Lord Graham of Edmonton
Sixty-one years ago. I may have just given away the age of the noble Baroness. Well, the noble Baroness is just younger than me and I am now 88 years old, so I have not given it away too much.
Lord Newby
My Lords, before the noble Lord embarrasses the noble Baroness, Lady Boothroyd, further—
Lord Newby
I remind the noble Lord that there is a time limit of five minutes on the speeches.
Lord Graham of Edmonton
I have watched a number of five minutes’ being put up for the past hour, but no one has said anything to me. Thank you very much.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, first I thank the noble Lord, Lord Patel, for securing this debate. I am particularly grateful to him for presenting the House with the scale of the financial challenges that face our health and care services. Those challenges should not be underestimated and I very much welcome the opportunity to debate them.
Healthcare systems across the world are facing huge and very similar challenges. The noble Lord, Lord Filkin, quoted a number of sobering and inescapable statistics. Our population is ageing. The number of people aged over 65 in England is set to increase by 50% by 2030 and the number of over-85s is set to double. New treatments and technologies, while very welcome, often increase costs. Of particular importance, more people are living longer with long-term conditions. There are now 15 million people in England living with a long-term condition and that number is rising fast. By 2018, an estimated 2.9 million people will have more than two long-term conditions, up from 1.9 million in 2008.
More people need to be supported to manage their conditions well and this means, as my noble friend Lady Tyler and many noble Lords have identified, that the NHS and social care need to find ways of working more closely together. This includes, as the noble Baroness, Lady Emerton, reminded us, managing older people’s care proactively to help keep them out of hospital, as well as ensuring that the care and support people need is ready and waiting for them when they are ready to leave hospital, along the seamless pathways she talked about. It also means making sure that the NHS is there for us all in an emergency, as it should have been for the noble Lord, Lord Graham of Edmonton.
I want to outline the Government’s approach to the financial challenge set out in the recent spending round and then go into more detail on our proposals to bring about the radical change in the integration of health and care services. The spending round set out that the Government are continuing to protect health spending in 2015-16. We are setting up a £3.8 billion pooled health and social care budget to transform service delivery—to which I will return in a moment. We are providing better and more proactive care for the vulnerable elderly. We are introducing a new national minimum eligibility threshold to protect access to social care services—again a topic to which I will return—and we are beginning work on introducing the cap on the cost of care so that no one should have to sell their home to fund care later in life.
In addition to taking these radical steps to integrate health and care, we are making enormous strides towards an ever more efficient and comprehensive health service. We are pressing ahead with investing in technology to reduce clinical mistakes and to guarantee quality of care; investing in cancer services through two new proton beam therapy centres and investing in better mental health care. We are also working closely with partner departments across central government to fund capital projects worth almost £700 million.
Last month in the spending round the Government committed to protect spending on health through to 2015–16. In addition to already committing £12.7 billion of funding to 2014–15, we will be adding an extra £2.1 billion in 2015–16. All this investment will go towards delivering improving services and boosting integration. Although funding continues to rise, meeting rising demand represents a huge challenge. The noble Lord, Lord Kakkar, was absolutely right. Greater efficiency is vital here and I am pleased to say the NHS is already delivering significant efficiencies. Thanks to the dedicated and hard-working NHS staff, the service delivered £5.8 billion of savings during 2011–12 and approximately £5.1 billion for 2012–13. This means that the NHS is on track to deliver up to £20 billion of efficiency savings by 2014–15.
The noble Lord, Lord Rix, and the noble Baroness, Lady Hollis, spoke about the importance of funding social care. We are clear that they are right. In the 2010 spending review, we allocated an extra £7.2 billion from 2011 to 2015 to support social care services and we have committed another £0.5 billion since. We calculated that this would be enough to maintain services if councils achieved 3% efficiency which was an assumption in line with the projections of The King’s Fund, the Local Government Association and the Association of Directors of Adult Social Services. This included money transferred by the NHS to support social care services that benefit health.
One very important way in which to deliver efficiency is to create a genuinely joined-up service, correcting the failure to co-ordinate care that the noble Lord, Lord Crisp, spoke about so well. With some of the biggest users of the NHS being those who also use social care services, we need to make fundamental reforms to the system to ensure better integration between services. In delivering these efficiencies to date, the NHS and social care have clearly made huge strides in working more closely together and getting more value from the public money that they receive. Too often, people still fall through the cracks. The changes announced in last month’s spending round represent a significant opportunity to do more; rather than continue simple transfers from the NHS to social care, the spending round announced a £3.8 billion pooled health and social care budget. This is a radical step forward in reducing the silos of separate local budgets and will be a powerful driver of local integration. The aim is that the pooled fund will be directed at activities that have a clear benefit across both the health and care systems, and it will be given only on the basis that services are commissioned jointly and seamlessly between the local NHS and local councils.
