It is a pleasure to speak under your chairmanship, Mr. Jones, and a pleasure to see two such affable hon. Members in the seats of power. I got to know the Minister well on the Select Committee on Health way back in 2001-02, when we were both very new and just out of the egg. I shared an office with the shadow Minister, the hon. Member for Billericay (Mr. Baron), during the first few weeks after our arrival in 2001.
This is not meant to be a confrontational debate. Sitting bang in the middle, as I do, I hope that I am able to speak from the point of view of patients and staff of the national health service, and put forward strongly their views on what is right and what is wrong with the involvement of the private sector. I have no political message; I am just exploring the issues, asking a mass of questions and hoping for some answers.
Briefly, I shall deal with the very successful public-private partnerships that have existed for years. The traditional partnerships were laid out in the first part of the Health Committee’s report on the role of the private sector in the NHS in 2001-02, and we listed many of the successful partnerships at that time relating to voluntary hospices, psychiatric beds, brain injury rehabilitation, treatment for eating disorders, drug abuse and, of course, care homes. We must not forget the vital contribution of the independent community pharmacies and the vast pharmaceutical industry.
In the Health Committee report on the influence of the pharmaceutical industry in 2004-05, we were careful to recognise its importance for the NHS. In paragraph 43, we said:
“A flourishing UK pharmaceutical industry is of great importance for healthcare as well as having economic benefits. To achieve this, it is most important for the industry to be able to undertake research effectively.”
“The industry’s ability to compete internationally requires a legislative and organisational framework for research that protects the interests of all stakeholders—patients, researchers and pharmaceutical companies.”
It is a very important partnership, which has been drawn into optimistic relief recently. Last Saturday, The Independent reported that the company Sanofi Aventis has come together with Médecins sans Frontières to produce, for 50p a day, a combined anti-malarial drug that is required to be taken for three days only. Moreover, it waived its right to seek a patent for it. The company’s vice-president for access said:
“This was not a love wedding, it was a reasonable wedding…But reasonableness is often more important for a long marriage. They’ve seen we are not nasty people working against poor countries and seeking only profits.”
That is a very good sign for the future, and perhaps in other fields we shall see the large pharmaceutical industries coming down on that side.
There have been newer developments in the field of private-public partnerships. The out-patient renal dialysis unit in my hospital is one such development. I am not going to talk about GPs. Everyone knows that they are independent providers who very much relish that role, but I know very few who concentrate on private practice, so I shall not talk about them.
Before I examine the Government’s use of the private sector as health service provider, I want to explain what I see as two conflicting views of privatisation. My impression of the Government’s position is that they feel we have an NHS regardless of who provides the service as long as the patient does not pay. That does not reflect my views, or those of most NHS staff and a lot of patients. They believe that to have a true NHS, most services—particularly if we are talking about acute hospital services—must be provided by the NHS. It was Bevan’s revolution, as long ago as 1948, that meant that all NHS staff were paid on the same scales at a stroke, whether they were top teaching hospital consultants, lowly consultants in district general hospitals, matrons in huge hospitals or those in cottage hospitals. The unity of the quality of staff throughout the country was crucial. When I was looking for a consultant job, pay was not an issue; it was a question of the sort of work one wanted to do and the place one wanted to go. The fear is that a multiplicity of providers may lead to a loss of this strong influence of unity.
I want to examine in detail three aspects of health care provision: first, the treatment centres and services for investigations; secondly, clinical assessment, treatment and support services; and, thirdly, the private finance initiative. I intend to conclude with some terribly worrying warnings that have been expressed in some quarters about the future.
On treatment centres, there is no doubt that it is correct to separate elective work from emergency work. That means that we do not have cancellations and we can usually accommodate all the patients on the lists. An organisation called NHS Elect was set up to study that process in four or five centres, of which Kidderminster was one. Only eight months after setting the organisation up, instead of waiting to see what would happen, the Government produced phase 1 of the independent sector treatment initiative.
The Minister contributed to the Health Committee report of 2001-02. There were bits about which we both agreed, although there was one bit on which we did not.
I am grateful to my hon. Friend and namesake for giving way.
People are concerned that independent sector treatment centres do not necessarily provide value for money, although they may improve waiting times for elective surgery. They do not necessarily augment NHS capacity, but can have a damaging effect on the hospital where they are located. Queen’s hospital at Burton upon Trent is an example of that. Finally, they do not have any responsibility for the provision of undergraduate or postgraduate medical training and the integration of research. Those three areas are crucial, but the private sector is able to walk away, with its half-empty beds, while damaging the general hospital next door or just up the road.
I shall cover all those points, so I shall continue and hope that I do so before the hon. Gentleman has to leave.
One of the conclusions of the report on the role of the private sector was:
“It remains to be demonstrated that greater use of the capacity of the independent sector poses no direct threat to resources in the public sector.”
The Government, in their response, said:
“The Government agrees with the Committee that it is important that new capacity is genuinely additional, and does not simply mean moving capacity from one place to another. This is true of the development of new capacity within NHS, as it is of the use of capacity in the independent sector.”
The first question is whether the capacity produced in the independent sector treatment centres is genuinely additional.
The Health Committee inquiry into independent sector treatment centres received a considerable amount of evidence that showed that the local capacity analysis was not full or accurate. Indeed, the private cataract unit in Oxford was imposed on the local NHS, rather against its wishes. Our report said:
“If there had been a severe shortage of capacity, the ISTC programme should have had little effect on capacity utilisation of NHS facilities. This has not been the case; according to NHS Elect, the introduction of ISTCs has led to under-utilisation of NHS Treatment Centres (because of the ‘take or pay’ contract).”
The hon. Gentleman makes a good and strong case, although I hope that I am not anticipating a point that he wishes to make later. He has certainly identified problems with independent treatment centres, but there are also private bodies that operate within NHS hospitals, as they do in my constituency. Clinicians who work for the NHS are at the same time in the market for providing services in the private sector, which clearly compromises their commitment to the NHS. Does he agree that those relationships need to be separated? Clinicians must make a decision: are they in the NHS or in the private sector?
I shall touch on that point peripherally. Briefly, where NHS consultants are involved in independent sector treatment centres, it is clear that that should be part of their NHS contracts and not paid at extra rates. I shall come to that, although I agree that the long-term permission for consultants to do private work as well as NHS work must be carefully defined and monitored.
