National Health Service Financial Overview

– in the Scottish Parliament on 30th October 2018.

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Photo of Kenneth Macintosh Kenneth Macintosh Labour

We move on to a statement by Jeane Freeman, the Cabinet Secretary for Health and Sport, on a national health service financial overview.

Photo of Jeane Freeman Jeane Freeman Scottish National Party

I welcome Audit Scotland’s recommendations as set out in its recent annual “NHS in Scotland 2018” overview of the national health service. Indeed, the Scottish Government has already taken decisive action to deliver them. They highlight the challenges that our health service faces, which are similar to those that are being faced by health services across the United Kingdom and beyond. Importantly, the report acknowledges that our committed workforce has continued to deliver high-quality care. Today, I pay tribute to all our health and social care staff, who deliver outstanding services, day in and day out.

As the Auditor General recognised last week,

“demands on the service from Scotland’s ageing population are growing”.

For example, since 2013, we have seen 13 per cent more cancer patients receiving treatment under the 62-day referral standard, and increases of 26 per cent in computed tomography scans, 34 per cent in magnetic resonance imaging scans, and more than 15 per cent in child and adolescent mental health services patients. That is a small snapshot of the additional demand with which our health service is coping.

In addition to demographic change, we face price pressures and rising expectations. However, as the First Minister said last week:

“The task for us is not just to describe the challenge”—[

Official Report

, 25 October 2018; c 14.]

—it is to put the solutions in place. That is exactly what the Scottish Government is doing.

On 4 October, I published the “Scottish Government Medium Term Health and Social Care Financial Framework”, to give more detail on the potential approach required to deliver a financially balanced and sustainable health and social care system now and for the years ahead. Last week, I published our “Waiting Times Improvement Plan”, which will see more than £850 million of investment through phased, focused and decisive action to secure substantial and sustainable improvements in performance. Solutions will be different in different areas of the country and in different specialties, but the drive for improvement is national in scope, requiring a focused, intensive programme of work that accelerates action that is already under way.

From my statement on 4 October, members will be aware of my commitment to facilitate a new planning and performance cycle for all NHS boards. Audit Scotland has recommended that that is supported by a robust and transparent financial management system. That is exactly what we intend, and further detail on the new approach will be provided as part of the 2019-20 budget. The new arrangements will require boards to deliver a break-even position over a three-year period, rather than annually as is the case currently. In each year, boards will have 1 per cent flexibility on their annual resource budget, to allow them scope marginally to underspend or overspend in that year.

In its report, Audit Scotland recognised that a range of work was under way to strengthen governance arrangements, including piloting a standardised review of corporate governance across all boards. The review of NHS corporate governance that was carried out by John Brown and Susan Walsh will enable us to pursue the adoption of good practice across all boards. Yesterday, I met our NHS board chairs and tasked them with implementing those recommendations by the end of this financial year. Our review of progress with integration will report in the new year and will consider areas in which integration is working well, along with any in which governance and accountability can be improved. We are also committed to ensuring that all non-executive members of boards have the necessary training, skills and expertise to fulfil their roles effectively. We are addressing issues on leadership positions: project lift is a new approach to recruiting, retaining, developing and managing talent in NHS Scotland to ensure that the very best and most able leaders reach boardrooms.

Audit Scotland’s report recommends the development of a national capital investment strategy. I agree, and members will be aware from my statement on 4 October of my commitment to bringing a capital investment strategy to Parliament by the end of this financial year. The new strategy will create a framework considering necessary investment over the longer term and will accompany the medium-term health and social care financial framework to create an integrated overview of the funding that is needed across Scotland’s health and care system. It will include important investment in primary and community care projects, which will be key in delivering the emerging health and social care integration agenda and shifting the balance of care from hospitals to local facilities and people’s homes.

