NHS Finances

Part of the debate – in Westminster Hall at 10:29 am on 14th March 2006.

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Photo of Steve Webb Steve Webb Liberal Democrat, Northavon 10:29 am, 14th March 2006

May I begin by joining others in congratulating my hon. Friend Andrew George on securing the debate? He is known across the House as a doughty fighter for Cornwall, and he has demonstrated that again this morning.

Let me pick up from where my hon. Friend John Hemming left off. In a typically terse and effective contribution, he highlighted the kernel of the problem, namely that nobody objects to financial discipline and rigour when huge amounts of taxpayers' money are being spent, but that those on the front line and the people who manage our hospital finances are faced with permanent revolution. As many colleagues know, there is an attempt in local government to give longer-term stability through two or three-year budgets. The way things are going, the NHS would like three-week budgets.

To expand on the example given by my hon. Friend the Member for Birmingham, Yardley, a letter went out to PCT finance directors on 1 February to say that the purchaser parity adjustment—the adjustment made in cases in which the amount paid is different from the tariff—will be halved next year. So at six or seven weeks' notice, trusts suddenly have millions of pounds more or less than they expected. To pick two cases at random, at about six weeks' notice, South Gloucestershire PCT will lose £3.8 million and Oxford City PCT will lose nearly £10 million. How is the front line, which is accused of being causing the deficits by mismanagement, expected to manage against a backdrop of permanent change? We are told that the system is designed to reward well managed trusts—those that get their deficits under control—yet those that have done so now find that their budgets are to be top-sliced to try to bail out other parts of the system.

In the midst of all that, the kernel of a good idea is trying to get out. That is to say that, given that the NHS has been shockingly unaware of its costs under Governments of both of the two larger parties for a protracted period, the move to sort out the situation, identify what the costs are and reflect them more accurately is a move in the right direction. However, we should not try to sort out in 10 weeks structural imbalances that have been built up over 10 years or more. What have the Government done? Instead of recognising that there are imbalances and developing a long-term strategy to sort them out, they are hastening the process of reform by bringing in and standardising the tariff prices more quickly. That is a strange reaction to the imbalances.

David Taylor, in an unusual display of loyalty, said, essentially, "What is £800 million among friends? It is not a big percentage." However, it is a mistake to net off the surpluses against the deficits, because the fact that there is a surplus somewhere in the country does not make life any better for the place that has the deficit. The gross deficit is therefore bigger than the figure that he cited. We have heard from my hon. Friend the Member for St. Ives about the front-line impact of the imbalances.

It is possible to get hysterical about all this, and I accept that it is important to keep the issue in context. However, we have to accept that there is a serious problem if front-line services have to be cut, and local people cannot plan because they do not know from one week to the next what their budget is going to be next year.

Tony Baldry, who is no longer in his place, mentioned over-trading. The situation is surreal: the NHS is being driven to be more efficient, do more operations and get waiting lists down, but when it does so, it is told that it is working too hard, doing too much and causing problems and needs to slow down. We have all heard of examples. Through the Liberal Democrat website, libdemnhswatch.com, we have heard of instances that occurred earlier in the year of sessions being cancelled and people being told that they could not run their clinics. Waiting time maximums are turning into waiting time minimums. In other words, people who could be seen quicker because there is capacity in the system are being turned away and NHS facilities are lying idle because the money has gone and more cannot be spent until 1 April. That is mismanagement on a grand scale. However, it is not happening at a local level predominantly; it is happening at central level.