Health Service Medical Supplies (Costs) Bill

Lord Warner Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 23rd January 2017 Grand Committee

Moved by

[Lord Warner]

1: Before Clause 1, insert the following new Clause—
“Duty to have regard to the life sciences sector and access to new medicines and treatments
In discharging, through the provisions established or amended by this Act, its responsibility to secure best value for the National Health Service in purchasing medicines and medical supplies, the Government must have regard to the need to—(a) support a flourishing life sciences sector within the United Kingdom economy; and(b) to ensure patients have speedy access to new medicines and treatments approved by the National Institute for Health and Care Excellence.”

[Lord Warner (CB)]

My Lords, Amendment 1 is in my name and those of the noble Lord, Lord Hunt of Kings Heath, and the noble Baroness, Lady Walmsley. First, I welcome the Minister to his first health Bill as a Minister. I am sure that the noble Lord, Lord Hunt, will have a great deal of sympathy with his position of having copped the Committee stage of a Bill in which he had had no previous involvement, because I did exactly the same to him when I left office and left him with the Mental Health Bill—having made, of course, an extremely brilliant speech at Second Reading to introduce the Bill.

I sympathise with the Minister’s position, but that does not mean that we will not probe forcefully on a Bill that is definitely a curate’s egg which does not seem to have left the Commons in as improved a state as it might have done. I am afraid that earlier this morning I separated Amendment 1 from Amendments 2 and 4. I hope that that has not caused too much trouble. I wanted to focus in this amendment on life sciences and the PPRS scheme and on their importance.

Amendment 1 is very straightforward. At the start, the Bill lays a clear duty on the Secretary of State, in discharging the Bill’s provisions, to have regard to supporting a flourishing UK life sciences sector and ensuring that patients have speedy access to NICE-approved new medicines and treatments—a subject to which I think we will come back on a number of occasions. As I made clear at Second Reading, the Department of Health Minister with responsibility for the pharmaceutical industry does have to balance a number of factors, and not just get the cheapest drugs for the NHS. This is what I had to do when I had those responsibilities, and the position is the same today, as I understand it. These factors involve the safety and value for NHS money of medicines, but they also involve helping the UK life sciences industry to grow and flourish and securing speedy access for patients to new drugs that have been approved by NICE.

It is clear that the Government have not done a spectacularly good job with their consultation on the Bill in showing that they understand this balancing act. They certainly have not convinced the pharmaceutical industry—hence this amendment at the start of the Bill. Suspicions have understandably been raised by the inclusion of elements in the Bill that were not in the 2015 consultation on the Bill, including enforcement powers for future voluntary pricing schemes that operate outside the statutory scheme. There is also the issue that the range of products covered by the Bill seems to have been extended, along with the disproportionately bureaucratic information requirements that have now found their way into the Bill.

We will come to many of these issues later, but I will focus here on safeguarding life sciences and the PPRS. Why is this so important? I will start with the life sciences issue. The pharmaceutical industry invests more than £4 billion a year in R&D—more than any other sector. It employs 62,000 people, with a geographical spread that is well outside London and the south-east. Pharmaceutical manufacturing employees have the highest gross value added of any high technology industry, at more than £330,000 per employee. One in four of the world’s top prescription medicines was discovered and developed in the UK. It is a very important and powerful industry for this country.

All this will be put at serious risk by Brexit, as the Prime Minister seems to recognise in the new industrial strategy that she announced today. We know the UK will lose the EMEA through Brexit, but Brexit also poses many other risks to the UK life sciences industry, which could lose market access for its products and see a flight of researchers and research. At such a time the last thing the sector needs is a piece of ill-considered legislation imposing unnecessary regulatory burdens—again, something the Prime Minister said in her industrial strategy that she wants to reduce.

As I made clear at Second Reading, I am not saying that the Government should not act to prevent the NHS being blatantly ripped off under the statutory scheme when a branded good comes off patent, as happened with Flynn Pharma and a Pfizer anti-epilepsy drug. The ABPI has never challenged action in cases of this kind. However, the broad wording of the Bill goes well beyond closing this loophole. It gives the Government the power in the statutory scheme to replace a list-price discount system with one in which a company repays the Government a percentage of net sales, with as yet no clear indication of what this level will be. The industry’s concern is that this will create a precedent that could be easily applied to the voluntary PPRS scheme. Ministerial assurances that this will not happen are simply not the same as legislative safeguards. My reading of the Bill is the same as the ABPI’s, namely that this legal precedent could enable a future Government to unilaterally apply the same approach to the voluntary scheme when a PPRS period ends. This would end a negotiated way of setting prices and encouraging research and innovation that has worked well for industry and successive Governments for more than 50 years.

