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Allocation To Regional Health Authorities

Volume 131: debated on Wednesday 13 April 1988

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`It shall be a duty of the Secretary of State each year to

allocate to each Regional Health Authority and to each Family Practitioner Committee in England an allocation sufficient to meet the costs of existing services, including the increase in costs arising from pay rises and price inflation on National Health Service purchases.'.— [Mr. Fearn.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second Time.

New clause 22 seeks to establish the principle that the Government have a duty to maintain the funding of the NHS at least in real terms. That has not happened in the past. Despite Government rhetoric, often at its most strident during Prime Minister's Question Time, the fact is that the NHS is suffering from cumulative underfunding over the years.

For example, the Government have repeatedly argued that their so-called efficiency savings are the same as providing new money for the NHS. That is palpably untrue. The repeated failure of the Government fully to fund NHS pay awards to which they have consented and their failure to recognise the full effect of price rises in NHS supplies have meant that health authorities have been squeezed. People working on the ground know from their own experience that the Government's claims do not reflect reality.

Moreover, there are particularly regional problems. The principle of equalising the level of health service available throughout the country is correct, but whereas the resource allocation working party strategy was established on the assumption that the provision would be levelled up, the Government have turned it into a matter of robbing Peter to pay Paul.

The new clause would prevent the worst effects of Government policy. I should have liked to write into the new clause a duty for the Government to fund the additional demands for services from the increasing number of elderly people in the population and for improving clinical techniques, generally estimated at about 2 per cent. per year at present. However, the drafting of such a provision would inevitably be complex and almost certainly flawed. Therefore, I have compromised by including the words "at least".

The formula set out in the new clause is not intended as a ceiling; it is merely a floor. The purpose of the new clause parallels that of the so-called Rooker-Wise amendment for personal taxation. It sets a basic demand for NHS funding, any breach of which would require primary legislation. We believe that the extra protection which would result from the fear of adverse publicity will protect the NHS generally, and each regional health authority and family practitioner committee in particular, from the worst potential effects of Government policies. I commend the clause to the House.

One effect of the new clause would be to impose on the Secretary of State a statutory obligation to anticipate the effects of NHS pay and price inflation in determining the financial allocations to regional health authorities and family practitioner committees. No sensible employer would ever guarantee to pay in advance all and any pay bill without knowing what it amounted t o. We await the reports of the review bodies on pay, and when they have reported and the various details have been gathered in my right hon. Friend the Prime Minister will make a statement.

Generally speaking, the hon. Gentleman should be aware that the new clause, which we reject, would signal a return to volume planning throughout the public sector. The success of the Government's medium-term financial strategy, in particular the reduction of public expenditure as a proportion of gross domestic product, is based on the discipline of cash planning and the adherence, wherever possible, to cash limits.

12.45 am

If accepted, the clause would reduce the Government's flexibility in reaching decisions on public expenditure programmes as a whole by pre-empting money for the health services ahead of, for example, programmes for pensions, and would remove the cash planning controls that have been such a successful feature of the Government's management of the economy.

In any event, the clause is not practicable. The effects of pay and price inflation cannot be measured until after the end of the financial year in question. My right hon. Friend the Secretary of State could, therefore, perform the statutory duty that would be imposed on him by the clause only by ensuring a substantial margin of over-provision.

There has been concern about the uncertainty created because health authorities enter the financial year before the review body recommendations are finalised. We have responded to that. As the Chief Secretary to the Treasury announced on 24 February, the Government are taking steps to change the timetable from 1989 for deciding the pay review body awards to provide greater certainty for health authorities when they draw up their budgets. We hope that decisions on the 1988 awards will be macle shortly, but in future years the timetable will be brought forward and we hope that decisions will be announced by the end of January.

The basis of the Government's economic strategy to which I have just referred has given us the low inflation and rapid growth which have enabled us to fund the National Health Service to record levels, to employ record numbers of staff and to look after record numbers of patients, both inside and outside the hospital service.

The new clause is uncalled for and not practicable, and I urge the House to reject it.

Question put and negatived.