Audit Scotland recommended that a clear understanding of demand and capacity should inform workforce planning. Again, I agree. Our fully integrated health and social care workforce plan, which we will publish by the end of this year, will encourage all health and social care providers to adopt a comprehensive approach to workforce planning in order to ensure that workforce resources are deployed as efficiently as possible.

Finally, I welcome Audit Scotland’s recommendation about publishing clear and easy-to-understand information on how the health funding system works, including information about levels of spending. The Parliament knows that we are committed to ensuring transparency on health funding, and that we have recently introduced regular reporting of the financial position of NHS boards and integration authorities. That is essential in providing the clarity that is necessary for the important discussion that we will need to have about the future shape of our NHS and social care services.

Our financial framework was predicated on what I described in an earlier statement as

“the perhaps bold assumption that the UK Government will honour its commitment” and

“deliver the consequentials as a true net benefit”.—[

Official Report

, 4 October 2018; c 50.]

I regret to tell the Parliament that the UK Government has failed to keep that commitment. I am very disappointed that yesterday’s UK autumn budget confirmed that the UK Government would short-change Scotland’s NHS by a total of £54.5 million next year, and by more than £270 million over the period to 2023-34. That the UK Government has short-changed our health service by £54.5 million, compared with its claimed level of consequentials in the summer, is an insult to our NHS and the people who depend on it.

In addition, the UK Government has not set out the consequential funding that would be delivered beyond next year, leaving open the possibility of the NHS funding commitment being further eroded, not least as the Chancellor has more than hinted at the potential of a totally revised budget from the UK Government as a result of its crashing us out of Europe with a no-deal Brexit.

Notwithstanding that disappointing—but, regrettably, not surprising—step by the UK Government, the Scottish Government remains committed to channelling every penny of health consequentials into Scotland’s health service. I can assure members today that, despite the actions of the UK Government, we remain committed to our programme for government promises and to our recently announced waiting times plan.

Returning to the Audit Scotland overview report, it is understandable that, due to the timing of the report, Audit Scotland was not able to fully reflect that the framework sets out additional funding for the health portfolio of £3.3 billion by 2023-24. That expected increase would mean an annual growth for the health portfolio of 2.9 per cent in real terms. As Audit Scotland’s report says, the Fraser of Allander institute predicts that the health resource budget is likely to have to increase by around 2 per cent per year to stand still. That is a vital point about funding and sustainability, which is not reflected—again, understandably—in Audit Scotland’s report.

I welcome the annual contribution from Audit Scotland. I accept the recommendations in full and, as I have set out in this statement, I am taking the steps necessary to ensure that the challenges are addressed. We have a record number of staff, record funding in excess of £13 billion this year and even more investment planned by the Scottish Government. Although essential, that will not be enough, and we must continue to follow our twin approach of investment and reform. I now look forward to working together with colleagues across the chamber in a responsible and mature manner to deliver that, and to ensure a balanced and sustainable health and social care system for the years ahead. I commend this statement.

Photo of Brian Whittle Brian Whittle Conservative

I thank the cabinet secretary for giving me advance notice of her statement.

Another week, another ministerial statement on health—perhaps the cabinet secretary and the Scottish Government are waking up to the fact that they have been failing the NHS over their 11-year tenure. If the Scottish Government had been paying attention to the day job, the cabinet secretary’s statement that we have an ageing population would hardly have come as a surprise.

We have a shortfall across Scotland of some 850 general practitioners. Last week, the cabinet secretary announced an extra 400 training places—training that takes seven years to complete. I am afraid that that remains a shortfall. That is hardly prudent workforce planning and does not even take into account any future trends.

The fact that such a high proportion of our nursing staff are approaching retirement age was hardly difficult to work out and plan for. Nonetheless, in 2012, the then cabinet secretary for health, Nicola Sturgeon, cut training places for our nurses and midwives. That was short-sighted, and we are seeing the consequences on the wards today.