The second leg of Amendment 1 covers the issue of speedy patient access to new drugs. We will come to this matter later on other amendments so I will say little now, except to remind the Committee that we already have a poor record on the take-up of new approved medicines. For every 100 European patients who can access new medicines in the first year they are available, just 15 UK patients have the same access. Even when NICE has approved drugs and treatments, NHS take-up still lags behind. The first page of Friday’s Times showed the sector’s concerns, with one-fifth of new drugs being rationed and drug companies now openly saying they will no longer launch new drugs early in the UK. Whatever we do with other parts of this Bill when we come to them, I urge the Government at this time of great uncertainty for UK life sciences to put at the beginning of this Bill a statement of intent and reassurance of the kind embodied in Amendment 1. I beg to move.

[Baroness Walmsley (LD)]

My Lords, I support this amendment and compliment the noble Lord, Lord Warner, on his comprehensive introduction of it. I have no intention of repeating everything he said. However, I have a few points. I, of course, support the Government’s intention to try to make sure that the health service is not ripped off, but point out that a very large fine has just been imposed on Pfizer by the competition law regulations in relation to the case mentioned by the noble Lord, Lord Warner—so even without this Bill, that is working and we must bear that in mind.

What I am particularly concerned about is the potential effect on the life sciences sector, particularly—as the noble Lord, Lord Warner, said—in the light of Brexit. There are dangers to our markets and to our researchers. Our research is going elsewhere and researchers from other EU countries coming to us are all in danger because of the Prime Minister’s determination to take us out of the single market and the customs union, which I do not believe is what the public voted for.

The particular issue that concerns me is that although we were told in some of the meetings we had that there had been consultation and there will be more consultation before elements of the Bill are implemented, parts of the industry tell us that they are very concerned that they were not consulted. They do not feel that the level of consultation before the Bill is implemented is anything like good enough. We have to support our life sciences industry. We are very good at life sciences. It is one of the things that we can lead—and have led—the world on, but we must make sure that it is not in danger.

The other point is on access to treatments—not just drugs but other treatments. I am told by GPs that rationing is already in place, either by these referral management companies—private companies—that are being placed between the GP and his or her recommendation and the consultant, or by the consultants having pressure put on them to refuse consultation over certain patients referred to them by GPs. We already have rationing and we need to make quite sure that we are not affecting our pharmaceutical industry. We must ensure that our industries involved in research, medical implements, treatments, machines and devices and all those things that we are so good at inventing are not damaged by the Bill. It is really important that we have a statement of intent in the Bill. It will place on the Government the responsibility to make sure that they consider this terribly important sector. I have not had a chance to read the industrial strategy yet, but I would be surprised if the money follows the intent. I do not think that we will be able to look to that for any comfort, so we need this amendment.

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In discussing later amendments—in particular, from my point of view, Amendment 10—we will come back to the question of value. It seems to me that value-based pricing was not reflected in the structure of the PPRS this time round, but that it will be possible for us to do so in further revision of the PPRS in future. To that extent, the issues under Amendment 1 are very well raised. I do not personally support the structure by which it would be incorporated into the legislation, but I think it was very helpful to get that overall picture at this first stage.

[Lord Warner]

Will the noble Lord clarify something for me? The point of my amendment was, in a sense, not any particular PPR scheme but the principle of a PPR scheme, which is a negotiation between government and the industry. No one is arguing that the PPR scheme should be set in stone for ever and a day. What the industry is concerned about is that Government are getting ready to impose a system as an alternative to a negotiated system. The amendment is not meant to enshrine a particular PPRS but to encourage the idea of a negotiated deal with the sector. Does the noble Lord accept that that is a good principle?

[Lord Lansley]

The short answer is yes. We should aim for what is a price paid by the NHS to the industry for the medicines that it uses that is reflective of value and is designed to promote innovative medicines—that is, as we will discuss in a later amendment, those that meet unmet need or add substantially to therapeutic benefit and are not the “me-too” drugs that are very similar to existing medicines but have a slightly different method of operation or delivery. Paying for what innovation gives by way of therapeutic benefit is where we want to be.

However, the amendment is right in the sense that one has to do that alongside supporting the life sciences sector. That is where freedom of pricing at introduction is important. I have accepted the principle of a PPRS which delivers a budget to the NHS and delivers freedom of pricing to the industry. We are not legislating precisely for the structure of the PPRS, but let us assume that those are continuing features. However, through the operation of the rebate or some other means, it seems perfectly possible to incorporate some of the criteria that will be the subject of our discussions on a number of amendments, as is reflected in the second limb of the amendment.

