Budget: Taxes and Borrowing
Lord Patel Excerpts(1 month, 2 weeks ago)
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Lord Livermore (Lab)
It was £40 billion in taxes. The noble Viscount is right that growth was one of the biggest failures of the previous Government, and we are absolutely determined to turn that around. We cannot undo the damage of the past 14 years in just one Budget. The OBR has said that growth is largely unchanged over the Parliament; that is in the context of a Budget with some very difficult decisions on tax to clear up the mess that we inherited. Of course, we need to go further and we need to go faster. That is why we are doing planning reform, pension reform and skills reform, all of which will boost growth and none of which is included in the OBR’s forecast. Let us remember that, under the previous Government, we were the only G7 country with investment below 20% of GDP. Our growth rate was dismal by OECD standards. Their Brexit deal imposed new trade barriers on business equivalent to a 13% increase in tariffs for manufacturing and 20% for services. They crashed the economy, with interest rates peaking at 5.25%.
Lord Patel (CB)
My Lords, does the Minister agree that the Budget failed to address the financial difficulties faced by the higher education sector?
Working From Home: Public Sector Productivity
Lord Patel Excerpts(1 month, 4 weeks ago)
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Lord Livermore (Lab)
There are a variety of measures, as I understand it. The ONS has a fairly standard measure. However, the noble Lord is absolutely right that it is much harder to measure productivity in the public sector than it is in the private sector. Measures that the Government are undertaking, such as increasing the number of GP appointments or reducing waiting lists, increase public sector output and therefore productivity.
Lord Patel (CB)
My Lords, following on from that answer from the Minister, NHS England says that productivity in the NHS has declined by 11% since before the pandemic. At the same time, nearly 40% of the staff in NHS England and ICBs work from home. One of the comments made is that we require managers with experience and training to allow for better management of the flow of patients, so that clinicians who cannot work from home are better able to deliver their services. What is the answer?
Lord Livermore (Lab)
I am not sure I am going to be able to answer that right now, but, as set out by the noble Lord, Lord Darzi, in his investigation into the state of the NHS, productivity in the NHS has fallen significantly and is far too low. Improving productivity in the NHS is a key priority. What the noble Lord said about management was really interesting. Emerging studies show that, where workforces are well managed, productivity can rise with working from home. This is a point that the noble Lord who asked the original Question raised in a previous debate on this subject, which I read: the quality of management has a key impact on productivity when working from home.
Health and Social Care in England
Lord Patel Excerpts(11 years, 5 months ago)
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Lord Patel
That this House takes note of future models of funding of health and social care in England.
Lord Patel
My Lords, it is a pleasure to open this debate on the future funding of health and social care. I would like to thank all noble Lords taking part in the debate today. Looking at the list of speakers, no doubt we will hear radical views and provocative ideas in an altogether interesting debate. I thank in particular the Minister and the noble Lord, Lord Hunt, on the Opposition Front Bench for taking part today. Perhaps neither of them will be willing to put forward what the views of their own parties would be if they were in Government post-2015, but who knows? They might be persuaded to do so. The procedures of the House mean that the Minister has to wind up the debate. However, any questions put to him about future Government plans for funding health and social care beyond 2016 would be, in my view, inappropriate, and I, for one, would not do so. I hope that we have an open debate which can form the basis of a wider public debate. In my view, that is necessary before the next general election, and only this Chamber could facilitate such a debate. I also thank the Library staff and the many organisations outside, chiefly the Nuffield Trust, for providing detailed briefings to facilitate this debate.
Last Friday, 5 July, was the 65th anniversary of the establishment of the NHS through a bold and courageous piece of legislation that established free healthcare for all, irrespective of the ability to pay. Despite its many faults and occasional disasters, even to the point of causing harm and death to patients, and the daily reports of its shortcomings, it remains the most cherished public service—to the extent that, much to the bewilderment of foreign visitors, we celebrated it at the Olympic opening ceremony. Some say that it is our only national religion.