The cabinet secretary says that there is record investment in our Scottish NHS, but conveniently fails to mention that that is as a direct result of Barnett consequentials. Yesterday, the Scottish Government was handed an extra nearly £1 billion, and it has complete autonomy to spend that as it sees fit. We know that the Scottish NHS will get an extra £214 million this year and a further £720 million next year.

The damning Audit Scotland report on the state of NHS finances states that, after 11 years of SNP Government, NHS Scotland’s performance in meeting key targets is in a downward spiral because the current model is not “financially sustainable”. Will the cabinet secretary ensure that the funding boost from the UK Government will go directly to the NHS, or will she continue to follow the Scottish Government’s usual pattern of finding a grievance for every solution?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

I am always happy to come before Parliament and talk about our health service. It is a successful service and represents an excellent track record on the Scottish Government’s part.

I am disappointed, however, that Mr Whittle is surprised that we have an ageing population. The Scottish Government has been talking about that for some time and has taken the steps that I have outlined. It really is a pity that people do not listen, read and pay attention. On the back of the Government’s track record, I have already taken steps to further address the challenges that are placed on the Scottish NHS—and on other health services across the UK—both by that ageing population and by other challenges.

What is different is that the Scottish Government has plans in place and action under way to address those challenges. My colleague Mr Mackay has said, and I have repeated, that every penny of the health consequentials will be invested in health by the Scottish Government. We have a track record of providing increased investment in our health service over many years. That is a question of political choice; it is not thanks to the UK Government continuing to cut the overall budget that is delivered to the Scottish Parliament and the Scottish Government. The Scottish Government, and its political choices, is so much more in tune with what the people of this country need than a Tory Government will ever be.

Photo of Monica Lennon Monica Lennon Labour

Audit Scotland has delivered a damning report on 11 years of Scottish National Party mismanagement of our NHS that should shame the Government. Under the SNP, the future of our NHS is not financially sustainable. The SNP cut the health budget in real terms last year, despite rising waiting times and rising staff stress levels.

Photo of Monica Lennon Monica Lennon Labour

Audit Scotland. The Cabinet Secretary for Finance, Economy and Fair Work should read the report.

Photo of Monica Lennon Monica Lennon Labour

The serious challenges that face our NHS require action, not more of the same broken promises from the SNP.

Jeane Freeman’s grand plan to improve waiting times will continue to break the law for years to come. It hardly inspires confidence. Today’s statement does not reveal a plan for the future of our NHS. It is damage control. Jeane Freeman said last week that her predecessors Nicola Sturgeon and Shona Robison failed to keep their promises on the NHS. Why should the people of Scotland believe that this cabinet secretary is any different?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

I am grateful to Ms Lennon for her questions. I start by clarifying that Audit Scotland did not say that this Government has cut NHS investment. That really is important. I am genuine in saying, as I have said since the day and hour when I was appointed Cabinet Secretary for Health and Sport, that I look for a mature and responsible discussion, and the starting point for that has to be accuracy in what we say.

I am disappointed that the medium-term financial framework appears not to have been read. I made the point—and Audit Scotland recognises this—that it came after the time when Audit Scotland could have taken full account of it, but the medium-term financial framework clearly shows the intention to invest in the NHS in Scotland beyond the amount that the Fraser of Allander institute anticipated will be required simply to stand still. The medium-term financial framework also makes clear that what we need is investment and reform. We already have reforms under way, and we have significant investment under way.

We undoubtedly have challenges, and I have been very honest in recognising those and setting out to deal with them. The big difference between those of us who sit on these benches and those who sit elsewhere in the chamber is that we face up to those challenges and have a plan in place. What we do not have are manifesto commitments that would cut our budget for the NHS and reduce the number of nurses, or the current commitment from the Labour Party at UK level not to reverse the tax cuts for the rich that the Tories want to impose.

If we are looking to see who the electorate will believe, I believe that they will put their trust in us—as they currently do—as a Government that delivers, because we understand the reality of the situation that we need to deal with and we have the plans in place to deal with it, not the slogans that we get from either side of us in the chamber.

