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NHS Finances

Part of the debate – in Westminster Hall at 10:26 am on 14th March 2006.

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Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley 10:26 am, 14th March 2006

I thank my hon. Friend Andrew George for arranging this debate. I also thank you, Mr. Amess, for calling me to speak, and I know that I have to end at half-past 10. I had not intended to speak, but when I saw how few Members were intending to participate, I thought that I could perhaps get in.

I particularly congratulate Mr. Lancaster on identifying all the key points that are causing a major crisis in the finances of the health service. Tony Baldry mentioned purchaser protection adjustment, and there is also the top-slicing of primary care trusts and the fact that we do not yet know what the tariffs will be. It is important to understand what impact that can have on hospitals.

There are certain ways in which trusts can press a button and get money from their PCTs. Some PCTs are finding that unusual things are being diagnosed and that that benefits the trusts. We cannot complain when trusts do that—they are simply using the processes that exist—but it puts other PCTs under financial pressure.

The top-slicing varies. The initial figures were between 2 and 6 per cent. and will perhaps end up at 1.5 or 2 per cent. The purchaser protection adjustment may be 2 per cent. For my trust, it is 2 per cent. this year, 3 per cent. the year after and 4 per cent.—compared with the current financial year, of course—in the subsequent year.

The big problem is that things are done at the last minute. Anyone who does financial planning in the public sector needs time to plan. In that respect, Ministers have responsibility for the shambles that they are creating in the health service because they are signing off last-minute changes to the finances. A large part of those finances are difficult to change, so those parts that can be changed suffer greater changes, and emergency care is one of them. Obviously, certain people put a greater demand on emergency resources, so a lot of effort will go into them.

It has recently been argued that managers should be sacked without compensation if they fail to manage finances—that is, they will not get a peerage. However, we really have to ask whether Ministers should be sacked without compensation for putting us in the current situation, because this is the calm before the storm. It is no good the Government saying, "It's all about local decisions," because it is not. The Government claim credit for putting lots of money into health services and say, "Isn't it brilliant?" They then cut the amount available and say, "It's nothing to do with us, guv—it's all to do with local decisions. You've closed the hospital. You've got to balance the books." However, the fact is that last-minute changes are causing the crisis.

Payment by results is turning into a massive shambles across the country. There are last-minute changes, there is no co-ordination and people have no time to plan. Frankly, we have to look very carefully at top-slicing and payment by activity, which is about £320 million across the country. If we reverse that, there is a better chance of doing something over the next year. Otherwise, everything will be a total mess.