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Nhs Administrative Costs

Volume 281: debated on Tuesday 16 July 1996

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To ask the Secretary of State for Health when he last met the chairmen of health authorities to discuss administrative costs. [35785]


To ask the Secretary of State for Health what proposals he has to reduce bureaucracy in the NHS. [35787]


To ask the Secretary of State for Health if he will make a statement about administrative costs in the NHS. [35795]

Our programme to streamline NHS management will release £300 million for patient care over the two years ending next March.

Does the Secretary of State accept that the internal market has proved to be a bureaucratic nightmare, which the British Medical Association estimates costs £1.7 billion a year? Will he confirm that, since the baseline of 1989, 20,000 new managers have been put in post at the cost of 50,000 nurses? Is he aware that the cost of that additional bureaucracy to the people of Hemsworth is £2.6 million? The people of Hems worth want not pen pushers but nurses and better clinical care.

Both the statistics that the hon. Gentleman quotes, although much beloved of Labour Front-Bench Members, are simply wrong. First, the hon. Gentleman says that there are 20,000 new senior managers. As the hon. Member for Peckham (Ms Harman) knows well, even if the hon. Gentleman does not, that is a new classification, which was introduced in the mid-1980s. If Labour Members really believe that there was no senior manager in the health service before 1985, they are in a tiny minority. It is clearly absurd. The 20,000 new senior managers is a nonsense statistic, and the hon. Lady knows it. Secondly, the only way in which the hon. Lady can concoct the statistic of 50,000 fewer nurses is by including trainees in 1984 and excluding them in 1994. If one takes honest figures over those 10 years, the figure is not 50,000 fewer, but 20,000 more nurses.

Given what the Secretary of State has said, why does he think that the BMA and others are so strongly critical of the spiralling costs of administration and transaction? Can he share with me the anger that my constituents feel when they see patient services such as urology services under threat in the local hospital, and when valued local facilities are in danger of being transferred to less convenient neighbouring hospitals? What does he have to say to my constituents about that?

I have two things to say to the hon. Lady and her constituents about administrative costs in the health service. First, those costs have grown because, as the hon Lady's predecessor—the right hon. Member for Derby, South (Mrs. Beckett)—acknowledged, the traditional NHS was undermanaged. Secondly, let us consider how much they have grown. The numbers of administration and clerical staff in the health service have increased by 22 per cent. in 10 years. To put that in perspective, the numbers of medical and dental staff in the health service are up by 21 per cent.—almost the same percentage in the same period. The numbers of professional and technical staff of the health service have increased in the same period by 28 per cent. During that period of growth of investment in management, there has been a 41 per cent. increase in patient treatments in the health service. That is the context that the hon. Lady should point out to her constituents.

When will the Secretary of State recognise that the NHS is now suffering from the disease of bureaucracy, and that its complications include waste and secrecy? For instance, in Gwent, a lady manager's employment was terminated and she received £35,000 in compensation, but a few days later she was re-engaged, at a salary of £39,000 per annum. Surely such money would be better spent on more, and better-paid, nurses and on re-opening the wards that have been closed in recent years?

The problem that the Labour party faces in talking about management and administration costs in the health service is that Labour Members voted against £100 million of administrative savings in the health service when they opposed the abolition of regional health authorities. The hon. Member for Peckham has offered the population a recantation for a mistaken vote on the regional health authorities. She recognises that Labour Members made a mistake in not taking that £100 million and she is now on the verge of apologising to the electorate for their failure to take a £100 million saving that was available.

The Government are well ahead of the hon. Member for Peckham. Not only have we taken that £100 million, but we have put in place clear plans to deliver an additional £200 million—£300 million of administrative savings. The hon. Lady offers a paltry £100 million, which she opposed when the opportunity presented itself.

Has my right hon. Friend received any representations from Labour Front Benchers regarding his 5 per cent. cut in NHS administration costs, which are already amounting to about £140 million? Does he know whether the Labour party thinks that this is too much, too little or just right?

When I announced £140 million extra saving through tight controls on bureaucracy in the health service, as my hon. Friend rightly says, Labour Members dismissed it as too little. Nine months later, they presented a programme designed to deliver not £140 million, but £100 million.

Will my right hon. Friend join me in condemning the incessant attacks on national health service managers? Does he agree that the national health service was undermanaged for many years and that managers are now delivering a more efficient, cost-effective and better health service?

I entirely agree with my hon. Friend. Earlier, I quoted figures that show that there has been an increase in the number of medical, dental and nursing staff in the national health service, and that there has also been an increase in the number of administrative support staff. As a result, patient treatment is growing faster than any of the statistics.

Does my right hon. Friend agree that, in the right circumstances, the best way to save taxpayers' money and to ensure that it goes to patient care is to amalgamate trusts? Can we expect an early and quick decision on the amalgamation of the trusts on the Isle of Wight? We are all in favour of it and we want to see it get under way as soon as possible.

I will not make an announcement from the Dispatch Box this afternoon in relation to my hon. Friend's request. However, I say to my hon. Friend and to trusts that are contemplating merger proposals that there are very few administrative savings available to trusts that merge that are not available to the same trusts if they choose to organise their affairs differently while remaining separate. What I look for in proposals to reorganise patient care is improved patient care, not simply changed bureaucratic arrangements.

Will the Secretary of State admit that even though he promises to cut back on the £1.5 billion in extra bureaucracy, he cannot unless he scraps the system that is creating it: the internal market? Is it not cynical of him to demand fewer managers while promoting a system that requires more managers? Will he admit that the right way to ensure minimum bureaucracy is to scrap the annual contracts, scrap the extra-contractual referrals and the protocol compliance, scrap the hundreds of thousands of invoices every year and scrap the national health service internal market?

On behalf of the hon. Lady's many friends on the Government Benches, I wish her well in her campaign for re-election to the shadow Cabinet. I extend the sympathy of every Government Member to the hon. Lady because of the predicament in which she finds herself. She would dearly love to be able to offer more money to the health service but her Presbyterian colleague, the shadow Chancellor, will not let her do that. He has left her making bricks without straw.

The hon. Lady referred to management costs. One day, she says that £1.5 billion can be saved in management costs, and then I point out that that is more than half the total that we spend; the next day, she cuts the figure to one fifteenth and £1.5 billion suddenly becomes £100 million. The inconvenience with £100 million is that it is one third of the amount that the Government are already committed to save.

Notwithstanding the huge reductions in administrative costs brought about by the abolition of the regional health authorities, will my right hon. Friend confirm that increased administrative costs elsewhere in the NHS have led to better management and to more patient treatments? Will he look at how much further the clerical and paperwork undertaken by hospital doctors can be cut, even if it means employing more administrative staff?

My hon. Friend has raised an important point that is easily overlooked. I have emphasised that there has been a 21 per cent. increase in the number of medical and dental staff in the NHS over the past 10 years. If we do not provide administrative support to those doctors and dentists, they end up doing it themselves instead of delivering patient services. My hon. Friend is quite right: if we want an efficient use of the resources available to the health service, we have to provide administrative support staff as well as professional staff.