The Department of Health has perpetuated the myth that ISTCs have had a dramatic effect on waiting lists. The best evidence against that comes in the ophthalmic field. For example, at a time when more than 300,000 cataract operations were being done in the NHS, precisely 20,000 were being done in independent sector treatment centres. Waiting lists were falling because of hard NHS graft before the ISTCs came into operation. Ministers and civil servants acknowledged that in our inquiry. One of our conclusions was:
“ISTCs have not made a major direct contribution to increasing capacity, as the Department of Health has admitted. It is far from obvious that the capacity provided by the ISTCs was needed in all the areas where Phase 1 ISTCs have been built, despite claims by the Department that capacity needs were assessed locally.”
I shall digress briefly and discuss clinical investigation facilities. They fell outside the remit of our ISTC inquiry, but they are relevant to the notice taken by the Government of local capacity issues. I received a letter out of the blue from a former houseman who is now a professor of clinical magnetic resonance imaging in one of the major universities, and therefore in charge of MRI scanning for a prestigious university hospital. He was not aware of any attempt to see whether extra capacity was needed in wave 1 of the ISTCs. It was not as if existing facilities in the NHS were underused; rather, they were underused only because of lack of resources. If the money had been put into those facilities, they could have done everything that the independent sector was going to do.
There was no consultation on wave 1, and even though that doctor’s trust turned wave 1 down because it did not need it, it was forced on it. If only the Government money had gone to the trust, it would have achieved exactly the same results. If primary care trusts are offered free centrally funded MRI scans, it is not very hard for them to choose those rather than the NHS ones, for which they would have to pay. There is no level playing field. The Health Service Journal recently surveyed 97 NHS chief executives, who were asked a series of questions. When asked about the playing field on which the private and public sectors competed, 97 per cent. said that it was unfair.
Is the hon. Gentleman saying that the centres that were set up received special compensation deals from the Department? Is there any evidence that money was being filtered in to encourage them to set up, to reduce their capital costs and to guarantee their futures?
From the point of view of MRI scanning, the money was provided directly from the Department rather than going through the trusts. The independent sector treatment centres in the first wave were paid a premium. The answer to the questions that we have asked about that is that the premium was necessary because the ISTCs had to set up the services. I am not sure that I bought that argument, but perhaps the Minister will say something more about it.
What really bothered the Health Committee when we considered ISTCs was that there was no hard evidence on clinical outcomes. We heard alarming anecdotes about disasters, such as revisions of joint replacements and so on, but we could not get hard evidence either way because it did not exist. We therefore welcome the chief medical officer’s request to the Healthcare Commission to review the quality of care in independent sector treatment centres. The Government response to that inquiry gave the terms of reference, although to be honest we all thought that they were rather woolly. For instance, the current key performance indicators are a measure of process rather than of quality. The Healthcare Commission’s remit appeared to concentrate on process rather than outcomes. We were told that the inquiry was due in March 2007—this very month—so I wonder whether the Minister has any information about when it will arrive. Also, I understand that the Royal College of Surgeons is willing to set up another inquiry, into real outcomes, and I wonder whether he has any information about that.
Other concerns about ISTCs include their integration with the NHS. During the Health Committee inquiry we visited several independent sector treatment centres. Those that were working closely with the NHS, swapping staff, were working extremely well. Those centres that were working entirely separately were working in competition. The independent sector treatment centre for orthopaedics in my area is exactly like that. It is in competition. The local NHS orthopods can see no good coming out of it, and have had no chance to get into it and try to improve it. There is also a weird clause of additionality, which goes against integration, but it is funny that it has been applied in some places and not others. There has been a report about the independent sector treatment centre at Queen’s hospital in Burton upon Trent, which is obviously one that works with NHS consultants. If that centre can do that, why cannot others?
Orthopaedics is a shortage specialty, so I understand that the additionality rule will not be lifted for the phase 2 ISTCs, which will be very sad. Integration will equate the standards and answer the other great criticism mentioned by the hon. Member for North-West Leicestershire (David Taylor): the lack of teaching in ISTCs. Worries have been expressed about the quality of the doctors who work in ISTCs; if they come from continental Europe, they will not necessarily have undergone the same stringent accreditation processes as we have in this country. Will they be adequately qualified to provide teaching in ISTCs?
Are ISTCs a threat to NHS services? The Health Committee could not come up with hard evidence on that, but we made two comments:
“The Phase 1 contracts, including the ‘take or pay’ elements, give ISTCs a significant advantage over NHS Treatment Centres and other NHS facilities. This is one of the reasons that several NHS Treatment Centres have spare capacity. In the longer term, there are good reasons for thinking that ISTCs could have a more significant effect on finances of NHS hospitals.”
We concluded the ISTC report with the following words:
“We are not convinced that ISTCs provide better value for money than other options such as NHS Treatment Centres, greater use of NHS facilities out-of-hours or partnership arrangements such as those at Redwood.”
Recently—in Hospital Doctor, I think—there were reports of the south-west London elective orthopaedic centre, a joint venture between four NHS trusts: Kingston Hospital NHS Trust, St. George’s Healthcare NHS Trust, Mayday Healthcare NHS Trust and Epsom and St. Helier NHS Trust. The centre provides NHS elective orthopaedic surgery, and is working very successfully. It treats more than 3,000 patients a year, and needs 300 a month to break even. However, staff there are terrified that new independent sector treatment centres proposed for the area could pose a threat.
I hope that, before the hon. Gentleman moves on, he will ask questions about an important issue—perhaps it is the worrying trend that he rather coyly mentioned in his opening remarks. We have been assured that the European Union is not interested in policies on nation-state issues such as health. However, it has become clear that the EU and the European Court is looking at the opening of the Pandora’s box of providing for the private sector in the NHS in the manner that he has described. They consider that, if the market is being opened up, the Government need to play by market rules; the Pandora’s box has been opened and cannot be closed. That is of great and deep concern to many right hon. and hon. Members.
The hon. Gentleman is a mind reader; I shall come to exactly that point at the end. It is the potential bombshell.
I move on to CATS—or clinical assessment, treatment and support services—which are being consulted on in Cumbria and Lancashire. I am not sure whether the part of Lancashire represented by the Minister is involved, or whether it is the northern part of that county. I should like to draw attention to the consultation document, which is an absolute example of consultation pointing in one direction only. Its very title is, “Improving our Patients’ Experience of Healthcare in Cumbria and Lancashire”. It is highly significant that the introduction and welcome pages are signed by six PCT chief executives and one chair. The latter happens to chair the independent sector commissioning board, and one of the chief executives is the lead chief executive of the same board. Surely, that is a conflict of interest. Furthermore, not a single clinician is mentioned in the introduction—nor, as far as I can see, in the whole consultation document. There is certainly no mention of patients forum involvement or anything like that.
