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Nhs: Economies In Administration

Volume 415: debated on Monday 8 December 1980

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2.41 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what is the expected reduction in staff to be achieved by the abolition of one administrative tier of the National Health Service, namely, the replacement of area health authorities by district health authorities.

My Lords, we anticipate a 10 per cent. reduction in management costs by 31st March 1985, which could involve a reduction of up to 4,000 posts. This will be achieved both by the elimination of the area tier and by the streamlining of management below the level of the new district health authority.

My Lords, while thanking the Minister for that reply, may I ask him whether it is true that there will be a saving of £30 million per annum in the budget of the National Health Service and a reduction of 10 per cent. in the administrative costs? On the other hand, does he not feel that there is a fear that some of the administration might possibly be transferred from the middle tier, on its abolition, to the upper tier or to the lower tier and so diminish the hoped for reduction in costs?

My Lords, the exact number of posts that will go will depend partly on the rate of growth in National Health Service expenditure, because we shall be controlling management costs as a proportion of expenditure, and partly on how health authorities decide how they can best achieve the 10 per cent. reduction that we seek. If they prune severely what are called "non-staff management costs"—and I mean by that costs such as accommodation, heating, cleaning and so on—they will reduce the number of staff posts that have to be cut.

My Lords, may I ask the noble Lord the Minister whether it is not quite impossible at this stage for the Government to give any indication at all of what can be saved when the area health authorities cease to exist and the district health authorities come into account? Is it not a fact that the district health authorities, although smaller in number, will have to cover exactly the same area as the 209 area health authorities? At this stage and until this change comes about, is it not quite unrealistic to give any indication at all as to what, if anything, can be saved?

My Lords, it is a judgment. We hope to reduce management costs by 10 per cent. The efforts of the last Administration resulted in a cut from 5·7 per cent. to 5 per cent. of expenditure in management costs. This was a successful operation and we now wish by 1985 to make a further reduction from 5 per cent. to 4½ per cent. I entirely agree with the noble Lord that to put a precise figure on it, whether £30 million or any other, at this stage would be unwise. Current costs are about £300 million. It is an indication of what we hope to achieve.

My Lords, can my noble friend say whether, by the time the reorganisation is complete, there will be more or fewer posts than there were before the last reorganisation in 1974?

My Lords, may I ask the noble Lord the Minister whether he is aware that we on this side of the House thoroughly approve of the reorganisation in that one tier is going? However, are the Government aware that at the present moment the facilities in the National Health Service are quite inadequate to meet the demands which the Service should meet? If there is to be a further curtailment of personnel then the service provided by the National Health Service will be even less effective than it is at the moment.

My Lords, I think the noble Lord takes a rather pessimistic view of the future. We do not intend to see any curtailment of services. We hope to get a little "fat" out of the National Health Service.

My Lords, is it not a fact that the replacement of the area health authorities may not be completed until 1985, by which year the present Government may not even be in office?

My Lords, can the noble Lord tell us whether these area health authorities were set up by a Conservative Government and that it is a Conservative Government which is abolishing them? Would he not agree that it would be better for the stability of the country if they stopped acting like the Brave Old Duke of York?

My Lords, it is quite true that it was a Conservative Government which introduced the area health authorities and they are now showing the courage to remove them. This could, of course, have been done quite easily by the last Administration, had they felt like it.

My Lords, is the noble Lord aware that the first step to undoing the muddle created by a previous Conservative Government is welcome? May we hope that it will be followed by an attempt to dismantle the rest of their National Health Service Act, the Local Government Act, and the London Government Act?

My Lords, the noble Lord may certainly hope for better and better government in the future.

My Lords, will the noble Lord tell the House whether the Government's calculations regarding savings include taking into account the compensation that will be payable to a considerable number of highly paid officers, possibly among the 4,000-odd that he mentioned?

My Lords, our calculations certainly take into account compensation paid to any of the staff who are made redundant. The Government hope that very few staff will be made redundant. There will be early retirement and natural wastage, and we hope that these will cover practically all the proposed cuts.