NHS Funding (York and North Yorkshire)

Tuesday 18th June 2013 Westminster Hall

16:30

[Hugh Bayley (York Central) (Lab)]

Thank you very much, Mr Streeter. At the end of April, the hon. Member for York Outer (Julian Sturdy), who I see in his place, and I met the health overview and scrutiny committee of City of York council to discuss the perilous funding settlement received by Vale of York clinical commissioning group. The meeting was also attended by Patrick Crowley, the chief executive of York teaching hospital NHS foundation trust, who said:

“The NHS system in North Yorkshire and York is on the brink of a crisis”.

At that meeting, the hon. Member for York Outer and I agreed jointly to seek a debate to discuss that crisis in Parliament. In the light of that, I hope, Mr Streeter, that you will allow the hon. Member for York Outer to make his own contribution to the debate. I am also pleased to see that the hon. Member for Selby and Ainsty (Nigel Adams) is present for the debate.

The funding for Vale of York clinical commissioning group has suffered a triple whammy. First, it started from the lowest base in Yorkshire and the Humber, because its predecessor body, the North Yorkshire and York primary care trust, received less money than any other PCT in the region. Secondly, the PCTs’ base funding was not split evenly between the five new clinical commissioning groups in north Yorkshire and York, and Vale of York CCG, which covers the city of York, received the lowest share of the funding. Thirdly, that meagre amount was top-sliced, because the former PCT had overspent its budget in the previous year. I will say a little more about all three issues, after which I will suggest an immediate remedy to the problems and a longer-term solution to the funding crisis.

The baseline funding received by PCTs in Yorkshire and the Humber in 2012-13 varied considerably across the region. North Yorkshire and York PCT received £1,475 per patient; Leeds received £1,550 per patient; Sheffield received £1,700 per patient; Wakefield received £1,800 per patient; and Barnsley received £1,900 per patient. Why did the other PCT areas get more? It was because the NHS funding formula allocates a base amount of money for each member of the public, adds or subtracts an element to reflect the age or youth of each person, and adds additional elements in respect of social deprivation. Areas of Yorkshire and the Humber other than north Yorkshire and York are deemed to face greater deprivation and, therefore, greater unmet health needs, and as a consequence they receive more money per capita.

The funding worked out through that formula, which reflects deprivation, was about £1,300 million for north Yorkshire and York in 2012-13. That sum was reduced this year by some £430 million, largely as a result of top-slicing for services to be provided on a national basis by the NHS Commissioning Board, which left some £865 million to be divided between the five clinical commissioning groups. However, they were not treated equally. Vale of York CCG received £1,050 per patient, whereas Scarborough and Ryedale CCG received £1,234 per patient, which is almost £200—20%—more per patient. The odd thing is that the same NHS foundation trust provides services for patients in Scarborough and Malton, which is part of Ryedale, and in the city of York. For some of those patients, however, there is substantially higher funding, which is likely to exacerbate the problems of postcode rationing. Some patients from the better-funded part of the patch will receive access to a wider range of treatments than those from the city of York.

How is the split justified? We are told that the funding was split between the clinical commissioning groups in north Yorkshire and York on the basis of the use that patients from their areas made of NHS services in the previous year. It is well known that middle-class people in more prosperous areas make greater demands of the NHS than do poorer people in deprived areas, so the two parts of the funding calculation for the Vale of York clinical commissioning group are pulling in diametrically opposite directions. The funding formula that allocates money to north Yorkshire and York reflects disadvantage, so north Yorkshire and York gets less than Barnsley, but the funding for the CCGs in north Yorkshire is split based on the use that they made of services, so relatively deprived inner-city areas of York receive less. The problems in those areas are not as severe as those in Bradford or Sheffield, but they are still greater than the problems faced by Richmondshire or Hambleton. It really is unfair to provide a baseline pot of money based on a lower allocation for north Yorkshire and York because it is deemed to have lower deprivation, but to choose the most deprived part of north Yorkshire and York and cut the funding further because people in deprived areas do not use health services as much as people in more prosperous areas.

I understand that when the funding body was determining how to split funding between the CCGs in north Yorkshire and York—indeed, across the country—it decided to use a demand-led formula rather than a needs-based formula, but it looked at what the results of a needs-based formula would have been. I asked the Minister whether he would release that information, but it was not readily to hand. If at least he released the figures on the north Yorkshire and York split, it would help us to work through with clinicians and health service managers in our patch whether the current double whammy, as I call it, is appropriate.