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[Lord O'Shaughnessy]

I thank the noble Baroness for that point, with which I completely concur. This is obviously a big moment in time, for several reasons. Our current price regulation systems for pharmaceuticals run until the end of 2018 and, in 2019, we will leave the European Union. These things are bundled together and co-dependent; making the right decisions on each of the factors will have a knock-on effect on the rest. I very much understand the point. As I said, my job has the tension of both responsibilities, including health, and the trick is to square the circle.

[Lord Warner]

My Lords, I am grateful to the Minister for his response but I was not convinced and I am not sure that the industry will be convinced. Over time, the industry is seeing the legal requirement to implement NICE being watered down by NHS England in effect introducing a cost-control system on top of the legal requirement. It is seeing the Government fixated with cost rather than innovation and patient interest. Companies are seeing their investment drop and their involvement in this country being called much more into question by their boards. That is the issue. It is not about whether the Minister can convince me or this Committee; it is whether he can convince the outside world in this sector. At the moment, I am inclined to pursue this on Report, but in the meantime I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

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[Lord Warner]

My Lords, I support these amendments, to which I have added my name. I do not want to go over again what has just been said, but the issue of access is critical. It is why companies have invested in this country. They criticised NICE when it was first set up; they were highly hostile but have been wooed over, have stayed with the game, played in it and continued to make products which are of great benefit to NHS patients. However, having jumped that hurdle they now see a new one, which is driven not by cost-effectiveness but by cost—a straightforward capping of expenditure at an arbitrary figure of £20 million. The noble Lord, Lord Hunt, was a little critical of NHS England. I would be if I thought that it was only NHS England but I do not believe that the Government are not behind this, putting pressure on it. We already have a massive difference of view between the Conservative chairman of the Health Select Committee and the Prime Minister over how much extra money has actually been put into the NHS. The noble Lord, Lord Lansley, winces, but such measures are being introduced basically to stop the NHS carrying out a legal obligation to implement NICE recommendations. I totally support the amendments in the name of the noble Lord, Lord Hunt, because they are a way of trying to ensure that, where repayments are made, they go back to where they should be, which is in the NHS and helping patients to access new drugs.

[Baroness Finlay of Llandaff]

I have added my name to the first of the amendments. I would have added it to the second, but there was not room—there were already four names there. I strongly support them. The debate so far has related to the pharmaceutical industry, to pharmacies—that is, chemists in the community—and to the NHS but these amendments go to the heart of it, which is access for patients.

One problem with what will feel to a patient like almost arbitrary rationing is that they will know that they have a disease or condition and that there is a drug which, if they lived in other parts of the world or had more money, they would be able to access and which, for one reason or another, they cannot. We must recognise that any costing system for medicines is relatively arbitrary and does not cost in all the social costs of disease progression, or of more severe versus less severe forms. Nor does it factor in the cost to the whole family of the distress somebody feels when they need medication and cannot access a drug which has gone through an appraisal process and whose criteria they can see they fit.

I hope that the Minister will look sympathetically at the principles behind this amendment. If you save money but do not put it back into access to medicines, you are effectively bleeding that area to plug other gaps or deficits in the NHS. As for the patient with the condition who knows that there is medication that probably would help them, although they are well aware that they could be a non-responder, no one should underestimate the anguish to them and their families, or the knock-on effect on society in the long term of failing to ensure access to effective medications.

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[Lord Hunt of Kings Heath]

That is very interesting. It has always struck me that when you chair a board of an NHS foundation trust, for instance, there is a philosophy that says that spending on doctors and nurses is a good thing but spending on drugs is a bad thing. It is a ludicrous position. I agree with the noble Lord, Lord Lansley, that there is a big problem. Spending on drugs is seen as a cost pressure, so automatically everyone’s emphasis is on keeping that spending down, whereas a rather more sophisticated approach would take the view that, if you have spent your money on drugs that have had a hugely positive impact on the throughput of patients, cost-effectiveness and efficiency, that might be a good investment. The question when we come to the next group is whether our current arrangements have come to the end of the road and whether we need to move on to something rather more sophisticated.

[Lord Warner]

What we set up a long time ago was, effectively, NICE to be the arbitrator, and we controlled the flow of technology appraisals into it. I used to sign off a limited number of drugs that would go into the NICE process. We have that system, which has now been legally enshrined. It is also open to NICE to withdraw drugs from use, as it has from time to time, or to change procedures. We have a system enshrined in our law in which the NHS is required to commit to introducing NICE-approved technology appraisals, so the idea that we should let the Treasury arbitrarily reduce and control the small bit of that total NHS budget on those grounds seems bizarre. I agree with the noble Lord, Lord Lansley: we have ended up obsessing about this relatively small part of the NHS budget when we have set up a system to ensure that the NHS gets value for money through the NICE appraisal process. We are getting into a strange situation, which is why we are scrabbling around to make amendments to try to make a pretty crazy system slightly less crazy.

