NHS Funding (York and North Yorkshire)

Baroness McIntosh of Pickering Excerpts

Wednesday 7th January 2015 Westminster Hall

[Julian Sturdy (York Outer) (Con)]

It is a privilege to serve under your chairmanship, Mrs Riordan. I am delighted once again to have secured an opportunity to address the important issue of health care funding in York and North Yorkshire and, ultimately, the formula used to calculate the per patient funding from which clinical commissioning groups—and, before them, the primary care trusts—derive their money. Other North Yorkshire and York MPs and I have been campaigning on this issue since 2010, and I am delighted that my hon. Friends the Members for Skipton and Ripon (Julian Smith) and for Harrogate and Knaresborough (Andrew Jones) are here to support me this afternoon. I strongly believe that the nettle has to be grasped on what I accept is a difficult issue, albeit one that cannot continue to be ignored.

The quality of local health care is of the utmost importance to many, if not all, people because, ultimately, it is something upon which we all come to rely at some point in our life. Health care provision is a measure of the local community’s economic well-being and happiness, and it is in our moral and economic interest to ensure the widest availability of health services, the shortest waiting lists and that the most impressive health outcomes are available to all, which I stress. Ensuring such health care standards for all is truly one of the Government’s most essential roles. Indeed, I am sure that all hon. Members from North Yorkshire, both those who are here and those who are not, will agree that health-related concerns crop up frequently in our constituency mail. That is certainly the case in my constituency, as I am sure it is in yours, Mrs Riordan. As such, I welcome the £2 billion of health care spending promised by the Government for this financial year in the autumn statement. That injection of cash has led to every area’s budget increasing ahead of inflation in the recently released allocations. It is for such reasons that I believe the Government can stand proudly on their NHS funding record.

I have called this debate, however, to address the fair allocation of funding and the impact on health care delivery due to a funding formula that works to my CCG’s disadvantage. In a previous debate on this issue I outlined my concern that the now-abolished primary care trusts would pass on their historical debts to the new CCGs. Vale of York CCG inherited a deficit of some £7 million in April 2013 due to the current funding formula. NHS England has acknowledged that the previous York and North Yorkshire PCT received approximately £17 million less than the allocation should have provided for the local population demographic because the funding is phased in over time. Although I am pleased to say that Vale of York CCG has cleared the deficit it inherited, it is still struggling to offer many services that constituents have a right to expect. Allocations made for the newly formed CCG in 2013-14 were a straight uplift of the historical allocations, which resulted in a postcode lottery for certain health care services in my area.

Why does Vale of York CCG, in particular, receive such a poor allocation? The Government decide how much money should be allocated to each CCG. Officials begin by dividing the total budget by the number of people living in each respective area. Money is then added or taken away to account for local characteristics, including the proportion of people claiming benefits, the teenage pregnancy rate and the number of people who leave education early. That is where the problem lies. Of the 10 characteristics, nine reduce the amount of money allocated to our area. That disparity in the allocation is due to the funding formula failing to take account of both the rural nature of the region and, most importantly, age. Instead, the current formula provides a significant weighting that awards additional funds to areas with high levels of social deprivation. The allocations for 2015-16 have now been announced and, once again, Vale of York CCG has received, by a substantial margin, the lowest per capita funding of all the CCGs in the area. Although I recognise that health needs are generally greater in more deprived areas, the current formula provides far too much weighting for deprivation and insufficient weightings for age and rurality.

Age and rurality are even greater problems in my constituency and in other North Yorkshire constituencies because York and North Yorkshire have the highest proportion of over-85s in the north, but Vale of York still receives among the lowest funding per head of any northern CCG. The area also has a high number of people in care homes, with a typical GP practice informing me that up to 50% of home visits are taken up by care home residents, who account for only 2% of patients on the practice’s roll. The distribution of health care costs is strongly age dependent, and it is difficult to argue against that. On average, it costs approximately eight times more for the NHS to care for a patient over 85 than for a patient in their 40s, which, of course, is due to elderly people being more likely to have additional health problems. We are all living longer, which is obviously a good thing, but we are living longer with more complicated conditions. Age is increasingly becoming a defining factor in health care funding.

Alongside age, the formula does not account for the additional cost of providing health care services in sparsely populated rural areas. Those additional costs are reflected, among other things, in longer average journey times for ambulances and community health staff, such as health visitors. There is also a need to provide additional smaller hospitals in rural areas in order to retain accessible and essential services for those communities.

The distortion in the funding formula has led to certain areas being awash with money, which in the past has sadly led to well publicised vanity health care projects, whereas York and North Yorkshire have consistently struggled to balance the books, resulting in their continuing to take difficult decisions on health care provision. Those decisions have had a massive impact on the quality of life of many of my constituents, hampering their ability to work and affecting their careers.

To my mind, Vale of York CCG does not provide some procedures due to the funding formula. I have been contacted by many constituents over the past few years regarding their inability to receive pain-relief injections free on the NHS. I have been actively campaigning for the removal of those charges for all who require such injections. I am sorry to say that the charges are symptomatic of the postcode lottery due to the current funding formula. The CCG reviewed its position on pain-relief injections and concluded that the injections are not clinically beneficial, which is why it decided to retain the charge, but I would argue that the injections can dramatically improve people’s quality of life and should be offered free of charge. Pain-relief injections are offered free of charge by many other CCGs across the country and across our region.