[Julian Smith (Skipton and Ripon) (Con)]

When the group of North Yorkshire MPs met the NHS on several occasions this year, did the hon. Gentleman feel, as I did, as though it was less than transparent with us about how any of the calculations were made?

[Hugh Bayley]

All of us in north Yorkshire and York share concerns about the low level of funding for our patch. I share the hon. Gentleman’s concern about the lack of transparency, which is why it would be enormously helpful for the Minister to ask his funding advisory panel to carry out the calculation I have mentioned. That would illustrate whether there is a problem such as I have suggested, and it would help us to tease out an appropriate solution.

The third part of the triple whammy is that as a result of historical underfunding—under the previous Government as well as the current one—the North Yorkshire and York PCT had a deficit of some £20 million or £30 million year after year. As a consequence of the deficit in the final year of its operation, some £12 million was top-sliced from the baseline funding for the CCGs in our patch. I was afraid that that would happen, so on 4 July last year, I asked the former Secretary of State, the right hon. Member for South Cambridgeshire (Mr Lansley), whether he would guarantee that each CCG would start off with a clean balance sheet, and he replied that

“we, along with the NHS Commissioning Board, intend all the new clinical commissioning groups across England to start on 1 April 2013 with clean balance sheets and without legacy debt from primary care trusts.”—[Official Report, 4 July 2012; Vol. 547, c. 930.]

I do not think that anyone could argue that that was a slip of the tongue, because paragraph 3.2 of the Department of Health’s “Handover and Closedown Guidance” for 2012-13 states:

“CCGs will not inherit legacy debt.”

Furthermore, paragraph 4.5 of “The Operating Framework for the NHS in England 2012/13” states:

“CCGs will not be responsible for resolving PCT legacy debt”.

What should the Government do about this issue?

The first, and immediate, action should be to honour the commitment given to me in the House—similar commitments have been given to other hon. Members from north Yorkshire—and agree, as was requested by York’s director of public health in a letter at the end of April, that the Department of Health will “absorb and manage” the final north Yorkshire and York deficit, which is some £10 million to £12 million. I understand that that has happened in some areas, and has given those new commissioning groups a start without carrying debt that has arisen from management by predecessor bodies.

Secondly, I ask the Minister to assure us that in good time for next year’s funding allocation the contradiction between the needs-based formula that divides funding between the old PCT areas and the demand-based fix, which was used this year to divide the PCT patch budgets between the various commissioning groups, will be resolved.

16:42

[Julian Sturdy (York Outer) (Con)]

It is a privilege to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for York Central (Hugh Bayley) on securing what is an extremely important debate for York and north Yorkshire.

The hon. Member for York Central, other hon. Members from north Yorkshire and I have tirelessly campaigned for some time to secure a fairer funding formula for York and north Yorkshire, so I am extremely pleased to be able to speak today about a matter that is so important to me and my constituents. The hon. Member for York Central has clearly set out the history of the primary care trusts—now the clinical commissioning groups—and their current deficit. However, despite the deficit having being reduced over the past 12 months, York and north Yorkshire CCGs—as the hon. Member for York Central mentioned—are still starting off on the back foot compared with all other CCGs across the country, and that is sadly resulting in a postcode lottery system for health care for our area.

As we know from the hon. Member for York Central, the disparity within the allocation of the funding formula is due to its failing to take into account the rural nature of our county and, most importantly, age.

[Nigel Adams (Selby and Ainsty) (Con)]

I totally agree with my hon. Friend’s point about age. In north Yorkshire, we have one of the largest numbers of over-85s in the country, and the formula simply does not give enough weight to the ageing population. I would have though that it was as clear as the nose on your face that consideration must be given to the rural nature of a county and the degree of ageing of its population.

[Julian Sturdy]

I entirely agree with my hon. Friend. That is why in my short contribution this afternoon I will focus solely on age.

We must note that under the previous Government the funding formula was changed and more money put into the national health service. In addition, deprivation was given more weight in the formula. On paper, ensuring that deprivation is the most important factor, seems, morally, the right thing to do. However, I believe that when that reasoning is put into practice it starts to fall down. The distortion within the funding formula has resulted in some areas being awash with money, leading to well-publicised vanity health care projects, such as the one in Hull, with its 72-foot ocean-going yacht at the cool price of £500,000. At the same time, York and north Yorkshire have consistently struggled, as ably put across by the hon. Member for York Central, to balance the books, which has resulted in their continuing to take difficult decisions about health care provision.