[Lord Lansley]

There is a risk of going on about this, but the structure of the amendment in the context of the PPRS as presently constructed is illogical, because the PPRS is constructed around budget control. The point, however—we will no doubt come back to this, not least on the next group—is that we should be thinking about how we can arrive at a negotiated price for the NHS to buy medicines which may well be marketed initially or globally at a given price, but the amount that the NHS should pay should reflect value. I have said it before and I will keep coming back to it.

I would not be as disparaging of the current consultation between NHS England and NICE at the noble Lord, Lord Hunt. It could have the effect that he describes: adding additional jeopardy because one has to meet not only all the normal criteria for an effective medicine but the NICE threshold, and NHS England might step in with hobnailed boots and say, “But we are not going to make it available and you must change the funding direction”. But it might recognise reality. The consultation, in my view, may have the effect of avoiding arbitrary post hoc rationing of medicines, because the NHS should be up front, negotiating price discounts on medicines, regardless of the rebate. That means engaging with the industry at an early point.

If the industry understands the consultation properly, it will understand that the budgetary impact for the NHS under current circumstances cannot be ignored. The best way to deal with that is not to go through all these processes and then find, at the end of the day, that the NHS cannot afford it, or that NICE has to say no through the application of the threshold. Rather, it is to use the pharmaco-economic evaluation and the health technology assessment properly alongside NHS England and say: “Here is something that is valuable and we want to be able to use it, but we must recognise the budgetary impacts”. There may well therefore be some risk-sharing processes or discounting processes to enable the product to be available to the NHS at an early stage and to give industry and the NHS all the information they need subsequently to be able to make sure that they have got the pricing right.

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[Lord Lansley]

The purpose of Amendment 5, in my name, is to recognise that the Government have brought forward legislation to do a necessary thing, which is to address the discontinuity between the voluntary scheme and the powers available under the statutory scheme. As such, where companies were operating under the statutory scheme with a pre-existing discounted price, often in the hospital sector, the effect of the statutory scheme imposing a given price cut did not impact on their effective price to their customers. Therefore, they did not make a contribution, in that sense, to the budgetary control that was being looked for. The purpose of the legislation is to bring equivalence to the voluntary and statutory schemes. But if we are creating equivalence between the voluntary and statutory schemes, we should be clear that the legislation does precisely that. The noble Lord, Lord Warner, quite accurately referred to this issue at Second Reading, if I recall. There are companies under the statutory scheme—Gilead is a particular example—with products that would, under the voluntary scheme, not have a PPRS control applied to their pricing because they would not contribute to the rebate as they have been introduced after December 2013. Under the statutory scheme, however, they are required to contribute.

As I understand it, the objection to bringing the two schemes to an equivalent place is that under the statutory scheme, as things stand, there are relatively few products and a significant proportion of them have been introduced since December 2013. Therefore, under the statutory scheme, the effect on the rebate of the rest of the companies would be excessive. That can be dealt with. The powers are available. If we legislate in the form that I propose, the Government can modulate the rebate between the two schemes in order to arrive at a similar result for those companies that have to contribute to the rebate and apply a common percentage. As a matter of principle, if we are legislating for the two to be equivalent, it is desirable to do so.

I am slightly worried about Amendment 3 because it assumes that there is a voluntary scheme. We do not know. There may or may not be a voluntary scheme. But a voluntary scheme will not always be in place at the point at which the Government, in order to protect the NHS, may require there to be one. I do not think that we should be in that position. There would be a flaw in the powers available to set a methodology for a rebate under a statutory scheme. In Amendment 6, which the noble Lord, Lord Warner, has not yet had a chance to speak to, he clearly understands that there needs to be a relationship between these two, but I fear there is a risk of gaming on that amendment because the industry may say that if it does not agree a voluntary scheme there cannot be a statutory scheme. Therefore, there is no scheme, and I do not think that that we want to get ourselves into that position. It will not surprise the Committee that I can see reason for my own amendment even if I am not necessarily in favour of everyone else’s.

[Lord Warner]

My Lords, I reassure the noble Lord, Lord Lansley, that I see excellent reasons for his amendment. If the purpose of the Bill is to achieve equivalence between the two schemes, the Bill should secure that. At the moment, it does not. The industry does not think that it does. I am not sure, technically, whether the noble Lord’s amendment secures it, but I think it does. If it is not quite right, no doubt the Government can amend it. I tabled Amendment 6 to push the Government a little more on their commitment to a voluntary scheme. That is its purpose. We have had a good canter over that particular area. As I said when we discussed Amendment 1, I was not totally convinced by the Government’s position, but I want to set out briefly why this is important.

