The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I first congratulate my noble friend on securing this debate. I know that the role that mutuals play within our society is a subject close to his heart, as he has indicated tonight, and of course the future of our hospitals is a subject of utmost importance to all noble Lords. Before I respond to the particular points raised by my noble friend, I should like to acknowledge the great benefits that cottage or community hospitals provide to those in their local area. I shall set out how the changes we have made to the NHS have provided protection to community hospitals wherever they are needed. Finally, I will describe the role that mutuals play in the delivery of our health services, including our community hospitals, both now and in the future.
Cottage hospitals, generally referred to as community hospitals, are local hospitals, units or centres providing a range of accessible healthcare facilities and resources. They can be invaluable assets that make it easier for people to get care and treatment in the community, closer to where they live. They allow large hospitals to discharge patients safely into more appropriate care, freeing up beds in major hospitals for people who need them, and they can reduce the need to travel long distances to larger facilities.
There are many excellent reasons why people are often extremely protective of their local community hospital. It may deliver a range of essential services, provide employment for local people and afford space for community groups. It is understandable that community hospitals are fiercely defended and inspire such loyalty. It is right that people think about their future place.
The changes that this Government have made to the NHS have given the power to local clinicians and patients to make improvements to their local NHS. Clinical commissioning groups, led by local clinicians, are now responsible for commissioning services. They are free to work out which services are needed and where they should be located to best meet local needs. I beg to differ from the noble Lord, Lord Hunt, about the accountability of clinical commissioning groups, which is real in the sense that they are accountable to NHS England for the outcomes that they produce and the plans that they put in place; they are accountable to the health and well-being boards on which they sit; and they are accountable to their local Healthwatch, which is the body that represents patients and the public in the local community. So I do not share the view of the noble Lord, Lord Hunt, in that sense.
It may be helpful if I explain the ownership of community hospitals. Ownership of the physical premises of many of our community hospitals changed when primary care trusts were abolished. Some were transferred to local NHS trusts and NHS foundation trusts. Other hospitals went to NHS Property Services, the Department of Health-owned property management company. I recognise that some noble Lords had concerns about these transfers when they occurred. We have been extremely clear that the conditions attached to these transfers mean that these hospitals will be retained unless local commissioners determine that they are no longer appropriate for delivering the local services that the community requires. As with all decisions about local patient services, it is right that these decisions are taken locally, taking account of local views. However, we must acknowledge that sometimes old infrastructure, although much loved, cannot keep up with the community’s needs. Changes in treatments and communities may require new and innovative models of care. Local commissioners should be able to explore a full range of options to ensure that services meet the needs of patients.
I now turn to the potential role that mutuals and staff ownership models could play in the future of our hospitals. However, I need to be clear from the outset that mutualisation is about the services that our hard-working NHS staff and their organisations deliver. It is not about the bricks and mortar where they work. I hope that will not disappoint my noble friend, but we are not considering the transfer of NHS property out of the ultimate ownership of the Secretary of State—unless, as I have said, it becomes surplus to NHS requirements.
Public service mutuals, as we define them, are organisations that originate in the public sector, deliver public services and involve a high degree of employee control. Over the last four years, this Government have worked tirelessly to ensure that citizens have access to effective and high-quality health provision. This is why we have broadened approaches to the delivery of healthcare, including through public service mutuals—a model which is revolutionising front-line provision and bringing benefits to staff, local commissioners and service users.
The Transforming Community Services programme, started under the previous Government, saw the separation of commissioning and provision within primary care trusts. As part of this programme, some organisations spun out of the public sector. We now have over 45 mutuals delivering community healthcare across the country, including in some community hospitals, transforming the quality of patient care through a more engaged and empowered workforce. To build on these successes, last year my right honourable friend Norman Lamb, alongside my right honourable friend Francis Maude, asked the highly esteemed Chris Ham, chief executive of the King’s Fund, to consider the options for strengthening the voice and the stake of employees in NHS provider organisations, always with the aim of empowering them to deliver efficient, high-quality services centred on the needs of patients. When he published his report in July of this year, he presented clear evidence that more engaged staff are linked to lower rates for some hospital-acquired infections and positive patient reports of dignity and respect. One study demonstrated that each increase of one standard deviation in levels of satisfaction was associated with a 2.4% drop in patient mortality.