Health and well-being boards, as well as being the local hub for planning service provision, will play a significant role in spending pooled budgets. To access this funding, local partners will need to agree a collective plan for how it should be used, including distribution within the health and care system. Plans will cover how areas will protect social care services; achieve seven-day working in social care and health to support patients being discharged and prevent people being unnecessarily admitted at weekends, which is an abiding problem; ensure better data sharing between councils and the NHS, with a requirement for the NHS number to be used as a unique identifier; and ensure a joint approach to assessments and care and support planning. Some £1 billion of the money will be linked to outcomes achieved, with half being paid at the beginning of the year and the remainder in the second half of the financial year. There will be a strong element of local determination in setting these outcomes. Many local authorities and NHS partners are achieving much greater integration between health and care services, thereby improving care for people and optimising the use of resources. The new pooled budget will help to make this a reality across the country.
A number of noble Lords have drawn attention to the wider picture and have referred in particular to the predictions by NHS England of a significant funding shortfall by 2020-21. I am not sure that it would be wise of me to ignore those predictions, as the noble Lord, Lord Desai, sought to advocate. Clearly, we are experiencing the biggest financial challenge that the NHS has faced. Work to set the NHS on a sustainable footing in the long term has already started. I have mentioned that it is on track to deliver £20 billion of efficiency savings by April 2015, and that is a start—but more must follow. We are pleased that NHS England is undertaking this work to better understand and respond to the long-term challenge for the NHS, and has committed to the development of a 10-year strategy. I welcome the realistic tone of the document that it has just published. NHS England will lead that work to build on the gains and efficiency in the NHS in 2015-16 and beyond; its publication today is an important first step, and it is looking for genuine engagement and the kind of open debate called for by the noble Lord, Lord Turnberg.
The noble Baroness, Lady Boothroyd, spoke about the acute difficulty with funding that faces us. We know that demographic change and more people living with long-term conditions, as well as the rising cost of drugs, will continue to put pressure on the NHS. So those demands are accepted by all, and we agree with NHS England that the NHS needs to transform the way in which it does things to become more efficient. It must be able to make the decisions that it thinks are in the best interests of patients, which is why we set up NHS England to work with local doctors, nurses, patients and the public about how their NHS works for them. The consultation on migrant and visitor access should elicit some important messages from the clinical community as well as the general public. I shall refer in a moment to what the noble Baroness said on that subject.
The noble Lord, Lord Filkin, suggested that integration and prevention alone will not solve the funding problem. I agree with him that it is not the whole solution but it is an extremely important part of the solution, which is why we have taken the opportunity of creating the pooled fund that I have mentioned. But we are not relying on that alone; we are maintaining our commitment to protect the NHS budget, despite precarious public finances, and the QIPP programme is on track to deliver up to £20 billion of annual efficiency savings by 2014-15—and we will continue to drive efficiency beyond that.
The noble Lord, Lord Turnberg, expressed doubt about moving services into the community and whether this would actually save money. I believe that it will and should save money; moving care into the community is not about doing the same things in another location—it is about managing conditions well to avoid the need for acute care. There are some good examples of where that has happened. Evidence from the four whole-place community budgets suggests that savings from integration could be very substantial. In their business cases, the pilots that we have run suggest that the net savings that could be achieved over five years are: Cheshire West and Chester; £26 million; Greater Manchester, £3.8 million; Triborough, £190 million; and Essex, £90 million. Those are significant figures by any standards.
The noble Lord, Lord Kakkar, asked me whether the department or the NHS models future trends on demography and disease. We most certainly do. My department, the NHS and other health bodies model all those trends. We agree with NHS England that the NHS must continue to change if it is to get ahead of these trends and, indeed, influence them. As my noble friend Lord Ridley recognised, this can be done. We have made a good start in delivering efficiency savings, but it is important to take on board the fact that savings in the first two years have been reliant on reducing bureaucracy and having pay restraint, as well as making local improvements in operational efficiency. The NHS now needs to focus on the transformational change of services away from hospitals and into the community.
I shall come on to the issue now raised by the noble Lord, Lord Hunt of Kings Heath, around reconfiguration. Certainly, the Government support reconfiguration. The NHS has always had to respond to patients’ changing needs and expectations. As lifestyles, society, technology and medicine continue to change, the NHS needs to change as well. Both the Government and NHS England are clear that this will not mean cutting, charging for or privatising services. Local empowerment is the key here. It is not fruitful or wise to go for topdown redesign. Local empowerment is the key to allowing services to respond to the needs of local people. Decisions about the future design of services need to be made as part of an ongoing conversation between commissioners, providers, local authorities, and the communities they serve. Clinical quality and local need should be at the heart of those decisions. As the noble Lord knows, we have made it clear that we expect proposals for significant change to meet four tests. There should be strong public and patient engagement; the proposals should support choice for patients; there should be a clear clinical evidence base; and there should be support for proposals from clinical commissioners. We have encouraged necessary reconfiguration through the NHS mandate.