The scheme has stood the test of time as a basis for a relationship between an industry and government where that industry has a much bigger set of customers and a much bigger presence outside the UK. We have actually punched above our weight in securing the presence of that industry in this country, partly through the NHS, but partly because a system was imposed on the industry in terms of the research-based drugs industry. There was a negotiation. Amendment 6 is not meant to say in any way that a particular type of PPRS should be enshrined in legislation for all time. It is trying to get the Government to say, clearly and unequivocally, that for the foreseeable future, there will be some form of voluntary scheme in which a negotiation takes place in an open and transparent way with this particular sector in order to keep this sector being attracted to setting up, doing research and developing pharmaceuticals for the population at large and for the NHS in particular.

Amendment 6 is trying to get out of the Government rip-roaring support for the foreseeable future, a little stronger than the Minister said earlier on, for a voluntary scheme that presents an opportunity for government and the sector to agree the basis on which they operate in a life sciences industry producing drugs that can be made available quickly and speedily, when proven, to the NHS and its patients.

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[Baroness Walmsley]

My Lords, I am in favour of this group of amendments. The Government plan to introduce new regulations and duties on the industry at a very difficult time, so the Minister cannot be surprised that the industry is concerned and that parliamentarians would like to take the opportunity to hold the Government to account based on what happens after the Bill becomes an Act.

For some of the things that we have been talking about, I have been told that the Government already have powers but have not used them—they are just refining and clarifying them and making them more proportionate. Of course, that makes the industry worry that they are planning to use them, even though they are not saying so. We need to know what will happen to all these issues of availability, access, proper supply and cost to the NHS once the Bill has passed. In the interests of transparency and post-legislative scrutiny, will the Minister accept that the Government should report back to Parliament?

[Lord Warner]

My Lords, I have added my name to Amendment 14, but I also support in principle Amendments 9 and 10A in this group. Each of these amendments does something slightly different and they need some consolidation. They are, however, a reflection of a deep sense of unease over where the Bill is taking us and a strong wish to monitor its consequences. The Government are imposing a lot of requirements on the industry for information. The quid-pro-quo is that we would like a lot more information from the Government on how this has worked in practice.

There seem to be three features that that kind of reporting back should cover. The first is the scale of payments made; the second is the use to which the money has been put; and the third is the impact of the Bill on the access to new medicines of NHS patients. It would not be right to try to draft this off the tops of our heads, but it would be helpful if the Government would accept that there should be some kind of monitoring of key issues around the Bill that are then reported back to Parliament and the public on a regular basis—let us say annually—and if we could get together with the Government to help draft something for Report in this kind of territory.

[Lord O'Shaughnessy]

My Lords, I am grateful to noble Lords for raising the issue of reporting requirements. We will address at the end the issue of access and my sympathy to reporting requirements, but I first want to deal with the amendments as they stand.

Under the current PPRS, the Government regularly publish information relating to the operation of the voluntary scheme. Of course, for a future statutory scheme I draw attention to the regulations that we have already discussed, in which there are annual reviews of the regulations and a requirement to publish a report on each review. The illustrative regulations require an annual review that will: set out the objectives of the scheme; assess the extent that our objectives have been achieved; and assess whether those objectives remain appropriate. These requirements will be tested through the consultation on the regulations and we will, of course, take account of those views. I totally accept that reporting is a critical principle, but believe that setting out the requirements in primary legislation is too restrictive because of the potential to change from year to year what the priorities are within a sector and within the NHS.

Turning to the specifics of Amendment 9, I reassure noble Lords that the content of annual reviews would not be restricted to reviewing objectives. They must also be able to address key issues arising during the year that might affect the operation of the scheme, so there is flexibility there. We also intend for the annual review to be published and put before Parliament, so there is the opportunity for that to be seen and discussed. On the details of what it is proposed to report—in particular, how the payments are used—to achieve the specific aims of the amendment, the department would need to ring-fence the funds and monitor where the payments are used. I do not want to rehash our discussion about ring-fencing. I take seriously the point that noble Lords make about driving access to innovative drugs but we do not think this is the right way of doing it.

Nor do I believe that, through these means, it is right to address matters relating to the NHS duty to promote innovation. This Bill is ultimately about controlling the cost of medicines and medical supplies. The NHS Act 2006 puts duties on the Secretary of State to take into account both the need for medicinal products to be available for the health service on reasonable terms and the costs of research and development, which is a big factor in innovation. By taking into account these factors, the Secretary of State is looking at the needs of the industry to support the R&D base as is necessary to support the development of innovative medicines and technologies.