The NHS is the most successful and envied health system in the world. I have had the privilege of working in it for 39 years and 62 days, and I was trained in it for five years before that. Today, over 1 million people are at work in the NHS, over 70% of them female, and many thousands more provide a voluntary free service. Over 1.5 million patients and their families will be in contact with the NHS. Each month, 23 million people visit their doctor or a nurse. Every minute, five 999 calls will be answered by the ambulance service. The NHS has delivered many innovations: drug developments, new devices, CT and MRI scans, ultrasound and innovative surgical procedures. In September, a Member of your Lordships’ House will celebrate 25 years of his heart transplant, which is quite an achievement. It has also delivered assisted conception, complex treatments and much more. In fact, in some ways we have failed to harness the potential of the National Health Service to deliver innovations, including healthcare delivery. The majority of people who come into contact with the health service are satisfied with their care. Of course, it fails some people and that is unacceptable, but all this suggests that the NHS is a good ship, and any future plans need to bear that in mind.
Is the NHS the product of brilliant design or of politics and circumstance? Are the continuous changing of structures and reorganisations beneficial or merely ideological? In an odd way, the strength of the system is that it is resilient enough to absorb change to meet changing needs and yet continue to provide care. I do not believe that any other health system in the world is able to do that, certainly not under the insurance model of funding. However, in prolonged austerity, can a service that is free at the point of use survive and continue to do so? If the answer is “yes”, how will it have to change? If the answer is that it cannot survive as a free service at the point of use, who is best placed to make the argument to the public for the alternative? Is it the clinicians, the politicians or the managers?
There does not seem to be much of an appetite to change the model drastically. A poll of public views suggests that there is a willingness to contribute financially for minor, non-clinical services, but the majority want a free service at the point of use and are willing to pay higher taxes if the efficient use of money can be demonstrated. In a recent report from the Nuffield Trust on the NHS as viewed by 65 politicians, many of them previous Secretaries of State, managers, clinicians and others, the majority feel that the founding principles of the NHS are deeply enshrined. Some, however, do not feel that that is so and say that we are sleepwalking towards destroying the NHS. Some, like the noble Lord, Lord Warner, who unfortunately could not take part today—I think he is sorting out the US health service—feel that we should start exploring the basis on which we fund the NHS, which is with a complex mix of hypothecated taxes, user charges, and so on. Other notable voices such as those of Stephen Dorrell, Alan Milburn, the noble Baroness, Lady Williams, and Kenneth Clarke, say that despite the financial challenge, the NHS should remain free at the point of use.
Expenditure on the NHS has risen constantly since its establishment in 1948. In its first year of operation, the Government spent £11.4 billion. In 2010-11, the figure was 10 times greater, at £121 billion. At a growth rate of around 4% per year, in GDP terms that was 3.7% of GDP at the inception of the NHS to nearly 8.9% now. A reduction in funding and cost savings over the next decade will, based on historical cost growth, produce a funding gap of £54 billion by 2021-22. Sir David Nicholson made a speech yesterday suggesting that it might be less, but that is the figure worked out by PricewaterhouseCoopers.
Historically, the drivers of increased NHS spending are population growth, growth in national wealth, cost increases and developments in medical technology. An ageing population with an increasing number of older people is thought to be much less important as an increase in life expectancy merely delays the healthcare costs associated with death. If we follow the trajectory of spending over the past 50 years to the next 50 years, we will spend one-fifth of the nation’s entire wealth on the provision of health and social care. Of course there will be the benefits of better health, quality of life and a positive impact on productivity and economic activity. However, spending at that rate will also produce diminishing returns and therefore costs will always need to be controlled.
To remain free at the point of use, the NHS will have to change. We will need to find a better way of spending £120 billion. Some, such as the noble Lord, Lord Fowler, and Sally Davies, argue for a plan to reduce demand: a strategy of disease prevention. Demographic and behavioural trends will put increased demands on the service. By 2023, the population of England is projected to be 58 million, with those aged over 75 accounting for 10% of the population. There will be an increase in the number of people with long-term conditions such as diabetes, vascular disease and dementia, and there will be more cancer survivors. People with such conditions account for 64% of out-patient appointments and make up 70% of in-patients. For every £10 spent, £7 goes towards the health and social care of these patients.
