Operational Productivity in NHS Providers

(Limited Text - Ministerial Extracts only)

Wednesday 1st July 2015 Westminster Hall

[The Parliamentary Under-Secretary of State for Health (Ben Gummer)]

It is a pleasure to serve under your chairmanship, Mr Pritchard. It is indeed my first appearance in this role in Westminster Hall and, therefore, under your chairmanship here.

I congratulate my hon. Friend the Member for Hendon (Dr Offord) on securing this important debate. I suspect that, in raising the important matters that he took up in his speech, he did not anticipate the glimpse of the promised land that the debate would give us. I have never sat in a debate on the NHS in this House—I have only been here for five years—when there was such a productive, interesting and bipartisan approach to such an important matter. I hope that it will be a model for things to come.

In seriousness, the differences between us, across the Floor, are far fewer than the things we agree on when we consider the NHS. A new Member, the hon. Member for Bristol South (Karin Smyth), said in her speech that now the election is over we have a fantastic opportunity to forge a greater consensus on the NHS, which will be better for the service and patients, and especially, in the present context, for the people who work in it. They get fed up with the politicisation of the NHS, which has happened since its creation in 1948.

The hon. Lady hit the nail on the head in her excellent speech: efficiency really comes from quality. We begin to get an NHS system that is truly efficient in using the resources that the taxpayer puts at its disposal and the hard work of those who work in it when the first consideration is care quality and safety. If we try to build a system around quality and safety, the efficiencies will flow from that and excessive costs will start to fall out. Part of the problem with trying to find efficiency savings in the NHS—indeed, in any public body or private organisation—is that a purely cost-cutting approach will almost certainly fail, in terms of not only the quality of the product being delivered, but the efficiencies being sought. I very much welcome the hon. Lady’s intervention on that point, because that is where we need to begin.

All of that lies at the heart of Lord Carter’s excellent report. It is an interim report—he will publish his final report, with a great deal more detail, in the autumn—but he has understood that it is the patient who feels the effects of inefficiency first and foremost. Their experience of care is not what it should be, because of how rostering is arranged or medicines are dispensed and administered. He gave specific instances in his interim report—for example, the range of products available for hip replacements—of where choosing one product over another can mean dramatic differences in the occurrence of revisions. As the hon. Member for Strangford (Jim Shannon) said in his speech, cheapest is not always best. Sometimes, a slightly more expensive hip replacement joint can mean a much higher chance that someone does not have to come back for surgery again in a few years’ time. Such decisions about balance lie at the heart of patient care. If we get the balance right, we have a huge prize: better patient care and a more efficient, cost-effective service.

I want to run through the main points of Lord Carter’s report and reflect on them in the terms raised by my hon. Friend the Member for Hendon. The NHS provides a varied picture of efficiency. The service has some of the most efficient hospitals in the world, but also some fantastically inefficient ones. That variation lies at the heart of the problem that we have to square in the next few years, which I will come to shortly when I address the specific points about the £22 billion target. As MPs, we all have anecdotal impressions from speaking to chief executives and managers in the NHS: they have come up with great ideas locally, but one knows immediately that no one is learning from that across the system. That was the case before the 2012 reorganisation, and it was case before all the previous reorganisations; it has been problem in the NHS since its inception.

We must also learn from best practice around the world. There is some fantastic practice around, and not only in France, Spain—specifically Valencia—and Germany; some of the best practice in the world for creating efficient healthcare is in American hospitals. I find it very exciting that there is some fantastic practice coming from Indian hospitals, because it shows how the world is changing. If we can draw in that expertise, we will do better for the NHS. I hope that, at the same time, we will export some of the best practice we have developed here—much of which has come from places not a million miles from the shadow Minister’s constituency—to hospitals and health systems around the world.

The changes in efficiency and productivity gains in the past few years have been considerable. Traditionally, the NHS has lagged behind in productivity improvements, but in the past few years it has overtaken productivity gains in the rest of the economy. Some of that has come from wage restraint, but there has been a genuine improvement in productivity, although it is not as much as we hope, anticipate and need to come over the next five years from system change, rather that just from wage restraint.

Lord Carter’s review covers some of the efficiency savings that can be made, especially in the provider sector. He has identified £5 billion of savings, of which £2 billion can come from improving workflow and workforce costs and £3 billion from static costs related to pharmacies, estates and procurement. As has been mentioned already, he has identified the fact that although there is much dispersed good practice, it is not shared, and there is no common understanding of what a good hospital looks like. On the back of Lord Carter’s principal recommendation, we are going to construct a good hospital. It will be a virtual hospital, so people will not be able to visit it, but they will be able to go to parts of it, because we are going to take the best practice and codify it.