Photo of Alison Johnstone Alison Johnstone Green

The increase in agency staff costs over the past five years has been staggering. There has been an unsustainable 38 per cent increase, with almost £166 million being spent last year alone. That is not a new problem and we cannot wait until spring 2020 for the Government’s recruitment framework. I would like to understand what the Government is doing now and what it intends to do in the immediate future.

Photo of Jeane Freeman Jeane Freeman Scottish National Party

I thank Ms Johnstone. She is, of course, correct, in that agency costs take up too great a proportion of our budget. That is why the workforce recruitment exercises that we have begun are so important; why we have for the sixth successive year increased the numbers of student nurses and midwives in training; and why we announced—only recently—a significant increase to the non-means-tested bursary for student nurses and midwives, which is unique to Scotland when compared with the NHS in England.

It is also why we have undertaken and supported other initiatives such as the return to practice, which we intend to increase; the transfer course with the University of the Highlands and Islands; the increase in the number of radiographers in training; and the new Scottish graduate-entry medicine course with the universities of St Andrews and Dundee, which is a postgraduate course of a shorter duration that is clinically approved and safe and has a particular focus on GPs in remote and rural areas.

We are taking all those actions and more to address the particular pockets of recruitment difficulty in our workforce, notwithstanding the fact that, as Audit Scotland recognises, the workforce numbers in the NHS in Scotland are higher than they have ever been.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Why is it that, given that it has been two weeks since the worst NHS report by Audit Scotland, there is very little that is new in the Government response today? Workforce planning has been a major long-standing weakness for the Government. Why do we have to wait still longer before we see the workforce plan published?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

We have already published three workforce plans. The workforce plan that I referred to will integrate all those plans so that we are certain that we are taking a whole-system approach. I do not understand why Mr Rennie does not recognise that.

We appreciate that workforce planning is a critical element of what we must do; it is one of the pillars on which our work goes forward. The medium-term financial framework is one pillar; the waiting times improvement plan is another; and another is the move to integrated health and social care. By the end of this parliamentary session, more than £500 million from the front-line NHS budget will be invested annually in integrated health and social care.

I would never underestimate the challenges that we face and I would never say that we do not have more to do, but the starting point for all of us is an accurate reflection of exactly where we are. We already have three workforce plans on the stocks.

The Presiding Officer:

There will be nine more questioners if we get through them all.

Photo of Willie Coffey Willie Coffey Scottish National Party

Given that the Tory UK Government is to short change the health service in Scotland by almost £55 million next year, has it indicated when it will confirm all the health consequentials that it previously claimed would apply through to 2023-24?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

The UK Government has not confirmed when the rest of the consequentials will be announced. That might happen in a spring budget or statement—however the chancellor frames it—but there is uncertainty about whether we will crash out of the European Union with no deal or with a deal that none of us understands and which is totally unclear. A few short months away from that time, the level of uncertainty is a considerable concern for our health service and particularly for our health and social care workforce. We have had no confirmation at all about the rest of the consequentials.

Photo of Edward Mountain Edward Mountain Conservative

I am pleased that the cabinet secretary mentioned governance and leadership—two areas in which her advisers John Brown and Susan Walsh have documented NHS Highland’s failures. I welcome the meetings that the cabinet secretary and I have had to discuss that.

How will the Scottish Government ensure that NHS Highland’s new chief executive, the board’s chair and similar appointments across Scotland provide the charismatic and positive leadership that our excellent doctors and nurses deserve?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

I am grateful to Mr Mountain for the productive discussions that we have had about NHS Highland, which I am sure will continue. We have changed in two ways how we recruit not only non-executive members of our health boards but those who hold key leadership positions.