The hon. Gentleman referred to a state of affairs in my constituency. He may be aware that the CATS consultation came about only after extreme pressure; it is really only about how, rather than whether, CATS is imposed. Perhaps he will note that many clinicians in my constituency are concerned about the impact of CATS on local hospitals—particularly my local one, Westmorland General hospital. It is estimated that between 60 and 80 per cent. of current out-patient demand will disappear if the CATS centres arrive, therefore undermining the potential viability of my local hospital.
I am aware of a lot of the things going on, but not the details of Westmorland and Lonsdale.
One has only to look at the contents of the consultation document to see which way it pushes people:
“CATS adds to existing health services…CATS is designed around the patient…CATS is intended to help reduce waiting times, simplify patients’ experience and add services closer to patients’ homes…We are designing CATS to meet the needs of patients…We intend to introduce eight CATS centres across Cumbria and Lancashire…The preferred bidder for CATS services is Netcare UK”.
There is a section entitled “What will the changes mean for my local hospital?”, and it is fairly dismissive. The most striking early sentence is about having a negative effect on hospitals not being
“the intention of introducing CATS.”
However, it says lower down that
“CATS will mean changes for hospitals”.
I am very bothered that continuity of care seems to be swept aside, but the document says that the huge advantage to local PCTs is that the introduction of CATS services is all free and that there is £23 million in additional money to fund it. The consultation’s response form, which has to be returned by 9 March, has no question allowing someone to disapprove of the proposal as a whole. I am still puzzled at why there is no contribution from medical or nursing staff to the document.
It is true; there are six specialties. The ones about which I know most are rheumatology, gynaecology and orthopaedics, because they are the ones that people have spoken to me about.
I shall speak briefly about rheumatology; I do not think that the people who designed CATS know what specialist rheumatology hospital doctors do. They can cope with anything from painful shoulders and backache to the really crippling inflammatory arthritises and the very rare, life-threatening rheumatological diseases. There is no detail about who Netcare’s doctors will be—are they accredited rheumatologists, do they have experience as physicians? A great thing in rheumatology is the multi-professional team so essential to modern care.
The hon. Gentleman is very generous in giving way. I shall be brief. Is he aware that rheumatology—which is indeed one of the specialisms in which CAT centres, in south Cumbria at least, are likely to specialise—has no waiting list to speak of whatever at the moment? Given that the official explanation for introducing and imposing CATS is the 18-week waiting time, it all seems completely off the mark and as if there has been no consultation.
I am aware of that. The British Society for Rheumatology has been on to me. Rheumatology is a speciality that will be able to reach 18-week waiting lists across the whole region without a problem. If referrals to the NHS drop by 50 per cent., for example, the area will be able to afford only 7.5 whole-time equivalent rheumatologists across the region whereas at the moment 17 cover 16 hospital sites. On the gynaecology side, a gynaecologist expects the fallout from CATS to affect all trusts. He tells me that trust managers and local MPs are worried, to say nothing of the clinicians. The great problem with gynaecology is that the problems in different trusts are different. Some can do it; some cannot. The same goes for the other specialties.
A catch-all solution across the area does not seem to be necessary. The gynaecologist who has spoken to me says that the answer is better management by clinicians and managers of the existing NHS services and that, if the money that will go to CATS could go to them, they are sure that they could improve the services to get down towards the waiting time targets. There are many concerns about the CATS.
Let me say a few words about the private finance initiative. I want to take the Minister back to our first inquiry in 2001-02, when we were both new to the House of Commons and to the Health Committee. We did not agree on the main issue, but he agreed with many of the recommendations, and I want to ask him what has happened to some of those with the recent approvals for PFI hospitals. In particular, we asked for more transparency, stating that
“there has to be more transparency, openness and accountability.”
The Government response stated:
“The Government welcomes the call for a more rational and objective debate about the Private Finance Initiative...and accepts the Government’s role in this.”
A later section dealt with the management of risk. I am sure that the Minister will remember that we concluded that the evaluation of risk was as much of an art as a science. We wanted more realism about the public sector comparator. We wanted more expertise in negotiating bodies from the health service point of view. My PFI was one of the early ones, and it is blamed for £7 million of the trust’s overspend. I do not know whether the following provision was worked into all the early PFI contracts, but if the bed occupancy goes above 90 per cent., which it regularly does, there is an extra fee to pay. Over the past few days, I have seen newspaper reports that new borrowing regimes are coming in for trusts from 1 April. The trust in Plymouth has decided to abandon its plans for a PFI, because it thinks that it can get its money from the public sector under those borrowing arrangements.
I shall begin to draw to a conclusion, as I am aware that I have been speaking for a long time already. In the rush to open the provision of hospital services to private providers, we must be sure that that is appropriate, that it is wanted by patients and that it will not lead to the downfall of the NHS as we knew it. There was an article in the British Medical Journal last September headed “Where are the medical voices raised in protest?” It bemoaned the fact that, whereas in the 1980s medical voices were raised strongly against the Thatcher Government’s changes, things appear to have changed, stating:
“In the past six years we have seen reform on a scale never before attempted in the NHS. The prime minister continues to say he wants to increase the pace of reform; however, it is not just the sheer speed of reform that makes it distinctive, but also its breadth and depth.”
The article includes a nice photo of Aneurin Bevan admiring a new hospital back in 1948, with two very posh gents with winged collars—we do not see many of those around—on either side of him. The photo is captioned, “Would Aneurin Bevan recognise today’s NHS?” The article went on:
“These reforms seem more radical than commentators in this journal dared imagine…If we add in the vagaries resulting from the PFI process, then we have a reform agenda that seems to sweep away Bevan’s NHS across the board, blurring the boundary between public and private not only in financing the service but also in the provision of care”.
Medical voices are raised and have been all the time—in particular those of the NHS Consultants’ Association, the “Keep Our NHS Public” organisation and the well-known Professor Allyson Pollock—although they have tended to be disregarded, but stronger voices are emerging. The royal colleges are beginning to speak out—in particular, the Royal College of Surgeons. There was a good report about Bernard Ribeiro of the Royal College of Surgeons in the Health Service Journal only last week, which said that he is determined to have a say in the political aspects of the NHS.
I have been drawn to voice my medical protest now as loudly as I can by the fact alluded to by the hon. Member for St. Ives (Andrew George). The best report on that, I think, was in the February edition of the British Journal of Health Care Management by Nicholas Timmins, the highly respected public policy editor of the Financial Times, who is not prone to raising groundless alarms. He quotes Ken Anderson, who was recently the Government’s commercial director:
“‘My personal conviction,’ he told the Financial Times, ‘is that once you open it’”—
“‘up to competition, the ability to shut it down or call it back in passes out of your hands. At some point European law will take over and prevail, and that is not something that can be rolled back. In my opinion we are at that stage now.”
