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The Minister of State, Department of Health (Paul Burstow)
I congratulate the right hon. Member for Exeter (Mr Bradshaw) on securing this debate. As a former Health Minister, he has stood up in the Chamber to respond to hon. Members who have raised concerns on behalf of constituents, as he has done thoroughly and thoughtfully today. I appreciate the way in which he presented his case. When he was a Health Minister, I found him to be a constructive and courteous colleague on the occasions on which I dealt with him.
I pay tribute to the hard work done by national health service staff every day of the week, whether in back offices or on the front line in wards. They change lives. It is all too easy to dwell on the things that go wrong and not to pay enough attention to the excellent work that they do. I certainly want to pay attention to that today. This Government are committed to doing all that we can to support front-line staff and ensure that we continue to deliver excellent services to the right hon. Gentleman’s constituents.
I will first address the central issue—the role of NHS shared business services and how it has come to be such an important player in shared services—by referring to the chronology. NHS SBS was established in 2005 after an open competition in accordance with European procurement regulations. I will certainly consider the right hon. Gentleman’s point about procurement law and will write to him if any further issues need to be dealt with. I will confirm the state of play.
The service was established to help to meet efficiency targets set out in the previous Government’s efficiency review, led by Sir Peter Gershon, in 2004. In creating NHS SBS, the last Government brought together two shared financial service centres situated in Leeds and Bristol and introduced private sector capacity and expertise to assist expansion and increase the range of services offered, to deliver the potential efficiencies of such an approach. I appreciate the right hon. Gentleman’s question about his concerns on behalf of staff. As a constituency MP, I too would want to ensure that such concerns were properly aired and that the decision makers involved understood those concerns and properly reflected on and respected them. However, I am sure that the right hon. Gentleman, as a former Health Minister, will understand that the responsibility for determining how local services are delivered rests with local NHS organisations. I will set out why. Local NHS organisations are in the best position to understand what local people need, how to design shared services to meet the support needs of NHS provider organisations and so on, and how to ensure that the offer available is appropriate and affordable. It would be inappropriate for a Minister to try to micro-manage the details of individual contracts.
In line with that policy, the Government absolutely do not mandate NHS organisations’ use of SBS. That remains a decision for local organisations on the basis of their assessment of the quality and value for money that they will receive by letting contracts to SBS. Nevertheless, the Department supports the use of SBS. I will explain how that tension is resolved. As a former Minister, the right hon. Gentleman will have grappled with it himself.
Public sector use of shared services and private sector expertise is in line with the policies of this Government and the last Government, but it absolutely must offer best value for money and meet the required quality standards. Equally, when the previous Government set up SBS, they took a 50% stake, meaning that from day one, the Department has had a duty to promote the venture and create value for the taxpayer. In turn, the Department’s share of SBS profits is returned to the NHS. It is therefore not uncommon for the Department, in undertaking its duty, to correspond with NHS organisations considering the use of NHS SBS in support of using shared services, particularly SBS. Such letters have been consistently provided throughout the existence of SBS, and I have copies of correspondence dating back to October 2008 that relates to the transfer of family health services of the sort that we are debating.
Mr Bradshaw
Does the Minister accept, however, that the original joint venture established by the Labour Government was for finance and accounting, not family health services? The only area in which we allowed SBS to take over the running of family health services was north London, because that service was failing dismally. It does not seem to have improved much since SBS took over, either.
Paul Burstow
My understanding—I will go back and check, and if it is not correct, I will write to the right hon. Gentleman—is that that extension of SBS’s role was a policy decision by the previous Government, and that the Nicholson challenge set in 2009 of making better use of support services by sharing across organisations was identified as an opportunity to realise savings that could then be reinvested in front-line services. I hope that that is a shared goal, even though its execution is open to proper scrutiny and debate.
I reassure the right hon. Gentleman again that, although the Department writes letters of the sort that he has referred to, they are nothing new in the context of promoting that business venture and the return of profits to the NHS. I stress that those decisions are local.
Back in 2007, the National Audit Office considered the potential of NHS SBS and estimated that it could deliver £250 million in savings over 11 years. To date, more than £70 million has been saved, freeing up funds for front-line patient care. As I mentioned, the review of shared services undertaken as part of Sir David Nicholson’s productivity challenge identified how a minimum of £600 million could be saved across England and redirected to support front-line services. The report cites SBS as an example of successful shared service ventures, delivering typical savings of between 20% and 30%.
In the specific case of Devon PCT’s family health services, as the right hon. Gentleman said, SBS provides numerous administrative functions relating to primary care, including patient registration, patient records management and contractor payments. Those functions help the NHS to run more smoothly, and the testimonies that he read out bear witness to the fact that they are valued services.