Lord Carter has created a system called the adjusted treatment index, which is a rather dry term for an exciting idea. We will say, “This index is the best that the NHS is doing and we’re going to measure you all against it.” Every chief executive, manager and clinician will be able to see where their particular unit sits against the very best in the country. That will immediately prompt some questions: “Why are we not the best? Why are we a third or half of the way down? What can we do to close the gap?”

The second output from Lord Carter’s report is to provide a suggestion, in base terms, of how the poorest performing hospitals, along with those in the middle and those near the top, can improve and become the best. His final report will give far more detail, but this is of course a living process. We want to create a manual that will help clinicians to constantly improve their performance, measured against the very best—and the very best in the NHS will be measured against the very best in the world, so that our target keeps moving upward.

Lord Carter also identified issues with staffing, agency spend and locums, which formed the meat of the speech by my hon. Friend the Member for Hendon. I will quickly go through what we plan to do. In the long term, it is clear that the expansion of nursing recruitment places will meet our objective to improve staffing ratios and the quality of care in hospitals, but we do have a backlog to fill. I do not want to break the bipartisan consensus, but the fall-off in recruitment places did begin before 2010. It picked up again in 2012-13, partly in response to the recommendations of the Francis report, but we still have some way to go to ensure that we are up to pace.

It has become clear that although there was a need for agency staffing to plug the shortfall, some have been abusing that position. Now that we are getting more and more nurses into the system, it is the right time to bear down on agency costs, which is why the measures outlined by my right hon. Friend the Secretary of State a couple of weeks ago will make such a difference, by giving chief executives the tools to ensure that they are not paying over the odds on agency spend.

[Karin Smyth]

On agency recruitment, does the Minister agree that we should encourage more young people to see the NHS as a good career? Young people such as those in my constituency, Bristol South, do not always get the advantages of university and further and higher education qualifications, and they do not see working for the NHS as a good and positive career. It is still a very good career—well paid and well remunerated by pensions and so on—but it is no one’s job, directly, to sell a career in the NHS in order to bring through the next generation of young people in places such as Bristol South to work in the NHS. That is not a hospital’s direct role. Health Education England is a new organisation and has that responsibility, but, in the spirit of bipartisanship and cross-departmental working, will the Minister take our advice and talk to colleagues in skills and development and support apprenticeships to encourage young people to come through and fill the gap currently filled by agencies?

[Ben Gummer]

I do not want to ruin the hon. Lady’s nascent reputation by agreeing with her again—happily, there are very few Opposition Members present to notice, although that is not an implied criticism—but she is absolutely right. We are lucky that nursing places are quite significantly over-subscribed. The position is popular, but she is absolutely right that we need to not only make far greater use of apprenticeships but widen the skills base in nursing full stop. We are actively working on that in the Department—I have spent much of the day on it, and I am sure there will be more to come.

To help chief executives in this interim period, we have forced all agencies that want to offer their services to ensure that they are doing so through framework contracts, and we are ensuring that there is an hourly cap on the rate that can be charged. We have also taken additional measures on managerial salaries, along with a few other measures, to ensure that managers have the opportunity to be able to manage costs as they wish. We understand, however, that this is the first stage of a much deeper programme of reform that is needed. Lord Carter’s report points in that direction by suggesting that we use our existing workforce far better, so that people are doing the job that they are suited to and qualified for and that their time is not wasted. That is the great win, not only for efficiency and patient care, but for staff enjoyment of their jobs.

The hon. Member for Coventry South (Mr Cunningham) made some helpful interventions about NHS workers’ quality of life. It has been a sad but persistent truth of the NHS for many years—decades, in fact—that staff-reported incidents of harassment and bullying have been higher than the national average and that workforce stress and illness is higher than average. Some of that is to be expected—parts of the NHS are extremely stressful working environments—but we can do much more. Part of that is about ensuring, when people turn up to work, that they are doing the job they wanted to do, with a suitable but not excessive degree of pressure, and that the system is not wasting their time. If we make them happier in their jobs, their patient care will improve and their commitment to the service will be even greater. I am therefore aware of the prize, not just in pounds, shillings and pence, but in an improvement to staff morale and therefore patient care.

[Jim Shannon]

One of the things that concerns me from a Northern Ireland perspective—this has also been raised in discussions with other Members in the Chamber today and outside—is that the NHS greatly relies on, in our case, Filipino workers, which is an immigration issue. Has the Minister had any discussions with the Minister for Immigration, the right hon. Member for Old Bexley and Sidcup (James Brokenshire), to ensure that there will be no shortfall when the gaps left by those who are here on work visas need to be filled and that the quality service in the NHS will not be lost? The hon. Member for Bristol South (Karin Smyth) referred to training people to ensure that keen, interested and able replacements are available. Has the Minister given any thought to that?