The NHS duty to promote innovation is different. It is about promoting innovation in the provision of health services and there is an extremely broad agenda that goes well beyond medicines. We have already said that we all want to make the UK the best place in the world to design, develop and deploy life sciences products. We do not believe that the Bill will have a negative impact on our doing so. We have also talked about the accelerated access review, so I will not go over that.

Turning to the specifics of Amendment 10A, the supply of medicines is highly complex, and pricing is one part of it. Other issues of course include rigorous safety and quality standards. Difficulties faced in the take-up or availability of medicines can be influenced by a number of reasons which are nothing to do with pricing. There can be manufacturing problems, such as batch failures; changes in guidelines, such as antibiotic switches; and raw material problems, as well as regulatory changes.

For example, in 2015, there was worldwide withdrawal of a branded antipsychotic injection, Piportil, due to a global shortage of the active pharmaceutical ingredient. Sanofi was unable to find an alternative source of this ingredient and had to discontinue the product. I set that out to illustrate the point that it is not always easy to link changes in pricing to issues of availability or access: there are other things to take into account. That is why we do not believe that we should set out, either in primary legislation or beyond the commitments made in the illustrative regulations, specifically to assess the impact on availability, access and so on.

Leaving all that aside and returning to the recurring theme of the debate, I understand the desire for greater transparency, which is undoubtedly the right approach to access. We must think about how we can improve access to innovative medicines for NHS patients and, in doing so, improve the operating conditions, if you like, for the life sciences industry—the win-win situation to which we keep returning. I would be happy to meet noble Lords either individually or collectively to think about what more we could do, whether through the Bill or looking ahead to the life sciences strategy, to ensure that we deliver on this promise. I take very seriously the warnings that many noble Lords have issued; the Government absolutely want to address this. On that basis, I ask noble Lords not to press their amendments.

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[Lord Warner]

My Lords, I am very interested in this part and added my name to that of the noble Lord, Lord Hunt, in opposition to the clause. He sparked my interest by accusing me of taking through the 2006 Act. Only on further reflection with my ageing brain did I find that I had not taken it through the House when I was a Minister because it was a consolidation Act. As far as I can recall, it went through both Houses of Parliament without any direct consideration, because there were no amendments to any of the legislation covered by the Act.

The noble Lord, Lord Hunt, in a very Sherlock Holmes manner, has been pursuing where this all came from. As far as I can see, it came from 1977, after a period in the Callaghan Government when there was great excitement about the relationship between the NHS, private practice and the private sector, following my period as private secretary to Barbara Castle. It comes from that generation. As the Minister and his officials indicated in a helpful meeting that we had, it has never been used. We are talking about a provision that comes not just from a long time ago but from a totally different context. We have Whitehall picking up a piece of legislation which it thinks may be useful and slotting it into the Bill with an amended purpose.

As the noble Lord, Lord Hunt, said, the medical devices sector does not think that there has been adequate consultation. It cannot understand what the Government are up to on this. The only justification it seems to have been given is that the department is modernising—whatever that means—a particular piece of old legislation. Modernisation is one of the words that one treats with a certain amount of caution, particularly when it affects public services. We are very unclear why the devices sector has attracted the attention of the Department of Health.

We are clear what the mischief is on the medicines side that the Government are trying to address. We are not clear what the mischief is on the devices side—medical supplies—that has caused the Government to go rootling around in the archives to find a bit of legislation that enables them to place a considerable requirement on the devices sector, which has been quietly minding its own business with a kitemarking system and the usual tendering processes for selling its products to the NHS.

I think we need to be a lot clearer than we are now as to why the Government need this modernising legislation. I remember that when I was a Minister one of the things I was trying to do was reduce the regulatory burden on the NHS and the health sector. I confess to having slipped up a bit in that I totally missed this 1977 regulatory burden. I wish I had spotted it, because we could have struck it out of the legislation while we were tidying up other things. Having got that off my chest and owned up to it, I would really like to know why the Government want this gold-plated provision on regulating a sector which, as far as I can see, has not caused any great problems. Perhaps the Minister can tell us why they have suddenly gone in for this attention and whether they have actually been neglectful of the sector. Has it been ripping off people a great deal for the past seven or eight years? Should we have acted sooner?

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[Lord Hunt of Kings Heath]

My Lords, I am grateful to the Minister for his response. I also thank him for his consultation and willingness to meet bodies before Report, which I am sure will be very welcome. I understand the first argument, which is that there is a need to ensure consistency in relation to this Bill and the 2006 Act. I fully understand that. I also understand the change from criminal to civil penalties. But we then come to the issue of whether this provision should be in statute at all. The Minister himself has acknowledged that this is a different market, with competitive tendering. It is very competitive. We can see no evidence that this measure has been used for 40 years, and as far as I can see there is no evidence to suggest that it will be used any time soon.