The PCT, along with nearby health care commissioners, has been exploring how to save money on administration and management functions without affecting front-line services. To spell out the current situation in relation to the agreement between the south-west and SBS, SBS provided an outline proposal in March this year, followed up with a final proposal in June. At the south-west regional project board, 10 trusts agreed to sign an intention to proceed in September. The intention to proceed is made between the trusts and SBS—there is no contractual relationship in that sense between the Department and SBS—as an agreement to invest the time and effort in undertaking the final element of due diligence, which was one of the right hon. Gentleman’s concerns, and consultation. It is not, therefore, a commitment to enter into a contract.
Due diligence is a process that runs alongside the contracting process. The due diligence process began formally alongside the final proposals in June and will gather pace following the intention to proceed. As part of this process, efforts are undertaken by both sides to understand the precise details of the proposed arrangements. As part of that process, the final and precise quality, which is an important consideration, and service standards are determined. If, as part of the process, the trusts are not satisfied that the offer from SBS can meet the quality and value standards that they require, they are not committed to entering into an agreement with SBS.
Mr Bradshaw
That is helpful, because my understanding of the situation is that the staff in Devon have been told to expect to be TUPE’d across on 1 December. The consultation for staff is taking place in parallel with the due diligence process, but surely that should wait until the trust itself is satisfied with the quality of the bid, following the due diligence process.
Paul Burstow
It is not uncommon for such processes to run in parallel, which, as the right hon. Gentleman has identified, is what is happening in this case. This is not, however, a conveyor belt that cannot be reversed. The point that I am making is that the due diligence process is not about doing things by rote; it is about making sure that both the taxpayer’s interest and the quality standards of the service are properly protected. It is a legitimate area for local scrutiny and debate, and for challenge by him and other Members who have a concern in the matter.
The TUPE consultation started on 2 November. Extensive discussions will be held with staff and managers. Following the consultation, the organisations will be required to consider the feedback from staff. Again, it is not a rote process, but one that requires decision makers to have proper regard for what they learn from the process. The right hon. Gentleman has mentioned India. I should make it clear that NHS SBS has no call centres for family health services in India. It is envisaged that, under this contracting arrangement, if it goes through, some staff will work in India, but they will not be part of a call centre service.
Only when each of the processes that I have described is complete, and the individual local organisations have concluded that the service offering is in the best interest of the local area, will the decision be taken to proceed. Should the proposals be advanced, it is expected that five centres of excellence will be established in the south-west, based in St Austell in Cornwall, Exeter in Devon, Ferndown in Dorset, Brockworth in Gloucestershire and Devizes in Wiltshire. That decision will be a local one made by NHS organisations on the basis of all the facts provided as part of the process that I have set out. The matter is to be decided locally, and those concerned must assure themselves—hence the due diligence process—that the contracts afford the necessary flexibility and quality standards. Indeed, on quality change and the formation of an NHS commissioning board, the contracts are framed in a way that allows such flexibility. I am assured that that should not present an insuperable obstacle to delivering the wider goals.
Mr Bradshaw
I appreciate that, but would it not make all the more sense to hold off signing the contracts until we know what the national picture will be when the commissioning board publishes its findings? I should be grateful if the Minister returned to the Department and found out why the official in charge of this work does not seem to think that the model being pursued in the south-west involving SBS would be compatible with what is likely to emerge from the recommendation of the national commissioning board.
Paul Burstow
I will write to the right hon. Gentleman to amplify why I think that the policy concern is not as great as has been presented, and why the emergence of the NHS commissioning board, with its role in family health services and the commissioning of primary care, provides a model whereby the exploitation of the opportunities for shared services will be even greater than it is now.
In conclusion, local NHS organisations have responsibility for getting value for money and meeting the highest levels of quality. That is true about everything they do, including proposals such as the one under discussion. The coalition Government support the move to shared services, if that decision is made locally and for the right reasons.
This is equally one of the key proposals that will help trusts to meet the quality and productivity challenge that the NHS has faced since 2009. I understand that the proposal for the south-west region aims to deliver operational savings of 32%, with a 23% net saving after the cost of change. By commissioning the service in a different way, it is estimated that the NHS can save in excess of £6 million over four years in the south-west, including £1.6 million in Devon.
I hope that the right hon. Gentleman will agree that it is only right for local organisations to look at areas where they can deliver efficiencies and quality and can release money for investment in front-line services. I hope that this debate has gone some way to addressing the right hon. Gentleman’s questions. I will undertake to enter into the correspondence that he has requested. If he has any further questions, I am sure that the Department will want to respond as quickly as it possibly can. I thank him for initiating this debate.