An example of such decisions is that the primary care trust had to stop offering routine relief injections for sufferers of chronic back pain. That decision has had a massive impact on the quality of life of many of my constituents—it has hampered their ability to work and has affected carers. I have raised that issue previously in this Chamber, yet people are again coming through my surgeries, as I am sure they are through the surgeries of other hon. Members here today, suffering from a lack of access to those important injections. The decision is consequently putting more financial pressure on areas such as welfare, and that far outweighs the cost savings made by local authorities under the funding formula. That demonstrates the lack of joined-up thinking under the current system.

It costs approximately eight times more on average for the NHS to care for a patient who is over the age of 85 than one who is in their 40s. York and north Yorkshire, as my hon. Friend the Member for Selby and Ainsty (Nigel Adams) has set out, has one of the highest population of over-85s in the north, and my constituents are really suffering under the current formula. York and north Yorkshire also has a high number of care homes, and a typical GP practice states that 50% of home visits can be taken up just by care home residents, even though that group makes up only 2% of the patients on its roll.

I therefore urge the Minister, through NHS England, to review the current funding formula, to ensure that age is given more weighting.

[Julian Smith]

Was my hon. Friend not appalled, as I was, that when as a group of north Yorkshire MPs we sought clarification about why the NHS Commissioning Board had not given weight to the new Advisory Committee on Resource Allocation formula on age, we were told that the minutes of the meeting in which the decision was made could not be released, against the interests of all the people in our constituencies?

[Julian Sturdy]

I entirely agree with my hon. Friend. The important thing, as has been mentioned, is clarity. We have not had clarity, and we really do need it, considering all the work that hon. Members have put into the issue in our patch.

The change we are discussing would guarantee a much fairer funding formula across the country, and ensure that funding went to those in most need and those who have the highest call on our invaluable national health service.

16:50

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

It is a pleasure to serve under your chairmanship, I believe for the first time, Mr Streeter.

I pay tribute to the hon. Member for York Central (Hugh Bayley) for introducing the debate and raising the important issue of health care funding. He, like all Yorkshire Members in the Chamber, is a great advocate for his constituents. It is important to debate such issues and, in particular, to look at perhaps the greatest determinant of need in the NHS, which is that many older people have very expensive multiple care needs—dementia, diabetes, heart disease—and to look at the very big human need, which is how better to provide dignity in elderly care. That is exactly why my right hon. Friend the Member for South Cambridgeshire (Mr Lansley) adjusted the formula, slightly changing the weighting for deprivation, to reflect such demographic challenges.

My hon. Friends and the hon. Member for York Central will be aware that the responsibility for health care funding now falls to NHS England. I have committed NHS England to reviewing the funding formula, and I am sure that it will listen carefully to today’s debate on north Yorkshire and elsewhere.

It is important to highlight how funding flows work in the NHS, and it may be helpful to say a few words about how the new arrangements have changed the way in which funding is allocated. As Members have pointed out, the NHS is paid for by taxpayers, and the money is allocated to the Department of Health by the Treasury. For 2013-14, the Department has set key priorities for NHS England through the mandate. I will outline the priorities that will help NHS England to prioritise funding within the NHS, and aid in the interpretation and use of the independent data given to it by the Advisory Committee on Resource Allocation.

The first priority in the mandate is the focus on preventing people from dying prematurely by improving mortality rates for the big killer diseases to be the best in Europe, through improving prevention, diagnosis and treatment. There is a clear priority to improve the standard of care throughout the system, so that the quality of care is considered as important as the quality of treatment or the clinical outcome. That will be done through greater accountability, better training, tougher inspections and paying more attention to what patients say, so that we have a truly patient-centred NHS, which is as important as providing care and dignity of care for older people.

There is a clear priority to improve treatment and care of people with dementia, and to focus on the important role played by technology—particularly in rural areas, through telehealth and telemedicine—in delivering better care in the community for older people. A key focus is on improving productivity and ensuring value for money to make sure that our health care system stimulates and supports the local economy in relation to not only the obvious importance of keeping local populations well and at work, but the benefits that can be gained from synergies with the life sciences and the supportive and stimulating research from such important places as Cambridge.