Alongside pain-relief injections, another procedure that has not been available through the Vale of York CCG is IVF treatment. In fact, for a long time the Vale of York was the only health authority in the country not to offer any free IVF treatment. I know from many constituents who have contacted me about the issue that infertility has an awful effect on people’s lives, causing stress and depression, and with the potential to tear otherwise healthy relationships apart. It must be extremely frustrating for someone to know that treatments are available just a few miles away but are inaccessible to them; nevertheless, that has been the reality in many parts of my constituency for a number of years.

I was pleased to hear the CCG announce in late December that it will now offer at least one cycle of IVF. Although that falls well short of the three cycles recommended by NICE, it is a welcome step in the right direction.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I apologise to my hon. Friend for missing the start of his speech and congratulate him on securing this debate. This may tempt him toward a conclusion, but does he agree that spending more on primary care in the Vale of York and other North Yorkshire CCGs would keep people out of hospital, which would obviously be to the greater good of the health service and those living in North Yorkshire?

[Julian Sturdy]

I entirely agree with my hon. Friend. Given the rurality of the whole of North Yorkshire, which I mentioned at the start of my speech, we know that providing health care services is difficult and expensive. That is part of the argument for why the funding formula must be adjusted. At the same time, it must be more cost-effective to deliver services in people’s homes and offer more accessibility. Nevertheless, as my hon. Friend will know from the situation in her constituency, it is important that we also keep small hospitals open and accessible. I know that that is an important issue in the constituency of my hon. Friend the Member for Skipton and Ripon. This debate is all about ensuring that we have a fair formula so that we can deliver those services.

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[The Parliamentary Under-Secretary of State for Health (George Freeman)]

Thank you, Mrs Riordan, for calling me to speak. It is a pleasure to serve under your chairmanship this afternoon.

I start by congratulating my hon. Friend the Member for York Outer (Julian Sturdy) on securing this debate, with the support of our hon. Friends the Members for Skipton and Ripon (Julian Smith), and for Malton (Miss McIntosh), and I congratulate them all on their contributions to the debate. I am very aware of the personal interest of my hon. Friend the Member for York Outer in health matters affecting his constituents, and of course his interest in NHS allocations, including this question of fairness for rural areas.

I will also take this opportunity to pay tribute to all the North Yorkshire MPs who have worked so hard together on this issue since 2010: my hon. Friends the Members for Selby and Ainsty (Nigel Adams), for Skipton and Ripon, for Thirsk and Malton, and for Harrogate and Knaresborough (Andrew Jones), the hon. Member for York Central (Sir Hugh Bayley), my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), and my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill). I know they have had one meeting, if not more, with the Secretary of State for Health, and as a group they have been an effective and forceful lobby on this important issue, which we in the Department of Health all take seriously.

Of course, the whole House will agree that good-quality patient care is something we all expect, regardless of which part of the country, or indeed which county, we live in. As my hon. Friend the Member for York Outer has signalled, the question is how we work within the overall NHS budget—I welcome his acknowledgement of the Government’s increasing that budget—to determine how funding for each area should be assessed and decided. He made the key point: that it must be done in a way that is fair to all citizens and patients, wherever and whoever they are, and that where someone lives should not in any way unreasonably distort their access to health care. It is the NHS—the national health service—and those initials should mean something.

My hon. Friend will be aware that I, too, come from a very rural constituency—Mid Norfolk—where many of the issues he has identified chime, including ambulance response times and the extra time that clinical staff and patients take to travel around. Of course, there are other issues and problems, which he has highlighted: hidden deprivation, ageing and elderly populations, and isolation and loneliness compounding conditions such as dementia, making it harder to set up initiatives such as dementia cafés.

Health funding is an issue I have taken an interest in for a long time. Years ago, I did some work in County Durham to unpack the index of local conditions and the standard assessments in local government spending. When we unpack those formulae, we discover that those used to allocate funding for deprivation are all inner-city indicators: they are all about high-rise blocks, the percentage of black and minority ethnic people, and density. They are all urban indicators, as if only urban areas really experience deprivation. So my hon. Friend is raising an important point, which goes to the heart of much of the way that Whitehall allocates funding.

I will say something about how allocations within the NHS are made under the arrangements we have put in place. As my hon. Friend is aware, NHS England is the independent organisation responsible for managing the budget and the day-to-day workings of the NHS. It supports clinical commissioning groups—the local groups of GPs and other health professionals who commission NHS services on behalf of their patients. To make sure that the taxpayer has a say in how that money is spent, the Government provide direction and strategic ambitions for the NHS through a document called “the mandate”. The current 2014-15 mandate was reviewed and updated in December. There are eight key areas, which are about making general improvements; the Government deliberately leave the NHS free to make decisions about how these objectives should be met. They are: helping people to live well for longer; managing ongoing physical and mental health conditions; helping people to recover from episodes of ill health or injury; making sure that people experience better care, and integrated care; providing safer care, with a greater emphasis on patient safety; promoting NHS innovation; supporting the NHS to play a broader role in society; and making better use of our health resources.