[Ben Gummer]

I was going to come on to that, so I shall do so now that the hon. Gentleman has prompted me. There have been long and deep discussions about this. Our estimate is that no more than 700 nurses will be affected by the time the new rules are in place, which is a different number from that given by the Royal College of Nursing, whose number we do not recognise. It is small challenge given the scale of the workforce and one that we will surmount at the time, but we must see it within the broader policy of reducing immigration to this country from the hundreds of thousands to the tens of thousands—a policy that has broad support across the House and certainly in the country at large. It would be wrong for the largest employer in the country—one of the largest employers in the world—to exempt itself from that overall ambition.

In the end, we will achieve a sustainable workforce in this country only if we do all we can to ensure that those who are British and have grown up here and want to work in the NHS have the opportunity to do so. That is why it is important that we widen and open the avenues into working in the NHS, as the hon. Member for Bristol South suggested, over the next few years, in order to meet the challenge to which the hon. Member for Strangford alluded.

I want to quickly run through the other issues raised by my hon. Friend the Member for Hendon. On master vendors, he has a specific issue regarding some constituents with whom he has been dealing, but I understand that master vendors are managed under a series of arrangements with the Crown Commercial Service. Officials will meet with that organisation soon to discuss the overall issues around master vendors. It is for individual trusts to make such purchasing decisions, but I understand the issue he has raised and the terms in which he put it, and I will ensure that it is investigated properly.

My hon. Friend identified two areas involving agencies and fraud. Fraud is of course unacceptable, and the NHS has quite good systems for identifying it. Given the scale of the NHS, I find it surprising—it is entirely to the credit of those who work in the NHS—that fraud makes up such a tiny proportion of the excessive costs in the NHS.

On the revalidation of locum doctors, for which the General Medical Council is responsible, some doctors find it difficult to gather all the required supporting information needed for revalidation due to the peripatetic nature of the work. To help with that, specific guidance is available for both the doctors and their employers via NHS England and NHS Employers. Locum doctors are part of a larger issue about agency spend and foreign workers working in the NHS. I imagine that the three organisations will come together in the next few years to produce a more stable situation.

[Mr James Gray in the Chair]

Let me turn to the remaining points of the hon. Member for Bristol South. On the stability of the system, I hope and anticipate that one product of the general election is that the system will be broadly stable over the next five years. We intend to continue with the current structure of the NHS. There will be some small changes, such as that identified by my right hon. Friend the Secretary of State last week concerning the NHS Trust Development Authority and Monitor, but we are broadly content with how the system is set up. We must now proceed to ensure that it works.

The shadow Minister made a point about structures and fragmentation. There will always be a genuine dilemma here, because one can approach any system and say that change can be achieved by altering structures, but changing structures can lead to the same outcome. That has been the story of the NHS since its inception. It would be a mistake to think—the hon. Member for Bristol South and the shadow Minister were not suggesting this—that a structural change would somehow produce the outcomes that we all want. The priority is to ensure that the system’s wiring works correctly—that everyone’s interests are aligned and that the incentives are correct—so that people want to sit around the table and come to a considered decision, which can too often not be the case when there is an adversarial relationship between providers, producers and purchasers. That is why I hope that the system’s stability over the next five years will allow us to focus on the significant challenges mentioned by the shadow Minister.

[Andrew Gwynne]

When discussing competition rules, we often talk of public versus private, but two public parts of the NHS can also compete. Another NHS trust might have the tender for providing a service in another area and an integrated care organisation might want to bring that back in-house.

[Ben Gummer]

Absolutely. There are examples of that all over the country, but there are also examples of people working together in what might be considered competitive situations, so it is about ensuring that we copy the best and delete the worst.

Before I turn to the shadow Minister’s comments, I want to reflect on the contribution of the hon. Member for Angus (Mike Weir). The SNP spokesperson on health, the hon. Member for Central Ayrshire (Dr Whitford), has used a constructive tone in the Chamber so far, bringing some of her expert experiences as a clinician and also the experiences from Scotland. It is nice to be able to sit here and hear the experiences of people in Northern Ireland and in Scotland, and it would have been nice to have heard from Wales in this debate. Indeed, we do not yet properly learn from the best in Scotland, which would be all to our good, let alone the best in America or India.

The £22 billion in savings is an estimate not from the King’s Fund but from NHS England. It formed part of its plan, devised at the end of last year and some years in the making, which identified £30 billion of additional money that needs to be put into the service over the next five years. It stated that £22 billion could be generated internally—that was Simon Stevens’ estimate—which leaves an £8 billion shortfall. That is what we are pledged to provide. None the less, he, like everyone in the Chamber, has correctly seen that £22 billion is a large number and one that will take a great deal of intellectual and moral work to deliver. I welcome the tone with which everyone has approached this challenge in the debate.