We are using values-based recruitment exercises, which look at more than one dimension of an applicant who is before a decision-making panel. That approach has been successfully used for the Golden Jubilee national hospital’s board for many years, and it is being picked up for other boards. It considers not only an applicant’s experience, what their CV says and their answers to interview questions but how they perform in other situations. That provides a better and more rounded perception of an applicant, which means that more informed choices can be made.

That is happening alongside implementation of the governance work that

John Brown and Susan Walsh undertook, as Mr Mountain said, which I require NHS board chairs to have implemented by the end of this financial year. The series of ministerial reviews of boards is also about to begin. All territorial boards will have a ministerial review, which will look directly at their governance issues, at where we expect them to improve their performance and at the challenges that they face, on which we might assist them more.

When all that is taken in the round, we will reach the level of leadership that is required across our NHS from our chief executives and our boards, which have the critical and vital role of scrutiny and challenge. I am not sure that I can promise charisma, but I can commit to all the other aspects.

Photo of Emma Harper Emma Harper Scottish National Party

In her statement, the cabinet secretary recognised the increased demands on the health service. In my South Scotland region, we have a particularly large ageing population with increasingly complex health and care needs. Can the cabinet secretary outline what action is being taken to meet the demand of those needs?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

On the ageing population, I will make two points. First, that population as it presents to us is picked up by the additional capacity that the waiting times improvement plan and its £850 million of investment bring into the service and the system in order that they can cope with those additional demands—in particular, in respect of elective healthcare needs and diagnostics—that the ageing population and others place on our health service.

My other point relates to our public health programme and our need to do more in the field of working with mothers before they give birth—hence the element of the mental health plan that Ms Haughey is taking forward around perinatal mental health. Our understanding of the impact of adverse childhood experiences—ACEs—through our work with mothers, babies and children and our work in schools ensures that the generations coming behind us will have healthier lifestyles than we currently have. Therefore, the demands on our health service will change in the future. That is part of what we talk about as a whole-system approach, and it is part of the investment and reform that I touched on earlier.

Photo of Kezia Dugdale Kezia Dugdale Labour

Audit Scotland reported that NHS Lothian missed all eight performance targets and that it was not even close to meeting six of them. The cabinet secretary has quietly sent in a rescue team led by the head of NHS Northumbria; can she advise when that task force will report back to the Government and when staff and patients can expect to see significant improvement?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

The task force is continuing its work and I receive regular reports on its progress. I am pleased to say that—albeit that it has been only a short time and I would not overclaim this—we have seen a small improvement in NHS Lothian’s performance in relation to accident and emergency targets.

I would be happy to update Ms Dugdale—and other MSPs with a particular local interest in NHS Lothian—as the task force continues its work. The approach by the task force is not to go in, look at things, report, and go away again. It is working on the ground with healthcare staff in NHS Lothian and with the management team there to make improvements, which is the right place for it to be.

Photo of George Adam George Adam Scottish National Party

On Sunday, the Chancellor of the Exchequer said that, in the event of a no-deal Brexit,

“frankly, we’d need to have a new budget that set out a different strategy for the future.”

He then promptly forgot about Brexit yesterday. For the record and for the sake of all those who work in our national health service, has the Scottish Government been given any assurances by the UK Government that, in the event of a no-deal Brexit, the UK Government’s commitment to the NHS spend will be kept and not just thrown away in a new budget?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

No such assurances have been given. As I said earlier, that all simply adds to the significant uncertainty that is faced by our NHS staff, on top of the uncertainty among the very valuable members of our healthcare workforce who are European Union nationals. Like everyone else, I have little hope that I will be heard, but I urge not only the UK Government but our Conservative colleagues here to join us in pressing very hard for some sort of resolution from the UK Government. It could start by giving us assurances about the consequentials.

