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NHS Finances

Volume 455: debated on Tuesday 9 January 2007

The NHS as a whole is on course to deliver net financial balance by the end of this financial year, It continues to cut waiting times and perform well against key service targets. Our quarter three financial report will be published next month.

In 2006 and with much fanfare a shiny new hospital was opened in Gravesend. Given the projected year-end deficit for the south-east, what assurance can the Secretary of State give that the hospital is safe and that services will not continue to go elsewhere from it?

The new hospital to which the hon. Gentleman refers is just one of 70 new or rebuilt hospitals already under way, with many others to come. I hope that he will recognise that the enormous investment that we are making, including in the new heart centre that has just opened at Darent Valley hospital, illustrates the fact that we are investing record sums of money in the NHS—investment that his party opposed. We are not cutting services: we are improving them.

I recently conducted a survey of all local authority chief executives in the UK about the impact of NHS budgets on their local authorities, 25 per cent. of whom said that NHS budgets were hurting them. For instance, Buckinghamshire county council estimated a cost shunt of £670,000 from the health service on to the local authority. Camden is seeing an increase in the number of hours of home care as a result of faster hospital discharges. What discussions has the Minister had with the Department for Communities and Local Government about the impact of NHS finances on local authorities and what action is she taking—

The hon. Gentleman reflects well the need for social services authorities and the local NHS to work closely together to provide even better care for the people whom they look after from both the local government budget and the NHS budget. We have increased both those budgets and my Department works closely with the Department for Communities and Local Government on that score. I hope that the hon. Gentleman will encourage Liberal councillors to ensure that they do not cut social services for vulnerable elderly people.

Notwithstanding the Secretary of State’s earlier replies, I still cannot see how the undoubted deficits in this year’s budget can be made up other than by cutting services. Mine is a predominantly rural constituency, and is she aware that my constituents will not take kindly to any cuts in services at hospitals in Macclesfield, Leighton or north Staffordshire, or at the Congleton War Memorial hospital? In addition, they will not accept cuts in the mental health services, which remain the Cinderella of NHS provision in this country.

In that case, I hope that the hon. Lady will welcome the recent opening of a new day-case unit and a new medical admissions unit at Macclesfield district general hospital where, in addition, a new MRI scanner has been brought into commission. Moreover, we have invested more in mental health services in every part of the country than any previous Government.

Is my right hon. Friend aware that we in Coventry have received enormous benefits from the great investment made by this Government? We have a brand new hospital, and there has also been tremendous investment in mental health services. That continuing success derives in part from the city’s MPs’ ongoing close consultative relationship with the Department, which I hope will continue with her blessing.

During the Christmas recess, did my right hon. Friend have the opportunity to read the Institute for Public Policy Research’s recent report entitled “The Future Hospital”? One element of the analysis stated that, on average, patients stay in hospital a day longer if they are admitted on a Thursday than if they are admitted on a Sunday. What is her estimate of the savings that NHS trusts could make if they corrected that inefficiency, without jeopardising patient care?

I did have the opportunity to see that report. It confirms that the NHS would save nearly £1 billion every year if all hospitals ensured that patients went home as soon as they were clinically ready. That is what the best hospitals do already, and the report provides further confirmation that there can be no trade-off between better care for patients and better value for money. The two things go together, and that is what our reforms are designed to achieve.

What incentives are there for primary care trusts to try and balance their books? My Barnsley PCT has been funded under target for years, but it would have achieved financial balance by the end of this financial year had it not been required to pay £7 million to fund the deficits in Sheffield, Doncaster and Rotherham. How long is that money likely to be held by the strategic health authority?

My hon. Friend makes an extremely important point, which reflects the fact that only a small minority of hospitals and PCTs are overspending. Indeed, 50 per cent. of the NHS’ deficit is concentrated in just 6 per cent. of its organisations, and it is unfair for that minority to overspend at the expense of the majority. That is why we are so determined to ensure that the NHS as a whole returns to financial balance, and that the minority of overspenders put their houses in order by making themselves more effective. They must deliver better care for patients and better value for money, and they must also repay the money that they have borrowed, as in the example that my hon. Friend gave.

What steps is the Secretary of State taking to promote more widely the valuable information contained in the NHS’ quarterly “Better Care, Better Value” indicators? In particular, is she promoting that information to hon. Members, so that they can point out to their PCTs the benefits of prescribing generic statins? Is she aware that, in the league table of prescribing generic statins, the PCTs of two of her colleagues on the Front Bench are ranked 291 and 298 out of a total of 303? If they improve—

Order. I have counted three supplementary questions already, and I think that the hon. Gentleman is about to ask a fourth.

The hon. Gentleman is right; the quality and value indicators that we published last year repay close study. That is why we have made them available on a website so that each PCT and hospital can see where they need to make their services more effective, and how they can improve patient care and free up money for new drugs and new treatments. I certainly commend the quality and value indicators to every Member, because they show, once again, how better care for patients can go hand in hand with better value for the record sums of money that the Government have invested in our NHS.