We also know that mutuals can lead to greater job satisfaction, higher productivity and reduced absenteeism, and social enterprises and mutuals have a proven track record of delivering high-quality, responsive, cost-effective services. While there are significant numbers of mutuals delivering community services in a range of settings, a number of different opportunities and challenges arise when thinking about how these mutual principles can be applied to a wider range of acute hospital services where they do not currently operate. That is why, in response to Chris Ham’s report on staff engagement and empowerment in the NHS, we have established a pathfinder programme to support NHS trusts and foundation trusts in exploring the potential advantages of the mutual model. We have made available a £1 million fund to support a number of pioneering pathfinder organisations in understanding what mutualisation could mean for them and identifying solutions to practical barriers. We will use this pathfinder programme to explore and identify the benefits and risks of the mutual model in new areas of the health sector—which could include, but is not limited to, staff working in community hospitals.
I must be clear, however, that the establishment of a mutual model is not a panacea. Mutuals can succeed or fail, as can any organisation. Participation in our pathfinder programme, and any subsequent decisions by organisations to consider the benefits of the mutual model, must be on a voluntary basis, driven by the views of both staff and their patients and users in the local community. Therefore, while I can be clear that this Government understand the benefits of the mutual model and want to explore its potential across a range of health services, we do not anticipate that we would seek to roll this out across all staff working in community hospitals.
I now turn to some of the questions that have been posed. First, my noble friend queried whether we could look at international examples here. He may know that Sir David Dalton, on behalf of my right honourable friend the Secretary of State, is currently leading a review looking at new provider models. The review includes a detailed look at what we can learn from international examples, perhaps bringing those examples to bear in the NHS.
I was aware of my noble friend’s Private Member’s Bill. I am happy to take away his remarks and to discuss with my colleagues in the Treasury the ideas that he has put forward in relation to health services.
My noble friend Lord Framlingham, in his very powerful speech, signalled his concern about the paucity of facilities in some of our community hospitals and the threat of closure that might ensue from that. I hope that I can give him some words of comfort there. As I have indicated, the majority of NHS services, including those provided in community hospitals, are commissioned by clinical commissioning groups, so how those hospitals are funded is very much a matter for local determination rather than a national decision. However, NHS England expects CCGs’ commissioning decisions to be underpinned by clinical insight and knowledge of local healthcare needs, and that those decisions should have regard to the need to address health inequalities.
As I said, I do not think that mutualisation by itself would provide a panacea to prevent community hospitals closing. Where a community hospital is judged to be no longer viable—for example, because of the age of the fabric or a significantly diminished volume of services being provided—a change of organisational form or ownership alone is unlikely to affect local commissioning decisions. I shall come on in a minute to the issue of funding if I have time—although I suspect that I will not and that I will need to write to my noble friend further on that score.
My noble friend raised the possibility of external funding from the community, and I was interested in his remarks. Our view is that that kind of local levy should not be necessary. The Department of Health capital budget continues to rise in real terms, and indeed provider trusts are funded through the depreciation element of their income, with funds to cover their capital expenditure. Where trusts can prove their business case, the department will provide them with capital loans through the independent trust financing facility and may choose to provide public dividend capital directly in exceptional circumstances. Therefore, capital funding is available where it can be justified.
The noble Lord, Lord Hunt, suggested that CCGs should be reversing the flow of services away from hospital. To an extent, I agree with him, although I think that largely we are talking about acute settings rather than community settings. Simon Stevens, the chief executive of NHS England, has made it clear that there should be no national blueprint for this: CCGs have to be free to determine the services that they commission based on local needs. Of course, this issue does not bear upon NHS privatisation. Indeed, the pathfinder programme is there to explore the benefits of the mutual model and ways in which staff can be actively engaged. That is a million miles away from privatisation and, as I have said on a number of occasions, the Government have absolutely no agenda on that score.
In conclusion, as I have overshot my time, the Government have taken steps to secure the sites of community hospitals and ensure that they are used for the benefit of the community. Local clinical commissioners are best qualified to take decisions about the services required locally. We are supporting organisations that wish to explore in detail the feasibility and viability of the mutual model for their organisation or significant parts of their services and explore the benefits of mutualisation in a wider range of services within the health sector.