In 2011, nearly 25% of the population were obese. Behavioural factors such as smoking, drinking, obesity and a lack of exercise will have a significant effect on the health budget. The public and private sectors, particularly the food and drink industries, will have to contribute to preventative strategies, voluntarily or through legislation and taxation. One-third of healthcare costs are consumed by three categories of patients: mental health, vascular disease and cancer. The last two will double in incidence in 10 years and 40% of that incidence is based on the behaviour and attitudes of the public.
Inevitable technological progress will push up healthcare costs as new technology is expensive and will increase life expectancy, particularly of those with the highest healthcare costs. Likely developments in the medium term include better cancer care, better drugs for cancers, focused radiotherapy and ultrasound, the molecular targeting of cancers with drugs, nano-medicine, embedded chip monitoring of disease progression, genomics, better stratification of patients for treatment, proteomics, population genomics for risk identification, personalised care and, in regenerative medicines, cell therapy such as the treatment of age-related macular degeneration, autologous stem cell therapy, gene therapy, tissue engineering, robotic surgery, drugs that will slow the progression of diseases causing dementia, and many others. Other cost pressures will be rising wages, which can be controlled temporarily but not in the long term, and will affect productivity. These costs have stagnated since 2010, probably because of a reduction in labour. Productivity growth of 4% a year, year-on-year, cannot be sustained; neither can cost savings without providing care differently, which will mean managing public and political attitudes. It will also mean the better use of data and technology, which have the potential to transform treatment and the management of care.
What possible options are there for finding funds from other sources? The public view, as we can see following the Ipsos MORI and King’s Fund event, is interesting. The public want free care at the point of need, but may accept charges for inappropriate use or clinically unnecessary procedures. Some would accept increased taxation, particularly hypothecated tax. Many have accepted that the NHS is under pressure, but do not accept that it is justified to change the fundamental principle on which the NHS is based.
I am sure that there will be proponents of other ideas for raising funds or reducing costs. Arguments for co-payment will come to the fore; the experience of New Zealand and France may be of interest in understanding that. There have been novel ideas such as taxing the providers of risk foods and alcohol, as we did those responsible for fixing LIBOR interest rates, to pay the costs of the Armed Forces covenant; charging for GP appointments; and part-insurance, either for the young or the older population, on the California model. The evidence suggests that the public have no appetite for any of the above. Charging those not entitled to the service would be more acceptable if it was incremental. The majority of the public see the NHS as a morally special property and therefore expect it to be adequately funded, even to the detriment of some other public services, if that is the choice.
Any changes to NHS funding would require the public to be convinced that the current system is working as efficiently as possible before considering radical changes. The public want to be involved more and more with the NHS, including on decisions related to funding; changes need to be explained to the public, with a public debate before any legislation. The public have a strong attachment to the founding principles of the NHS and will not accept a radical change to the current model of funding. The only likelihood of success is through an incremental approach. I beg to move.
Lord Patel
My Lords, first and foremost, I thank all noble Lords who have taken part in this stimulating and brilliant debate. I am not biased, but it has been one of the best debates this Chamber has ever had. Some really serious thought has been given to how we might avert the crisis that may be happening in the NHS. Kenneth Clarke said, surprisingly, that:
“Every Secretary of State for Health will find they are trying to walk up a downward-going escalator”.
Despite that, he continued to say that it would be sad,
“if we gave in to the siren voices saying that an NHS largely free at the point of use can’t last”.
The NHS will last and we just have to find the means of making sure that it does. There is an issue about the demand and supply side. We need to address the demand side, a point made by many noble Lords, as well as on other issues. I see that the lawyers are gathering, and if I do not give in to them, I fear my fate.