I, too, noted the decision by the Competition Commission today around the mergers in Dorset. All mergers of NHS organisations must be in the interests of patients. The Competition Commission has a specific role to play in this, and that is the legal position. We note the commission’s provisional findings, which will be discussed with the two foundation trusts and other interested parties before a final view is reached.
The noble Lord, Lord Kakkar, spoke powerfully about the life sciences industry and how vital it is to the NHS—and, indeed, innovation more generally. We are absolutely committed to innovation and healthcare, both to deliver the best possible care to patients and as an important driver of economic growth. Innovation can also help to drive down costs. The healthcare and life sciences section of the Government’s plan for growth 2011 highlights that health research and innovation have a key role in the national economy as well as in improving health and care.
NHS England has an important leadership role, such as continuing to support the strategy for UK Life Sciences, and in spreading innovation throughout the NHS in line with their commitments in the innovation, health and wealth strategy.
In our current consultation on revisions to NHS England’s mandate, we propose updating its objectives on growth. The aim would be to help drive forward the Prime Minister’s initiative, announced in December last year, to sequence 100,000 whole genomes over the next three to five years by supporting its implementation and delivery and by preparing the NHS for the adoption of genomic technologies.
The noble Lord asked me what metrics would be applied to determine whether AHSNs are successful. I agree that there need to be robust and transparent outcome measures, and that is why there is a three-year academic evaluation commissioned jointly by the Department of Health and NHS England, which is currently out to tender. In addition, we are designing the five-year licence and building into it robust and vigorous outcome metrics, national baselines and locally appropriate lead indicators. That is due for completion by 1 September. However, all this will evolve over the five-year licence period.
My noble friend Lord Ridley said something unarguable: that the NHS needs to remove more inefficiencies. I completely agree with him and will draw attention to two specific examples: procurement, to which the noble Lord, Lord Hunt, referred and technology, which was spoken to so well by the noble Lord, Lord Bhattacharyya, the noble Baroness, Lady Lane-Fox, and the noble Lord, Lord Crisp.
On procurement, the NHS undoubtedly needs to look at every pound it spends to see whether it is giving value for money. Procurement spend accounts for around £14 billion of the NHS budget and we need to make sure that this money is being effectively spent. We will publish plans this summer to save up to £1 billion by 2015-16 through more efficient procurement.
On technology, I listened with care to the expert views of the noble Baroness, Lady Lane-Fox. We are committed to a paperless NHS by 2018 to improve services and make real efficiency and productivity savings. Better use of technology will save time for doctors and nurses, improve patient safety and has the potential to save billions. External studies have estimated that cost savings of £4 billion can be achieved, but these figures are illustrative at the moment and are subject to further work and examination.
My noble friend Lord Cormack suggested that we had reached a time when we needed a plurality of funding for the NHS. I understand the arguments that he put forward but I should make it clear that the Government have no plans to introduce any additional charges for NHS services. The NHS constitution states clearly that NHS services should be free at the point of use, except where charges are expressly provided for in legislation. Any decision to introduce new charges would need to be sanctioned by Parliament.
The noble Lords, Lord Rix and Lord Bhattacharyya, spoke about social care eligibility and the national threshold. In line with the recommendations of the Dilnot commission, the Government are committed to introducing a national minimum eligibility threshold. This will ensure that everyone has a minimum entitlement to social care, wherever they live, but councils will be free to provide services beyond the minimum level and there is no sense in which we are asking councils to be less generous.
The noble Baroness, Lady Hollis, spoke about local authorities facing 50% cuts. I recognise that local government has faced tough constraints on budgets but I do not recognise the 50% figure. Over the past four years of the current spending review, local government spending was forecast to fall by 14% in real terms and DCLG has calculated that this will fall in 2015-16 by a further 2.3%. It was that context that led us to take the decision to make significant additional resources available from the health budget to social care.
I am afraid that time is now against me. I have much more to say, particularly to my noble friend Lord McColl, who raised the extremely important subject of obesity, to the right reverend Prelate the Bishop of Derby on harnessing the voluntary sector to deliver more care, and to the noble Baroness, Lady Boothroyd, on NHS charges for migrant and visitor access. However, I fear that I will have to address those points in a letter.
I hope that this debate has brought it home to all of us, as it has to me, that the challenges facing us in ensuring that we have a sustainable, high-quality NHS for tomorrow and the long term, will occupy us for some time. They are issues that the Government in no way seek to avoid in our stewardship—which we are privileged to have—of this precious and valued national asset, the health service.