Mr. Timmins went on to report that the Department of Health has taken legal advice, which states that for various reasons, health services are exempt from compulsory tendering under EU law. However, other legal advice runs contrary to that, and he quotes reports that the European Court has decided that
“if a national health system embraces competition, then competition law will apply”.
I fully accept that the Government are committed to maintaining a health service that is free at the point of delivery, but if we continue to encourage the increasing provision of health services by private providers, we will not end up with a national service. It risks being fragmented across the country. The Guardian published a brief letter last September, when the NHS Logistics Authority was privatised. It stated:
“The sale of NHS Logistics means privatising, at the stroke of a Hewitt pen, a 20th of the NHS. It is yet another huge step away from Bevan’s integrated, public NHS in which everyone was on the same team.”
Surely, we can all resist the rush to unquestioned involvement of the private sector in NHS provision before it is too late. The Minister is a free-thinker and he has been given a certain amount of leeway to think for himself. I very much admire the way in which he went out immediately after his appointment to work in the NHS and I hope that he was able to talk to some of the staff without managers and civil servants present. I therefore make an appeal to him. Abraham Lincoln once said:
“My paramount object in the struggle is to save the Union”.
Could the Minister study all the pros and cons? If he agrees with many of us about the threat to the NHS, could he make dealing with it his paramount object?
One day at Horton general hospital in Banbury, we suddenly discovered that we were going to have a new independent treatment centre. I am sure that Capio does a wonderful job as an orthopaedic treatment centre, but no one asked for it—we certainly did not. All that it seems to have done is undermine the excellent, world-leading Nuffield orthopaedic centre in Oxford, which provided an excellent orthopaedic service for years.
My concern, to follow on from the excellent speech by the hon. Member for Wyre Forest (Dr. Taylor), is that there seems to be no coherent philosophy or steer from the Government as to what they expect the NHS to achieve, and I think that the Minister recognises that. I hope that he has not been misquoted—indeed, I think he has been quoted correctly—but I understand that he wrote to the Secretary of State, saying:
“The irony is that the process of change necessary to secure long-term public support for the NHS risks driving a wedge between the coalition of its strongest supporters…There is a feeling of nervousness among NHS staff about being on a journey without knowing where the end point is…Some are concerned that the values of the NHS are in some way up for grabs.”
Most of us believe that the NHS should be a comprehensive service that is free at the point of use and provided according to need, not ability to pay, but we are becoming increasingly confused.
What we have seen is a circular reorganisation of the NHS: it started in 1997, and we are now back where we began. We have seen PCTs come and go. At one stage, we had five PCTs in Oxfordshire, but we are now back to a single Oxfordshire PCT, which looks very much like the old Oxfordshire district health authority. There is also no indication of what local voice there now is in the NHS. All the non-executive members of trust boards are appointed by the Secretary of State and clearly believe that they are beholden to her. When we had concerns about the reconfiguration of services at the Horton general hospital, I wrote to all the non-executive directors of the Oxford Radcliffe Hospitals NHS Trust, but none of them responded. I think not that they were being discourteous, but that they felt entirely beholden to the Secretary of State. There is now no local voice, and without a strong steer from the Secretary of State and Ministers as to what they expect from the NHS, everyone else is completely adrift.
There is an incremental movement towards acute super-hospitals, and the Horton has been told that that is because there is a shortage of middle-grade doctors in disciplines such as paediatrics and, possibly, maternity. We are then told, however, that 30,000 middle-grade doctors are looking for 20,000 posts. I cannot believe that there are no middle-grade paediatricians among the 8,000 who will not get a post under the new system—the Government have announced that they will review it—but who could come to the Horton to ensure that we maintain a paediatric service. That service was set up as a consequence of a Government review that Barbara Castle initiated as Secretary of State for Health after a child died in Banbury.
As we come to the 60th anniversary of the NHS, the Government seem to have no coherent philosophy, other than bandying around the word “reform”, as if doing so is, in itself, a good thing. I am a child of the NHS and I was born shortly after it came into being. Both my parents spent their whole working lives in the NHS—my mother as a theatre assistant and my father as a doctor. I seemed to spend every Christmas day until I was 18 somewhere on my father’s wards and I spent most of my university vacations working as a hospital porter.
As an integrated entity, the NHS worked, and there was a clear philosophy about how it worked. Of course improvements can be made to how GPs commission services and so forth, but the permanent revolution in the NHS is incredibly demoralising and confusing. Unless the Minister can give some rational public policy explanation for why the Nuffield is being undermined and a treatment centre is being put in Banbury, Ministers will need to stand back and say that it is perhaps time to stop trying to reorganise the NHS and to start giving clinicians and communities a chance to get on with delivering services in the way that they want to. If Ministers do that, they will be surprised to find that those services are often delivered very well.
Ministers must avoid being contemptuous of public concerns about what is happening in the NHS. Last autumn, 15,000 people in my constituency and throughout Oxfordshire signed a public petition expressing concerns about how NHS resources are allocated. As I am sure the right hon. Member for Oxford, East (Mr. Smith) will explain to the Minister, we in Oxfordshire are paranoid—some more than others—about the allocation of resources. Although I readily accept that I am paranoid, whether about resources for the police or the NHS, there was a petition, and I presented it to the House in the usual way. Yesterday, the Clerk of Public Petitions, who had referred the petition to the Department in the usual way, sent me a note:
“I have now been told that no government observations will be issued on the petition.”
It is a disgrace that Ministers cannot even bestir themselves to draft a two-paragraph response to a public petition signed by 15,000 concerned NHS staff, patients and members of the general public.
The petition was organised in part by George Parish, who is a Labour district councillor in my constituency —the “Keep the Horton General” campaign is a cross-party community campaign. The fact that Ministers cannot even be bothered to respond to a public petition illustrates the confusion they have got into.
As we come to the 60th anniversary of the NHS, I hope that the Government can understand and get back to where the NHS started—as a public national service free at the point of delivery and available to all. I hope that we shall not have all this reform for reform’s sake, because it is causing confusion, consternation and division in the service.
I congratulate the hon. Member for Wyre Forest (Dr. Taylor) on securing this important debate. I shall try to be brief; indeed, I have already made a couple of my points, because he kindly let me intervene.
Like the hon. Gentleman, I do not speak from a position of outright ideological opposition to private sector involvement. However, I have a concern about my constituency in south Cumbria, where a rather rushed and belated consultation on clinical assessment, treatment and support centres is under way. As I said, the consultation is about how rather than whether CATS is delivered, and we are concerned that the arrangements are being imposed in ignorance of the local situation.