In tackling the difficulties that some areas of the NHS have experienced with their finances, innovative programmes —such as the one in our accident and emergency department to help older people—are often the first to go, rather than traditional programmes. What can my right hon. Friend do from the centre to encourage innovative programmes, which tackle health inequalities and provide improved access to services, and to ensure that they are not the first out under the last-in, first-out programmes that sometimes seem to happen when dealing with health budgets?

My hon. Friend makes an important point. Sometimes, under the pressure of financial difficulties, local organisations understandably make short-term decisions that may undermine innovative programmes that give patients better care and prevent falls, injuries and disease in the future. They thus help to deliver better care with better value for money. We do not try to micro-manage every hospital and PCT from the centre, but we give guidance—[Interruption.] We do indeed give guidance to ensure that such innovation is supported.

Can the Secretary of State tell us what proportion of the additional money going into the NHS is being absorbed by large pay increases, not for categories of staff in short supply—for whom, as she knows, I have long advocated increases—but for groups of highly paid staff, including consultants and general practitioners who have received increases of between £14,000 and £25,000 a year? Before the increases the General Medical Council was sending out notices headed “Important information for medical graduates”, which pointed out:

“There are an average of 210 applicants for each advertisement for junior hospital posts. Many posts attract over 1,000 applicants.”

In the light of that fact, why were the pay increases necessary?

I am sure that the British Medical Association and its membership will note with great interest the right hon. Gentleman’s desire to cut the pay of both hospital doctors and GPs. I am proud of the fact that about half the additional record investment that we have made in the NHS has gone on additional staff and better-paid staff. In the case of GPs in particular, the reason they are earning so much more with a Labour Government than they were under the right hon. Gentleman’s Government is that they are doing so much more work, preventing so much more illness and caring for patients so much better.

I am sure that my right hon. Friend is aware that Gateshead Health NHS trust is one of five in the country that has innovated and now offers physiotherapy services over the telephone. I am sure that she will agree that that helps to reduce admissions by caring for people in the community, and that through such programmes money can be saved and lives transformed.

My hon. Friend is absolutely right and I very much congratulate the NHS in Gateshead on that innovation. There is no doubt that as more orthopaedic patients receive physiotherapy directly in the community, those who need surgery can also be treated much more quickly in hospital.

May I ask the Secretary of State about trusts that have massive historical deficits, often of more than 10 per cent. of their turnover? Nigel Edwards of the NHS Confederation said that for those trusts

“financial recovery would imply such damage to patients that no sensible person would go for it. They would not compromise the survival of the people they serve”.

Is the Secretary of State intent none the less on requiring those trusts to clear their deficits within a specified period, irrespective of their current financial performance and irrespective of the impact on patient care?

I congratulate the hon. Gentleman on his promotion and welcome him to his new place on the Front Bench.

I have made it clear all along that we expect the NHS as a whole to return to financial balance by the end of the financial year. For the very small minority of organisations with very serious and long-standing deficits, it would be quite impossible for them to return to balance within one financial year, so they are being given longer. However, the longer they take to return to financial balance, the longer other organisations—we have heard from one of the primary care trusts today—will have to hold back on some of their growth money to compensate for the continuing overspending elsewhere.

Will my right hon. Friend ensure that the future viability of Chorley and Preston hospitals will not be put at risk through the transfer of work from those hospitals to the private sector? The issue is about capacity within those two hospitals and we do not want to see ward closures. Will she ensure that that work is not transferred?

The new independent sector care assessment and treatment service that is proposed for the north-west will deliver to my hon. Friend’s constituents and many other patients a better and faster service and it will do so by providing capacity additional to the capacity already available within the NHS and by enabling NHS capacity to be used much more effectively.

Does the Secretary of State agree that the financial stability or otherwise of NHS organisations is a fundamental measure of overall financial performance? Halfway through the last financial year, 134 NHS organisations forecast a deficit at the end of the year. Will she tell the House how many NHS organisations this year are forecasting a deficit?

The information, as at the six-month point, was published in that financial report, but we will update that next month when we publish the quarter three financial report. As I say, I remain entirely confident that the NHS will achieve overall financial balance and that more organisations will move towards financial balance this year.

I am surprised that the Secretary of State did not tell us; the answer to the question is 175 NHS organisations this year. What is particularly worrying is that last year the situation deteriorated between month six and the end of the year. An additional 45 organisations went into deficit. Can she explain why she believes that fewer NHS organisations will be in deficit this year and how many she expects to be in deficit? If they remain in deficit, precisely what the hon. Member for Barnsley, Central (Mr. Illsley) described will continue to happen: the money for organisations across the country will be top-sliced and their growth money will disappear in order to fund continuing deficits.

I notice that the hon. Gentleman never has anything constructive to say about the need to get better value for the record investment in the NHS and nor does he ever support NHS organisations in making the difficult decisions that are needed to get better value. We are publishing quarterly financial reports on the NHS—we are the first Government to have done so—precisely so that we and the NHS can track the progress that is being made, see exactly what steps need to be taken and take account of additional factors, such as the further cuts in prescription drug prices that are coming through, to ensure that the NHS gets back on track financially and continues to improve services for patients.