The Department of Health has set the mandate and a clear sense of direction for the NHS, with the priorities that are clearly there. The Department then makes allocations to several health bodies, including Public Health England, Health Education England, the NHS Trust Development Authority and NHS England. For 2013-14, NHS England received £95.6 billion, and some of that money will then, in turn, be allocated to clinical commissioning groups, but allocations to individual CCGs and the formula used to decide them are now the responsibility of NHS England, which has the key role.

In making those allocations, NHS England relies on advice from the Advisory Committee on Resource Allocation, as Members have said. ACRA provides detailed advice on the share of available resources available to each CCG to support equal access for equal need, as specified in the priorities set out in the mandate.

NHS England does not, therefore set income on an equal cost per head basis across the whole country; allocations instead follow an assessment of the expected need for health services in an area, and funds are distributed in line with that, which means that areas with a high health need receive more money per head. Under the formula, the 10% most deprived areas received more than 30% more per capita compared with the 10% least deprived, as the hon. Member for York Central outlined in his comments about Barnsley.

The calculation is based on several factors. In particular, it is increasingly based on the age of the population, the relative morbidity and unavoidable variations in cost. The objective is to ensure a consistent supply of health services across the country: the greater the health need, the more money that will be received. I am sure that we all support that.

The shift from a PCT funding formula to a CCG funding formula resulted in changes to the allocation for each particular area in 2013-14, as the hon. Gentleman commented. Funding now often takes place at a more local level—at the CCG rather than the PCT level—which we hope will ensure better prioritisation for local health care funding, with the funding formula being more sensitive to local health care needs.

The CCG model covers only non-specialised hospital and community care, as well as primary care prescribing, but the older PCT model also covered the whole of primary care, specialised services and public health, the costs of which were transferred to NHS England. There is, therefore, no direct comparability between the old PCT funding formula and the new CCG formula, for the reasons that I have outlined.

[Nigel Adams]

Whenever there are historical funding problems, such as those we experienced in north Yorkshire, there are inevitably leaks or stories about potential rationing and cuts to services. In my constituency in north Yorkshire, there has been lots of media speculation that a hospital opened by the Duke of Gloucester less than two years ago might close or lose its minor injuries unit. I have an awful lot of respect for the Minister, because he has done the job professionally, but I urge him to press NHS England to consider the funding case for north Yorkshire and other rural areas, and to consider the special circumstances that we have to deal with.

[Dr Poulter]

I will of course continue to press NHS England and raise concerns, as we have with representatives from the area, about the funding challenges being faced in north Yorkshire. It is also important to be aware that, because of how the new system works, with a mandate that sets clear priorities, NHS England recognises the need for a review of the funding formula for not only north Yorkshire, but nationally.

I agree with the remarks of my hon. Friend the Member for York Outer (Julian Sturdy) and the hon. Member for York Central about ensuring that funding goes to areas of greatest health care need. NHS England will obviously want to take account of rurality, age, the needs of older people and the complexity of care when it reviews the funding formula.

[Hugh Bayley]

The Minister says that Barnsley gets more money than north Yorkshire because of its higher level of deprivation, which I acknowledge, but why has the new formula given York less money than leafy Richmondshire and Hambleton, when York has higher levels of teenage pregnancy, drug addiction and deaths from asbestos-related diseases among people who had a career in industry. We have higher levels of deprivation than other parts of north Yorkshire, and yet we get less money. That cannot be right.

[Dr Poulter]

The hon. Gentleman makes a good case on his constituents’ behalf, but he should recognise that the Vale of York CCG—it serves not only his constituency, but others in the surrounding area—has received £357,891,000 which is the highest allocation in the area. He is right that its allocation is relatively lower per head than, say, that of Scarborough and Ryedale CCG, but I have outlined the factors that inform the capitation formula for funding, including density of population, and the obvious advantages of delivering health care in an urban environment.

I would be very happy to talk through such issues with the hon. Gentleman and my hon. Friends who are here today, and I am sure that we can arrange a meeting to do so in more detail than this debate allows. I also point out that NHS England will fundamentally review the funding formula to take account of demographics, age and rurality, which I am sure we all welcome. I look forward to meeting hon. Members in due course for further discussions and to see how I can assist them with the matters that they have raised.

Question put and agreed to.

16:59

Sitting adjourned.