[Mike Weir]

The reference to the King’s Fund was to make the point that it said that this was a tall order, as I think the Minister himself is admitting.

[Ben Gummer]

It is not a tall order, but it is a challenging one. Whoever was sitting in my place, from whatever party, would be facing a similar challenge, no matter how the needs over the next five years were framed. The challenge must be addressed, and it is better addressed if we all come together to do so.

The hon. Gentleman touched on pharmaceutical savings, which I have not yet addressed, and Lord Carter’s comments on them. Lord Carter will make more detailed recommendations later in the year, but the hon. Gentleman is absolutely right that there is much to be done to ensure that we save money on the provision and purchasing of drugs and by not wasting them. Lord Carter is looking at that, and the service is already implementing his initial recommendations.

New drugs are a problem faced by health services across the world. Indeed, it is a profound challenge, because the new drugs coming online are of an expense that has never been experienced in health systems before. They are also for increasingly small numbers of patients, precisely because they are personalised, which drives up the cost even further. That is why the Under-Secretary of State for Life Sciences, my hon. Friend the Member for Mid Norfolk (George Freeman), is bringing forward his accelerated access review and doing some exciting work, trying to use the muscle of the NHS—our ability to be an research lab, effectively—for those developing new drugs, so that we can use the NHS to drive costs down and provide patients with treatments earlier and more cheaply. There is a win-win there, but it requires a fundamental change in the system, which at the moment is not working.

Finally, I turn to the comments of the shadow Minister, mindful of the need to give my hon. Friend the Member for Hendon time to wrap up. I thank the hon. Member for Denton and Reddish for his kind welcome; it was good of him to say that. I hope that over the next couple of years we will be able to thrash out some of these difficult issues in the manner in which he has begun the process. If we do so, we will come to a better understanding of what is needed in our national health service.

The hon. Gentleman asked a number of questions, such as where the £8 billion is coming from. I believe it is coming from general taxation—my right hon. Friend the Chancellor will be providing greater details of that in the Budget next week. The hon. Gentleman also asked where the £22 billion was coming from. NHS England has devised the plan. It is NHS England’s plan to implement, and it will provide further detail about the £22 billion shortly. It will be an evolving plan that will necessarily change over the five years. NHS England is confident that it is achievable, but it will take some incredible heavy lifting by all of us and, dare I say it, the dropping of political shibboleths throughout the House—if one can drop a shibboleth; I am not sure.

The hon. Gentleman raised the issue of provider deficits, which is a problem across the system. He will know that there was a similar issue towards the end of the Labour Administration—in CCGs, rather than in hospitals. It does not necessarily require more money; it requires getting a grip on where the problem is. We have started that with announcements on agency spending. Many trusts in the country are doing well financially. Not surprisingly, they are often the trusts that are also delivering good care, because—to return to the comments of the hon. Member for Bristol South—if the care is right, the money flows from it. That is why Lord Carter’s review and a concentration on care quality will, we hope, produce the savings that we need, not just at this immediate moment to address provider deficits, but to achieve the £22 billion.

The hon. Member for Denton and Reddish also mentioned sales reps and procurement. I absolutely agree that the subject is covered in the report from Lord Carter. The numbers of product lines certainly should come down. I am not sure that the NHS, before having greater responsibility for purchasing, was any better at buying, but we need to be better at it. Procurement is a science. It is not one that I pretend to know a great deal about, but I know that in the end we will always end up in not quite the right place, because we might centralise too much, which takes away decision-making from the trust responsible. That is why we have to get the balance right.

On the cost of competition, the hon. Gentleman quoted a figure of £100 million. However, I understand that the costs of the reorganisation have been outweighed by the benefits, to the tune of about £1.5 billion annually. I think we all agree across the House on the producer-provider split. There will always be a degree of competition in the NHS; it is about getting the balance right between competition and collaboration.

In the last 30 seconds, let me touch on sub-acute services. The hon. Gentleman made his most pointed—and fair—remarks about the need to integrate social care with the NHS. The Government’s contention is that creating a new national structure for health and social care does not produce the end that we all want to see. That is why we want to see local solutions—we believe a good one is already emerging in Manchester—across the country, which will suit different areas according to their needs. In the end, we come back to money. We all know that money will be tight in local government. Our aim over the next few years is to ensure that as much of the resources that we can put into local government are going towards social care. That is the essence of the better care fund, which lies at the heart of what we are doing on integration over the next five years. I know the hon. Gentleman will want to comment on that as we proceed on those lines.

I thank all Members who have spoken in what has been an invigorating debate from which I have learnt a great deal. I again thank my hon. Friend the Member for Hendon for raising these important issues.