Tobacco: Smuggling
Lord Patel Excerpts(12 years, 7 months ago)
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Lord Sassoon
I know that the noble Lord, Lord Davies of Oldham, is an expert on the subject because I think that he had exactly the same Question from the noble Lord, Lord Dubs, about two years ago. He will know about the considerable efforts that his Government made. As I have already said, very specifically within the overall reduction that government departments are facing, HMRC has allocated £917 million to deal with revenue avoidance issues in the spending review period, of which £25 million is targeted at the area about which we are talking today. His concerns are fully recognised and have been met.
Lord Patel
My Lords, we have had several hours of debate about plain packaging and its effect on young people who take up cigarette smoking. Which evidence do the Government not accept on the basis of science? Is the Minister aware of today’s report from Cancer Research UK about plain packaging and its effect on children taking up cigarette smoking?
Lord Sassoon
My Lords, we are in an open consultation period. At the end of that period, it will be for the Government to assess all the evidence. But I am grateful to the noble Lord for drawing our attention to another important piece of topical evidence.
Economy: Growth
Lord Patel Excerpts(13 years, 8 months ago)
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Lord Patel
My Lords, it is a pleasure to follow my noble friend Lord Rees and I will continue the theme that he started. First, I declare an interest as chancellor of the University of Dundee, where I also worked for nearly 40 years. The university’s College of Life Sciences and Division of Signal Transduction Therapy is a model of the largest collaboration of academia and pharma in the United Kingdom. It is about such collaboration that I wish to speak today.
The Academy of Medical Sciences report, Academia, Industry and the NHS: Collaboration and Innovation, and the NESTA report, All Together Now: Improving Cross-sector Collaboration in the UK Biomedical Industry, highlight the opportunity that the UK has, with its world-leading pharma industry, biomedical science and National Health Service, to produce innovations and economic growth. The pharmaceutical industry is changing its model of R&D investment to that of more extramural funding, which I believe provides opportunities for the United Kingdom.
An ageing population and the increasing use of healthcare in the BRIC countries means that the industry has huge growth potential. Countries such as the USA, Singapore and France have recognised this by increasing their investment in research capabilities. We have strong research universities in life sciences, as evidenced by the high citation impact, which beat even the United States of America. But we underexploit the resources that we have—the NHS, universities, and large and small pharma.
While strong institutions, enabling regulations, funding and people with research skills are important, what is lacking across the country is collaborative mechanisms, and the fora, incentives and metrics that promote and encourage interactions between the players. Collaboration allows a better use of resources, avoids duplication and improves access to specialist facilities and expertise, which importantly improves the capacity for innovation. Big pharma is increasingly looking for external partners for drug development. Industry currently funds around 10 per cent of biomedical research in UK universities. If universities were to increase this to 15 per cent, it would mean an extra £100 million, which still would be only 8.5 per cent of extramural R&D funding of pharma companies.
There is a risk that the UK will remain static while other countries grow. One indicator of the extent of such collaboration could be an analysis of the levels of clinical trials activity in each hospital trust. Currently, the number of patients enrolled in clinical trials is low and falling. Collaboration would produce company growth in the private sector and increase income in the public sector. As pharma grows, R&D spend will grow. By 2015, there could be an additional £3 billion in external R&D funding. We need the right infrastructure, an electronic patient record system to support research and reform of the VAT system to encourage collaboration, and to develop more specialist support services.
The UK should accelerate the development of electronic patient records to support medical research and aim to become the world leader. Scotland has made a success of this and provides a valuable research resource. Industry can help by providing more industry placements and secondments. The intellectual property model of universities, NHS and pharma needs to change from getting income to developing research further. There needs to be more sharing of research facilities to reduce costs. Similar arguments could also be made to pricing policies for research that involves risk sharing.
I hope the Minister agrees that in our world-leading pharma, leading research universities and the NHS, we have fantastic opportunities to bring about innovation and treatment of disease. The Government should examine ways to see how best to bring this about.