As I also said, we have no waiting times for rheumatology, and it appears that many local consultants in a range of disciplines have not been consulted. The stated aim of the CATS centres is to reduce waiting times, but it appears that waiting times are not an issue in many disciplines, at least in my area. We should be grateful that they are not—indeed, the Government should claim credit for that, rather than trying to make us change local operating circumstances to deal with a problem that perhaps does not exist.
We also have a concern about the preferred bidder, Netcare. Local trusts were of course not given the opportunity to bid to provide the CATS centre services because the bid is entirely national. That is a matter of concern because of the impact that we believe CATS may have on local hospitals. We are told that there will be three CATS centres in Cumbria: one in Ulverston, one in, I think, Whitehaven, and one in Penrith. None of them, certainly not in south Cumbria, is on the site of, or even close to, an existing hospital. For a relatively small general hospital such as Westmorland general, the prospect of losing perhaps 60 to 80 per cent. of the demand for out-patient services because of the CATS centre undermines the hospital’s very existence—it could take away demand and staffing. We already face the possibility of losing acute services at Westmorland general because of another consultation—and incidentally, 26,000 people signed a petition opposing those cuts, but the trusts ignored it.
If we are forced to have a CATS centre in our area, we shall have to make the best of a bad job. I am concerned that we should ensure that the centres are situated close to hospitals, so that resources can be shared, rather than existing services being undermined. I am concerned also that the proposed removal of acute wards at Westmorland general coincides with the introduction of surgical provision from the independent provider Capio. My fear is the same as that of many of my constituents—that Westmorland general will cease entirely to provide emergency services and become simply a surgical centre. That is clearly not the vision for our hospital that local people, including local clinicians, share.
I would be grateful, incidentally, if the Minister looked into and responded fully to talk—some of it, I believe, informed—of Netcare, the provider of CATS services, being owned by the same venture capital company that owns Capio. As there is a possibility that the CATS centres will refer people on to surgical services provided by Capio, there is a clear potential conflict of interest. I am willing to be told that that is nonsense, but I would be interested to find out about any current links—or historical links, which are also important—between Capio and Netcare.
As there are problems with retention and recruitment in the NHS in Westmorland, a question that people will want me to ask is where the staff for Netcare and CATS service provision are to come from. Also, although it is clear from answers to written questions that the staffing of the CATS centres will have to comply with minimum standards, we are told that the employers do not need to comply with NHS terms and conditions. Two possibilities thus arise: Netcare’s terms and conditions could be better than those of the NHS, which would give rise to the risk of losing staff to the private sector, or they could be worse, in which case, whatever the minimum standards might say, we would run the risk of lower-quality provision.
My final comment is about value for money. The Government’s major case, apart from the 18-week waiting times—I think that that can be undermined, because of the local situation—is that what is happening is all about value for money. As a general point, money may go from NHS primary care trusts into acute hospital trusts, but under the arrangements involving independent sector providers, money from the PCT will go at least in part into the pockets of shareholders. That is not an ideological objection; it is just an objection to wasting money—to money leaving the NHS, which is clearly inefficient and something to avoid.
The argument for involving the private sector in public sector contracts is often that it is somehow good at taking risks and using its private sector fleet-footedness. However, the NHS is taking the risk in this case, not the private sector provider. Netcare is being given a minimum income guarantee of £4 million a year, irrespective of whether it does any work. That is not an incentive. We take the risk and it appears that Netcare takes the profit.
Why are the Government doing this? I do not know. I do not believe that the Minister is ideologically driven on the point. I share the admiration for him that the hon. Member for Wyre Forest voiced, and I believe that he is a free thinker, committed to the NHS. Perhaps the Government are panicked about the apparent lack of return on their investment in the NHS, which has been considerable. However, if we want to increase capacity, why not build it in the NHS to provide the services in question? If the Government were to do that, they would find that they had much more support.
I congratulate the hon. Member for Wyre Forest (Dr. Taylor) on securing the debate. He covered a vast terrain and in the limited time remaining I can focus on only one aspect of his contribution. He said that there has been a long and successful partnership between independent, private, voluntary and charitable provision and the NHS. So there has, but as plurality of provision develops it becomes all the more important that the terms of the interaction between the different parties—particularly with reference to the impact of innovations such as independent sector treatment centres—are fair.
I want to concentrate on specialist orthopaedic centres. The Nuffield Orthopaedic Centre NHS Trust in my constituency is affected by the issues that I shall outline, and so are the Robert Jones and Agnes Hunt Orthopaedic and District Hospital NHS Trust in Oswestry, the Royal National Orthopaedic Hospital NHS Trust, the Royal Orthopaedic Hospital NHS Foundation Trust in Birmingham and the Wrightington, Wigan and Leigh NHS Trust. The essence of the problem is that all those trusts are affected in varying degrees by the inability to date of the Department of Health to arrive at a national tariff that adequately recompenses them for the costs of carrying out complex orthopaedic treatments. Of course, as more of the routine work has gone to the ISTCs, the problem has been brought more into focus.
It should be stressed that the orthopaedic specialist centres have co-operated with the ISTCs and have not sought to block the arrangement. They went along with it on the understanding that talks would resolve the question of fair recompense for the work that they undertake. So far that has not been achieved. As was mentioned, the hospitals do important training work as well as much needed specialist and complex operations. Often treatment is expensive. The operation to save the limb of a patient with bone cancer might cost £7,600 but attract a payment of only £1,700, whereas, interestingly, the alternative of amputation, which I understand might cost £8,500, is adequately reimbursed under the tariff. There is a danger of perverse incentives. More importantly, the hospitals need to do the work—the patients need it—yet there is financial pressure.
There has been a system of additional payments to offer some protection to the specialist trusts, but there is a fear that if and when that is removed they will be exposed to severe financial pressures. The arrangement also works very unfairly in that it undermines the ability of those hospitals—my own included—to gain foundation status. In the case of Nuffield, that was merely because of questions about its medium-term financial viability, which was solely the result of the problem I have described. There were no doubts about its expertise or the international renown of the quality of the work done there.
Talks on this issue have been going on for a long time. The Secretary of State for Work and Pensions was Minister of State for Health when I first took a delegation to the Department about this problem. I am looking to the Minister today to provide some assurances, including to the Specialist Orthopaedic Alliance, about when the problem will be resolved. I ask in particular for reassurance with respect to a suspicion that exists of a danger that hospitals will be pressured into mergers—in some cases, not altogether well considered mergers—which will not resolve the problem, but merely hide it. The problem of fairly reimbursing the specialist centres for those highly complex operations is the nettle that must be grasped. The possibility of a merger with the John Radcliffe hospital has been floated in my area, but another tranche of specialist underfunded work that would have to be cross-subsidised out of other services is something the JR needs like a hole in the head.