Photo of Bill Bowman Bill Bowman Conservative

Although health boards were last year able to make savings of about £500 million, the Audit Scotland report says that that was largely thanks to one-off measures such as building sales. Further savings will obviously have to be made, and since they cannot come from building sales or, as we saw in NHS Tayside, creative accounting, how will the cabinet secretary ensure that they do not come in areas where they compromise patient safety and patient care?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

One point that I have to make about the savings that are required of our NHS boards is that when boards save money, they will keep that money and are expected to use it for patient services and patient care. I have made it clear to all our boards that, as they look at how to make best use of our resources, patient-centred and quality care must be the number 1 priority. As we monitor the boards’ use of resources and their spending plans and budgets, we will pay careful attention to where they are looking to make reductions in costs in order to apply those funds elsewhere.

The core answer to Mr Bowman’s question is that we need to focus on quality, because quality produces reform and reform produces financial prudence and good use of resources. That is my experience in the health service, and that is what we will do, going forward.

Photo of Lewis Macdonald Lewis Macdonald Labour

The cabinet secretary rightly said that the report is an annual report, but she will know that the Auditor General’s warnings of the need for change have grown more urgent year on year. Given the importance of public engagement in meeting those challenges, does the cabinet secretary agree with the Auditor General that better information is needed on how the NHS uses funding to support change, and that reporting on progress towards vision 2020 needs to be made public? If the cabinet secretary agrees with those views in the report, how will she deliver those changes?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

Those are important questions. I agree with those views. As I have said, I have accepted all the recommendations in the Audit Scotland report. I hope that I will have the opportunity soon to meet the Auditor General to discuss the report and to hear her thoughts on other areas in which we might make improvements in the coming year.

We are clearly committed to transparency of information. We make information public, but that does not mean that we could not do more. I am happy to hear propositions from across the chamber about what more we can do. It is not just about making information public; it is also about making information accessible and understood. Individual health boards and the Government have a way to go in that regard, so I am keen to look at how we might do that.

Photo of Colin Beattie Colin Beattie Scottish National Party

Will the cabinet secretary outline what Audit Scotland observed in its report on the long-term increase in health spending in Scotland?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

On long-term health spending in Scotland, the Audit Scotland report said that the Fraser of Allander institute estimates that the health resource budget is likely to have to increase by about 2 per cent per year in order to stand still. In my statement and elsewhere I have said that the commitment in our medium-term financial framework sets out additional funding for the health portfolio of £3.3 billion by 2023-24, which represents a 2.9 per cent increase in real terms. As I said when I made a statement on that, and when I published the waiting times improvement plan and made a statement on that, that additional funding is predicated on the UK Government coming good on its June commitment on consequentials. It has already failed in the first year, but I hope that it will not fail in future years. We need to know from the UK Government how it will make good the shortfall in the first year, and what it will do in future years, so that we can have a realistic forward look and understand whether either we can make good on our political choices and commitments or the UK Government will let us down, yet again.

Photo of Neil Findlay Neil Findlay Labour

At the weekend, NHS Lothian was exposed for taking in private patients for millions of pounds’ worth of private procedures and diagnostic tests, while NHS patients wait up to 60 weeks and beyond on waiting lists.

Does the cabinet secretary understand how angry at this unacceptable situation are the patients who are waiting with worry and in pain? What will she do about it?

Photo of Jeane Freeman Jeane Freeman Scottish National Party

I have to say that I am not best pleased about the situation to which Mr Findlay has referred. Our NHS boards should deal with private patients only in circumstances in which life is at risk. I understand that the amount of money involved is about £2.2 million, which is not enormous, but that does not lessen my concern about what NHS Lothian has done.

I have asked for details on the circumstances in which the board has dealt with the private sector and treated private patients to see whether it can justify it based on its capacity in services for NHS patients. Once I have heard what the board will tell me, I will decide what to do—with regard to not only NHS Lothian’s board but other boards—so that that there is clarity that NHS resources are to be focused on NHS patients. That is the right direction; treatment for private sector patients should of course be possible when it is a matter of life or death, but I do not expect otherwise to see it in Scotland’s NHS.