NHS England has been given £98.7 billion this year, rising to £101 billion in 2015-16, to achieve the objectives in the mandate. I welcome my hon. Friend’s support for the extra £2 billion that the Secretary of State recently announced. NHS England has the responsibility to ensure that that money is well spent.

The first thing to say on the financial aspect of the mandate is that we have protected NHS funding in this Parliament, as my hon. Friend acknowledged. In 2014-15, all CCGs received a funding increase matching inflation. Furthermore, like all CCGs in England, North Yorkshire CCGs will benefit from the £2 billion of additional funding announced in the autumn statement. As I say, those CCG allocations and the formula used to decide what they should be are the responsibility of NHS England. NHS England itself commissions some services directly, including all primary care, as well as making allocations to individual CCGs. So these allocations to CCGs, although they are crucial, are only one part of a broader picture. In making those allocations, NHS England relies on advice from the Advisory Committee on Resource Allocation. As my hon. Friend will be aware, ACRA provides advice on the share of available resources provided to each CCG, in order to support equal access for equal need, as specified in the mandate.

NHS England does not set income on an equal “cost per head” basis across the whole country. Instead, allocations 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, including rural areas, should receive more money per head. There have sometimes been suggestions that a single per capita payment should be made across all CCGs, but I am not sure that that would not in fact lead to further discrepancies. As my hon. Friend will be fully aware, the key question is what overall weighting should be given to a range of factors, including age, disability, rurality and disease prevalence. As he himself acknowledged, there is no simple answer that would please everyone; this process requires the making of difficult judgments.

Without knowing that background, it can sometimes be hard for people to understand what are misleadingly presented as huge anomalies in allocations to CCGs. In the Vale of York, the funding is £1,067 per head; in my constituency of Mid Norfolk, it is £1,050; and in central Manchester, an urban area with an urban CCG, it is £1,085. I appreciate that those small differences add up over large populations, but they are not huge variations. The objective is to ensure a consistent supply of health services across the country, with health funding following —as best the system can map it—health need. That is one of the reasons why the data steps that we are putting in place are so important to allow us to monitor disease and health need.

NHS England has reviewed the funding formula and made welcome changes that take into account three important factors in driving health care need: population growth, deprivation and the impact of an ageing population. That should go some way towards helping to address the points my hon. Friend made.

NHS England now believes, and tells us, that it has a funding formula that sets recurrent allocations to CCGs more accurately and fairly, which is what the formula is supposed to do. However, I welcome the scrutiny that my hon. Friend and other colleagues from North Yorkshire are rightly insisting that it be put under.

By reflecting changes in population around the country and better targeting of pockets of deprivation, the NHS should be able to offer the best services to patients where they need them. I know there is a perception in North Yorkshire that the area is relatively underfunded. However, the NHS in North Yorkshire has benefited from increased funding, and when the Vale of York CCG’s funding is compared to that of other CCGs across the country, it is evident that it is not a significant outlier in terms of either funding per head of population or the level of funding relative to the formula. I appreciate that those are average figures; my hon. Friend will know better than I do the specific details of his own constituency.

At a time of continued pressure on the public finances, the additional funding we have provided for the NHS underlines the priority that this Government place on it. It means that the NHS will continue to benefit from stable, real-terms increases in funding, which will allow us and NHS England to get those formulae more and more accurate. Next year, the recurrent allocations of all CCGs in North Yorkshire will grow by 1.94%, an increase of almost £17 million. I am delighted that these increases will ensure that CCGs, including those in North Yorkshire, can continue to meet ever-growing demands for services, while investing in new services.

As time is short, with my hon. Friend’s permission perhaps I could write to him on the specific points he raised about back pain and IVF.

[Miss McIntosh]

I have a very simple question. Obviously, we as Back Benchers scrutinise the Department of Health, but who scrutinises and monitors NHS England?

[George Freeman]

As Ministers, we are responsible and ultimately accountable to Parliament for that. However, I am conscious of the time, so perhaps I could pick that point up in a letter to my hon. Friend.

As I said, I welcome the attention my hon. Friend the Member for York Outer and other North Yorkshire MPs are bringing to this issue, and I hope I have signalled that I consider it a substantive concern. Citizens in this country, rural or urban, demand and expect a national health service—rightly so, because they have contributed to it—and they expect national access on a fair basis. The structure we have put in place is really about giving NHS England the clinical freedom to ensure that funding decisions are made on the right basis. No system will be perfect, but as Ministers we are absolutely committed to ensuring that the system we have is as accountable and transparent as possible, and to providing the security of funding to allow that process to be pursued.

I know from my own experience in County Durham and in my Norfolk constituency that these are important issues. It is about ensuring that our citizens in rural areas get equal access to health services. My hon. Friend the Member for York Outer and other colleagues are doing exactly the right thing in raising this issue. I will happily address in writing the points I have not had time to address this afternoon. I look forward to writing to colleagues with more detailed answers to the specific points they have raised.

Question put and agreed to.