I am speaking up for internationally outstanding centres of excellence in this country and I urge the Minister to assure us that early progress will now be made to ensure that those centres that have co-operated with the ISTCs will be fairly and properly reimbursed, as they should be.
I congratulate the hon. Member for Wyre Forest (Dr. Taylor) on securing the debate. I certainly accept the principle, particularly in respect of emergency and core NHS services, that a service is bound to be compromised if at the same time the provider is seeking to maximise shareholder profit.
I acknowledge that the private sector has a role to play in the NHS. I am not ideologically opposed to that, because it has a role in the provision of bricks and bedpans, but I am, to use that polysyllabic word, ideologically opposed to its involvement in core services, because that compromises them.
I said that clinicians who work for the NHS and are in the market for private work at the same time clearly compromise themselves and the efficiency of the service. A survey that I undertook in Cornwall in 1999 showed that the specialties with the longest waiting times were, coincidentally, the same specialties in which the greatest amount of private work was done by clinicians who also worked in the NHS.
I question whether that situation is efficient. It creates more bureaucracy. One of the clinicians in my constituency, Alistair Paterson, has complained to the Secretary of State through me that his previous booking system has had to be replaced by a waiting system, and, as a result of the new independent sector treatment centres, referral management centres now intervene in the process of GP referrals. A new raft of bureaucrats tries to redirect patients away from the NHS to ISTCs, because otherwise the income that the ISTCs will inevitably receive will be wasted.
The key issue is the one that the hon. Member for Wyre Forest finished with, and I hope that the Minister will address it. At the time, perhaps because of a surplus of NHS policy development officers in the Department—I am not sure why this happened—a decision was made that privatisation was a jolly, whizz-bang idea and that we should give it a whirl. The problem is that Pandora’s box has been opened, as the hon. Gentleman said. Now the NHS has to play by market rules, and it is open to the same competition rules as other sectors. In fact, the situation is rather worse than that. The advice that I have seen implies that the Secretary of State herself will be constrained from intervening and bailing out services in the way that under previous regimes she could have done.
I am grateful to my hon. Friend the Member for Southport (Dr. Pugh) for having given me a small amount of his time to make those points.
I congratulate the hon. Member for Wyre Forest (Dr. Taylor) on introducing this important debate. I too had the privilege of sharing a room with him during our early period in Parliament, which makes this occasion quite incestuous. I hope that the Minister is in a good mood today, particularly after the excellent Champions league results last night. As an Evertonian, I am sure that he is as pleased by that as I am.
It is nonsense to suppose that public service can exist in isolation from private enterprise. The NHS, like any public service, has always been a big purchaser of supplies and, indeed, of services from the private sector. But, by and large, it has not bought direct services for patients from private enterprise until recently. Nowadays, however, it is almost an orthodoxy to say that it should, provided that neither the quality nor the cost to the patient is in any way affected—provided that the service remains free at the point of delivery. That mimics the great saying of Deng Xiaoping, the founder of modern China, who said, “Who cares whether the cat is black or white so long as it catches mice?” Thus we have seen under this Government private profit-making enterprises take on many of the medical duties that formerly were done exclusively by NHS bodies and employees.
Ministers sometimes argue, with a degree of sophistry, that the NHS has always been, de facto, a confederation of small businesses. They argue that GPs have always been self-employed. However, the goal of private business, as we must acknowledge, is profit-making, but the goal of GPs is not and never has been profit-making. No genuine private enterprise would encumber itself with anything like the Hippocratic oath or subordinate its business practices to a constitutional framework such as that imposed on all the people who work for the NHS. In fact, the British Medical Association made that point specifically when it wrote:
“Although GPs are ‘independent contractors’ they are steeped in the ethos of the NHS and put the interests of their patients at the heart of their work. In many ways GPs’ independent contractor status is simply a reflection of the way they are paid rather than any suggestion that they not an integral part of the NHS.”
It may be impossible to serve God and mammon, and it has always proved tricky to serve the NHS and shareholders at the same time.
It certainly is the case that some bodies private and profit-making, or independent and charitable, are capable of taking on medical work done by the NHS. It is often suggested nowadays that there should be no animus against their doing so, especially as it appears at first sight that patients will be looked after as quickly and as well.
There are presumptions for and, equally, against using the private sector. It can reasonably be suggested that involvement of the private sector adds an additional cost: the profit margin of the entrepreneur, as mentioned by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron). As the hon. Member for Wyre Forest said, it puts at risk the co-ordination and smooth operation of health system provision and complicates the patient’s path to care when they are passed between the public and the private sector.
Using the private sector certainly reduces transparency in the operation of the whole system. There have been a couple of debates in this place on the deficiencies of out-of-hours services. Many people who have looked into the situation to get details about what is actually happening have had to use freedom of information legislation to prise from private contractors information that they would normally have had from the local NHS.
I believe that the Minister would acknowledge that using the private sector introduces needless legal complexity and a lesser degree of accountability. One cannot impose a statutory duty on a private contractor. If a private contractor fails to deliver, people normally complain to the commissioner, not to the contractor. That creates a genuine difficulty. Legislation going through Parliament at present will introduce local involvement networks—LINKs—to lobby on behalf of patients. If they want to take up issues, they must go to the commissioner first and only indirectly to the provider.
The major presumption against private sector involvement—it is a presumption that runs from Beveridge to Bevan right through to Wanless—is that a publicly delivered, publicly financed system of health care is an equitable, efficient and good model. In fact, I hesitate to call that a presumption—it is a fact.
To be fair, presumptions are made on the other side in favour of contracting out delivery to private contractors. It can be suggested that they are more motivated to control costs. It might be assumed that there is a plethora of competing interests out there just waiting to vie competitively for NHS custom, and that using them can defray capital costs and reduce the public sector borrowing requirement. It may be suggested that they are more flexible, and more ready to embrace innovation or bring in experience from other health systems. The big presumption running through all of that is that a competitive market will always deliver better outcomes than monopoly provision, even if the goal is to deliver health entitlements.
My views are clear: I am with Beveridge, Bevan and Wanless. The Government, though, have a problem. The Labour heart and soul are with Bevan but the brain has been captured by centre-right policy units. The Government endeavour to solve the problem by claiming to adopt a stance of even-handed Deng Xiaoping-type pragmatism, but the practice is quite different, and that has been well exemplified in this debate.