The Minister said that it was not thought that the switch from branding to generics would arise in relation to medicines, and therefore that we should look into a completely different sector and say that because something might happen in the future we need to have this overarching provision in the Bill. But that is not the right approach. It has become clear that there are two courses of action. One is to take this out of the 2006 Act altogether, which at the moment I rather favour. We should not regulate for something that might happen in the mystical future.

I, too, was a better regulation Minister and it was drummed into me that if you do not need it, get rid of it—and if you do not need it, do not legislate in the first place. In his heart of hearts, surely the Minister realises that this is unnecessary. The alternative approach is to take the threshold he suggested and put it in the form of an amendment so that we have some reassurance on the face the Bill that it will not be used inappropriately. Those are two particular options.

In my tour d’horizon, as the noble Lord said, I came across the comments made by the noble Earl, Lord Howe, in 1999 when my noble friend Lady Hayman was taking one of the many health service Bills through your Lordships’ House. The discussion was not about devices but about the PPR scheme, because the then Government had taken powers in relation to prices. The noble Earl, Lord Howe, said that the Government had,

“arrogated to themselves sweeping powers to bring the current voluntary scheme to an end and to control the price of any drug at will. Lower medicine prices are appealing but too much of that will kill the golden goose”.—[Official Report, 9/2/99; col. 118.]

If the noble Earl, Lord Howe, were here arguing for this Bill, I think that he would have reflected that the case had not been made for non-health service medicines to be involved. We need to find a way forward between this stage and Report, otherwise the persuasive argument will be to remove the offending sections from the 2006 Act.

[Lord Warner]

Perhaps the Minister will consider the Bill’s definition of “medical supplies”. It states that it,

“includes surgical, dental and optical materials and equipment (and for this purpose ‘equipment’ includes any machinery, apparatus or appliance, whether fixed or not, and any vehicle)”.

That seems to take the Government into any bits of kit—not just ordinary devices as we normally understand them. It covers ambulances and all sorts of fixed equipment in the NHS. Is the Minister really saying that the Department of Health needs a power to cover that range of subjects—I presume that it includes scanners—where competitive tendering may be used, and that the Government reserve the right to intervene in that? That is what the Bill seems to say.

[Lord O'Shaughnessy]

On that specific point, there are number of things—for example, supplements, cosmetics and foods—that fall outwith the categories of health service medicines or health service medical supplies but are sometimes provided or prescribed by the NHS. The intention of the part of the Bill to which noble Lords draw attention is to capture such items when they are provided by the NHS for the benefit of patients—but not in general.

--- Later in debate ---

[Lord Hunt of Kings Heath]

My Lords, this is helpful. Medicines have been referred to, but I would have thought that it could be helpful with other medical supplies. I have had a letter from the British Healthcare Trades Association. It says, in relation to other medical supplies:

“We cannot think of any procurement scenario in our sector where products, on an ongoing basis, are not subject to tender or tariff procedures. The price is tested at entry and reviewed at regular intervals, and the terms and conditions pertaining to the contract or tariff arrangements will include requirements for provision of information”.


That deals with the issue of information. So the noble Lord has put forward a very interesting suggestion and I hope that the Minister might be sympathetic to it.

[Lord Warner]

My Lords, I too am sympathetic to this amendment. I have a linked amendment, Amendment 33, which is about introducing a trigger before information is required. Both amendments, I think, are intended to curb the enthusiasm of Secretaries of State to intervene in a market situation where things are working reasonably well. So I have every sympathy with the amendment of the noble Lord, Lord Lansley, and I hope that the Minister will consider it sympathetically.

[Baroness Walmsley]

I too have a great deal of sympathy with the amendment, but I just wonder what the definition would be of an “open and competitive” process—perhaps it would be defined in regulations. Does the noble Lord agree?

--- Later in debate ---

[Baroness Wheeler]

My Lords, this important group of amendments to Clauses 6 and 7 covering England and Wales is intended to reduce the scope of the burdensome information requirements under the Bill by excluding medical technology and supply sectors from its provisions. The Bill itself is inconsistent throughout on how it refers to this key part of the industry, variously referring to the producing of medical supplies, of health service supplies or of health service products. This gives fuel to the widespread assumption that the medical supplies parts of the Bill were a hastily drawn-up afterthought addition to its main purpose.

