charitably assume that he was. The reason is simply that the setting up of the payment scheme is an operational issue, and in practice—I will turn in a moment to the strategic, broad points the hon. Lady made—we would not expect to intervene in the day-to-day running of the NHS as a matter of course. However, the hon. Lady is right to say that the payment scheme and the mechanism for payments is a powerful incentive to shape activity and how the NHS operates. I can reassure her, I hope, in one respect: I will certainly take a close interest, within the bounds of appropriateness, as will be set out in the Bill and the guidance underpinning it, in what the payment schemes look like. She is right in terms of the impact. She is also right—again, this could be career limiting; I hope the Whip does not note this down—to highlight some of the levers and mechanisms that the previous Prime Minister, Tony Blair, used in the early 2000s to make sure the money that he was investing in the NHS was driven through system and producing results.

I hope I can give the hon. Lady some reassurance that among those I have worked with and talked with in recent months are Matthew Taylor and Michael Barber, both of whom were a key part of that Prime Minister’s delivery strategy and approach. I listen very carefully to what they say, as of course I do to what the hon. Lady says. We may not be accepting amendment 100, but what I can say—I hope this will not necessarily prevent her from pressing it to a Division, but that it gives her some reassurance—is that I always reflect very carefully after these sessions on the particular points she makes, because she does know of what she speaks. I will continue to reflect very carefully on the points she makes in this context.

On clause 37, blunt or otherwise, we will continue to work closely with NHS England on the development of the payment scheme through existing accountability arrangements so that it aligns with the Government’s wider financial and incentivisation priorities for the NHS. I do not think that Secretary of State approval for small or minor changes to the scheme would be in line with the spirit of the Bill, in terms of operational freedom and flexibility for the NHS, but the power of direction under clause 37 does, I believe, provide a strong safeguard should it be needed. That is why I think it is the most appropriate mechanism. We may differ on what is the appropriate mechanism, but I hope we might agree that there needs to be some mechanism by which that power could be exercised and we would use clause 37. We may differ on that, but I think we have possibly come from the same position and are diverging only on the means.

The shadow Minister and the hon. Lady raised payment by results. The wider changes in the Bill, which we have discussed on a number of occasions, seek to facilitate a move to greater population health management. Therefore, as part of the payment scheme, we would expect greater incentives for commissioners and providers to focus on prevention and early intervention. I recognise that activity-based payment schemes such as payment by results do have value, as the hon. Lady suggests, including in reducing waiting times when used properly. Commissioners can still use payment by results should they wish to do so. The payment scheme simply gives local areas a greater degree of flexibility on how they want to use payment structures.

On consultation and engagement, I take the hon. Lady’s point but I think, reflecting her other points about how important this is, that the level of consultation and engagement suggested is inappropriate. She mentioned conferences and I wish her a lively conference, but hopefully an enjoyable one in tandem with that.

The hon. Lady mentioned the role of Parliament. We would not lay this before Parliament in that sense, but it would be published and of course MPs would be able to table questions, secure debates and potentially even table urgent questions on it should they so wish. The mechanism is there for that scrutiny.

I want to make a final point, if I may, on the macro point about waiting lists. The context is that we are now seeking to recover waiting list times and reduce waiting lists following the impact of the pandemic on elective and other procedures. As I said earlier, I hope to give the hon. Lady some reassurance in saying that as a historian I pay heed to the lessons of the past in tackling the issue. I am looking at what the former Prime Minister did to tackle waiting lists—a different context, but the principles are the same. I believe that quality should be key: that should always be the paramount consideration.

We believe that this mechanism, coupled with our elective recovery strategy, will deliver a reduction in waiting lists and waiting times, but I will continue to reflect very carefully, as the shadow Minister suggested I might, on amendment 100 and on the hon. Lady’s points. Although we cannot accept the amendments today, the underlying points she makes are valid and I will continue to reflect on them very carefully. On that basis, I commend the clauses and the schedule.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak 2:15, 23 September 2021

Mr Norris, before we go to the vote I want to give you an opportunity to respond, particularly on the amendments, so we can be clear about what you are up to.

Photo of Alex Norris Alex Norris Shadow Minister (Health and Social Care)

I will give a quick indication, if that is okay, Mr McCabe. I take what the Minister has said about amendment 100, and I hope that he will continue to reflect on it. At many points, the Bill reserves specific powers to the Secretary of State, but if we do not need to do so, because the Government can just use clause 37, why on earth would we ever do that? I actually think this would be a very suitable place to do it, but on that basis, I will not press amendment 100. I would like to push amendment 84 to a vote.

Question put and agreed to.

Clause 66 accordingly ordered to stand part of the Bill.