The private sector is not just chosen. It is encouraged, featherbedded and guaranteed payment regardless of work actually done. It is introduced into areas where its presence creates problems not only for NHS providers but for patients’ pathways of care. That is not just my view. The Healthcare Commission complains about clinical data from independent sector treatment centres being of extremely poor quality. The National Audit Office in its recent report on clinical governance mentioned poor management and audit of the independent sector by the PCTs that commission them. The Health Select Committee complained about the lack of robust data. The BMA bemoans the absence of a level playing field, and cherry-picking by the private sector. The Royal College of Surgeons reports itself as being unhappy about outcomes, and even the Conservatives suggested in a recent survey that poor value for money is produced by such arrangements.
If we go back to Deng Xiaoping’s metaphor, using the private sector is like force-feeding the black cat with food taken off the white one and not expecting it to catch any more mice in the process. At times, it approaches an improper attempt to use public resources not to benefit from a market but to create one in the belief that marketisation is the panacea for all public service woes. The Minister, I think, is on the verge of producing for Parliament a solution and a way of allaying those fears—the new NHS constitution. That will clarify all those issues and leave many of us quietly at rest.
I start by congratulating the hon. Member for Wyre Forest (Dr. Taylor) on his thoughtful and kind contribution. I congratulate him also on his positioning in the Chamber, which is truly independent.
The Opposition support the involvement of the private sector in the NHS if it can deliver benefits for patients. Private sector involvement is nothing new and nothing to fear. For instance, GPs, opticians and dentists are, essentially, private providers. Our central concern is that the way the Government are trying to embrace the private sector is highly inefficient. By trying to micro-manage where the extra capacity is being placed in the NHS, they are doing patients down and causing harm. We believe that if the Government were to create a right to supply the NHS and then allow patients a choice of where independent providers should be engaged, that would make for a much more efficient allocation of resources. The problems caused by the Government’s heavy-handed approach can be seen clearly in their policy towards independent sector treatment centres, as the hon. Member for Wyre Forest and others pointed out.
I start with the question of capacity. The process of engaging the private sector has been managed from Whitehall, so the ISTC programme has resulted in capacity being misplaced. New providers have been imposed on areas where NHS organisations are already meeting waiting time targets. That is happening because of a lack of consultation. Last year, in the Health Committee, the hon. Member for Wyre Forest made that very point. Indeed, the report stated:
“ISTCs were not established in accordance with the local capacity plans…In Oxfordshire, independent provision was imposed on local NHS providers against their wishes…since it would involve the transfer of work away from an NHS facility with an excellent reputation”.
That, I suggest, does not make for good and efficient allocation of resources. Patients are suffering as a result.
Just as worrying, however, is the Government’s model for engaging the private sector. Patient choice and GP-led commissioning have been sacrificed to divert referrals away from NHS providers and towards the ISTCs to make them viable. In other words, the decision has been made at the centre to restrict choice and to force patients down the ISTC route. That has to be wrong, but it is precisely what is happening through referral management centres, which sometimes have the power to overrule referrals made by GPs. What is more, some PCTs have told GPs that they must opt in favour of the new independent providers. That forces some patients into the private sector against their wishes.
I put it to the Minister that if the Government firmly believe in the value of the independent provision that they have commissioned, they should put that belief to the test by forcing ISTCs to compete fairly with the local NHS trusts. Patients and GPs would judge which was best.
As other hon. Members have suggested, another concern regarding the forced introduction of ISTCs is training. The impact of the policy on existing NHS services can be—and, I suggest, is—disastrous. The private sector has effectively been allowed to cherry-pick straightforward operations. That point was made by the right hon. Member for Oxford, East (Mr. Smith). A real concern is that specialist services are suffering because of the withdrawal of cross-subsidy from the profits generated by those routine procedures. The training of the next generation of NHS employees will suffer as a result, as trusts have to cut back on their teaching responsibilities. That point has been reinforced by the British Medical Association. We therefore risk problems being stored up for the future.
Another concern is the nature of the ISTCs’ contracts with trusts. The reason is that errors in forecasting patient numbers could result in trusts paying for operations that do not occur—in other words, paying for capacity that it not used. That will result in money leaving the NHS, but the NHS gaining nothing for it. The Minister may say that that is fanciful thinking, but answers to recent parliamentary questions reveal that utilisation rates, measured on the basis of value rather than activity, averaged only 77 per cent. in the 12 months to May 2006. That means that nearly a quarter of the capacity purchased from ISTCs has not been used. It is as simple as that. The NHS is paying for a service but not receiving it.
In addition, the ISTC programme is delivering procedures at a price that is above what they would cost the NHS. The figure is about 11 per cent. Again, that is hardly good value for money, and patients are suffering as a result. That is why the Opposition say that the private sector should supply to the NHS only if it can meet the standards and the price. However, the Government are keen to shy away from genuine competition to favour the private sector. Why? That is clearly the impression being gained in the front line of NHS service.
I offer an example of the negative impact that ISTCs are having on local NHS providers, and I have only to look within my own patch and to Basildon hospital. I realise that the Minister has had meetings with the hospital management and the Under-Secretary of State for Communities and Local Government, the hon. Member for Basildon (Angela E. Smith), but the Government are trying to force an ISTC on the hospital without due consultation. That will harm local patients.
According to the hospital, imposing a new private sector provider on the hospital could, in a worse-case scenario, result in £11 million of income being diverted to the ISTC. That will cause real problems. It is not me saying that; the hospital management are raising those concerns on a cross-party basis.
In addition, I am concerned that Basildon hospital will be forced to pay for operations that did not occur because errors will have been made in forecasting patient numbers. I mentioned some figures given in answer to recent parliamentary questions and said that nearly a quarter of capacity purchased from ISTCs is not being utilised. If we really want an efficient NHS, I suggest that only those treatments received by patients should be paid for by the NHS. Basildon hospital management’s concern is that that will not happen, particularly because patient number forecasts have yet to be finalised, although here we have an ISTC being forced on the hospital.
Imposing an ISTC on Basildon hospital will harm the training of staff there—a point made at a recent meeting of the hospital management. We know that ISTCs like cherry-picking the straightforward operations, but that will harm the specialist services in the local hospital, as well as across the NHS. I therefore ask the Minister to assure me that he will re-examine that decision, because its effects apply not only in my patch, but throughout the country.
I am conscious that time is drawing on, Mr. Jones, and I want to give the Minister time to answer our questions. I shall conclude with another direct question. Since December, he and his Department have been consulting everyone who provides care to NHS patients on 10 core principles. I believe that that is part of plans for an NHS constitution. The principles suggested bear a remarkable similarity to the 10 principles set out in the NHS plan. In fact, the only principle from the NHS plan that does not appear in the new draft almost word for word, or in spirit, is the seventh principle, which states:
“Public funds for healthcare will be devoted solely to NHS patients”.
The other principles are all there, including shaping services around the needs of individuals, supporting NHS staff and respecting patient confidentiality. But the seventh principle has been dropped, which leaves the possibility open for public funds to be used for patients to go private.
My party has dropped the concept of a patient passport. Are the Government about to pick it up? If not, why has the seventh principle of the NHS plan been dropped?
I am grateful to the hon. Member for Wyre Forest (Dr. Taylor), a fellow member of the Health Committee when I served on it, for the generous spirit in which he made his comments. As always, I respect his opinions on these matters and I agreed with much of his speech. However, there is a genuine point of difference and I will explain that before dealing with his specific questions. I am not sure that I will be able to answer everything in the 10 minutes that I have left, but I will do my best and will write to hon. Members with more specific answers, in particular to the hon. Member for Westmorland and Lonsdale (Tim Farron).
The hon. Member for Wyre Forest asked whether Aneurin Bevan would recognise today’s NHS. I am pleased to say that he would and that he would be proud of it. Since Labour has been in government, the state of the NHS has improved immeasurably—that is not spin; it is fact. That is what has happened on the ground and in constituencies up and down the country. There are not just considerably more staff in the public employment of the NHS—he knows the statistics and I do not think that he wants me to reel them off again—but the bricks and mortar on the ground in many of our communities are of a standard far superior to those in 1997. The very fabric of the NHS has been renewed. That is the progress that we have made.
The size of the public side of the NHS is considerably larger today, but I would be the first to say that it does not have a monopoly on good ideas or on how to deliver health care. I have described the changes that we have made, but our ambitions do not stop there. The hon. Gentleman knows that our ambition is to deliver a maximum 18-week wait by the end of 2008. In reality, for the vast majority of patients that will mean a wait of eight to 10 weeks. I would describe that situation as providing an end to waiting and waiting lists. People will begin their patient journey and will not simply be put on to lists to be managed. That represents the end to a process that the Government set in train.
Why is that important? I listened carefully to the hon. Member for Banbury (Tony Baldry), who made some valid points. However, to me his remarks portrayed reform as an intrinsic attack on the NHS. He read out a letter that I had sent and I stand by every word of it. Essentially, he put forward the idea that reform was a form of attack. If we, as a Government, had not taken steps to ensure that the NHS is responsive and delivers quick, high-quality care to patients, the arguments of those who call for alternatives to the NHS—those on the Opposition’s side of the political argument—would have been far louder.
There has not been a disagreement about whether the NHS is the right model for the future health care needs of the country. I am hugely proud that we have made the case for a universal health care service that provides care on the basis of people’s needs, not their ability to pay. That is increasingly accepted as not just the right way, but the fair way and the way in which we can continue to provide health care efficiently to the whole population. I do not accept that anyone from the Opposition can say that they have always believed in that. It is this Government who have shown their commitment to the NHS, stuck their colours to the mast and been a true friend to the NHS. A true friend would ensure that the NHS moves with the times and that it can deliver care of the quality and convenience that people expect today and will expect in the future.
Dare I say that I am probably the youngest contributor to the debate—or perhaps not. People of the hon. Gentleman’s generation, my generation and younger will have extremely different expectations of the national health service as they get older and become more regular users of health care services. If the NHS is not ready to provide the level of service that they expect, we will not in the long term be in a position to support its value. That is why we are taking forward a programme of reform—so we can shore up and maintain solid levels of public support for the NHS.
I remember the conversations that the Health Committee had during our inquiry into the role of the NHS. There was opposition to the concordat with the private sector that was signed shortly after the general election and to private finance initiatives. Such opposition is not heard from the patients and the communities that are benefiting from those initiatives, and that is why I fundamentally disagree with opposition to such schemes.
I will pick up on some more of points made by the hon. Member for Wyre Forest, as they were important. He asked whether the capacity is genuinely additional. Absolutely it is. In many ways, he contradicted himself in his next point because he went on to say that the additionality clause in some of the wave 1 contracts was a wired clause that worked against the interests of the NHS. Wave 1 ISTCs were commissioned to provide genuine additional capacity to that provided by the NHS. That was the reason for the clause that he went on to describe as detrimental to the interests of the NHS.
I do not have a great deal of time to deal with anything else. I will push on and perhaps we can pick up on that point in future.
The hon. Gentleman raised the issue of value and questioned how private sector involvement can be the right thing. As a long-standing clinician, he will know that NHS spot purchases from the private sector are not new and have taken place for many years. Across the full period of wave 1 ISTC contracts, the average percentage costs above the NHS equivalent costs for all wave 1 ISTCs is currently 11.2 per cent. That compares favourably with the historical costs to the NHS of spot purchasing from the independent sector. That is because it has been done in a planned way and in a way in which economies can be generated. That is driving good value through the NHS. Let me quote Laing and Buisson’s 2005-06 health care sector report, which says:
“The emergence of a new raft of ISTC providers able to quote at, or fairly close to, NHS reference costs made it clear that the days of NHS spot purchasing from the ‘incumbents’ at 30-40 per cent. over reference costs were over, and that they would have to reduce costs and prices if they wished to be involved in any significant way in servicing the NHS market.”
Hon. Members have failed to recognise that point, which is extremely important. There is a powerful value-for-money argument as well as benefits to patients who will be offered treatment more quickly than they could otherwise have secured it.
A question was asked about capacity planning when schemes are taken forward. I assure all hon. Members that there is a robust process in place to ensure that there is local support and capacity need for each ISTC scheme introduced. That is guaranteed.
The hon. Gentleman asked about training, which is another important issue. Training is a requirement for all phase 2 providers and is contractual. However, it is the choice of local training local organisations—the deaneries—whether the training capacity is used. Such an approach has been agreed with the Postgraduate Medical Education and Training Board. I hope that he welcomes the progress that has been made on that.
My right hon. Friend the Member for Oxford, East (Mr. Smith) mentioned specialist orthopaedic trusts and quoted my local trust, Wrightington, Wiggin and Leigh. I understand the situation in which those providers find themselves and the argument that they make about the costs of providing specialist orthopaedic work not being adequately reimbursed through the tariff. I understand that point. The process of payment-by-results will refine and improve as we progress so that there can be a further differentiation of high-value work and work that can be provided at a lower cost. I recognise the need for a sustainable solution.
My right hon. Friend has raised issues in relation to the Royal National Orthopaedic Hospital NHS Trust before. The trust needs clarification on such questions to take forward plans in relation to its estate or to realise its ambitions to be a foundation trust hospital. There is a need for a sustainable solution, and I and the Secretary of State met the trusts concerned not long ago. I assure my right hon. Friend the Member for Oxford, East that we will work towards finding a solution.