Our amendments in this group—excluding Amendment 19—remove all references to “health service products” in these clauses and substitute the “health services medicines” reference consistent with the other parts of the Bill applicable to the pharmaceutical industry. Despite extensive questioning and probing of Ministers by noble Lords and in the Commons and today’s explanation from the Minister in our earlier debates we have still to hear any evidence-based justification for these heavy-handed information and disclosure requirements. Both the ABPI and the ABHI have voiced strong concern at the onerous information requirements under the Bill and draft regulations and the potentially huge impact on SMEs across both sectors.

We were encouraged at Second Reading when the noble Lord, Lord Prior, in response to the widespread and deep concerns put forward, told us that,

“the last thing in the world we want to do is to build a bureaucratic edifice … or to gold-plate regulations, information requirements and the like … we are absolutely open to all ideas and suggestions on how we can reduce the regulatory and bureaucratic requirement on companies that supply the NHS”.—[Official Report, 21/12/16; col. 1685.]

Just to remind noble Lords—a point underlined earlier by my noble friend—the Bill currently requires,

“a person who manufactures, distributes or supplies any UK health service products”,

and in England it is applicable to,

“any medicinal products used to any extent for the purposes of the health service continued under”

proposed new Section 264A(1),

“and any other medical supplies, or other related products, required for the purposes of that health service”.

In other words, millions of products and thousands of small, medium, large and very large businesses.

Within Clause 6, information may be required on:

“the price charged or paid by the producer for products … the price charged or paid for delivery or other services in connection with the manufacturing, distribution or supply,”

of those products,

“the discounts or rebates or other payments given or received … in connection with the manufacturing, distribution or supply”,

of those products and,

“the revenue or profits accrued … in connection with the manufacturing, distribution or supply”,

of these products. These are the current draconian provisions and the only response so far to the Government’s insistence that they are open to ideas and suggestions is to promise to consult the medical supplies sector after the legislation has been passed.

We will not go into the issue of the dreaded Section 260 of the 2006 Act, which already contains powers to get price control and information powers over the companies concerned, but we have still to hear a convincing argument as to why it cannot be used as a basis for seeking any further information that is required. We are told that the new provisions clarify, modernise and streamline and now, in the noble Lord’s words, “make the provisions much clearer than they currently are in the 2006 Act”, but Ministers have still to explain exactly how this is the case.

To remind the Committee, the impact assessment makes the astonishing admission that the costs of these provisions have not been quantified for manufacturers, wholesalers and dispensers. Can the Minister tell the Committee whether any further work has been done on this? Surely proposals that stand to impact tens of thousands of businesses should be part of the evidence base before the Government decide to proceed with legislation? It is crucial that the Government accept our amendments and delete the medical supplies industry from the scope of Clauses 6 and 7; only then can they have the meaningful consultations with the industry that should have taken place before the introduction of the Bill. As noble Lords have underlined, it is not acceptable for Ministers to seek to change primary legislation to give the Government new information powers when the details and impact of the new powers will emerge only in future.

Finally, Amendment 19 in this group seeks to address the huge burden that the new information requirements will place on thousands of small businesses across the country. Bearing in mind that the Government have done no work on the potential impact on SMEs, this amendment would at least introduce a threshold limiting the businesses affected to those companies with a total workforce of more than 250 employees or with annual revenues of more than £50 million in each of the preceding three fiscal years prior to the information request. This is based on the EU threshold in relation to procurement. However, given our upcoming withdrawal from the EU, it seems sensible to specify a roughly equivalent amount in pounds. The value of the pound is, of course, currently subject to ongoing fluctuations. If the Government are inclined to act on this amendment, the Minister and his colleagues may wish to give some thought to an exact figure ahead of Report.

The potential impact of the proposed powers on SMEs is significant and could come with a significant unseen cost to domestic businesses and, as a result, to patients. A small firm such as Mediplus, with 55 employees and a turnover of approximately £6.5 million, already has to meet a range of requirements to demonstrate that it is providing value for money. The Bill would increase the time and cost of demonstrating compliance with regulations without any discernible improvement in final outcome. Increasing the bureaucratic burden on SMEs could force firms to consider how they bring products to market, which could have only a negative impact on the NHS and its patients.

The Government have indicated that they would exempt businesses with a turnover of approximately £5 million. The noble Lord will appreciate that, although that sum sounds large, it is very little in comparison with the revenues of the larger pharmaceutical firms which the Bill aims to regulate. The Government’s proposed exemption will still subject a company such as Mediplus to an increased regulatory burden. As noble Lords keep pointing out, all this is completely counterintuitive, given the Government’s supposed commitment to deregulation, and can only risk the viability and innovative streak of very small businesses, which we should be supporting in the current climate. I beg to move.

[Lord Warner]

My Lords, I have added my name to the set of amendments and strongly support what the noble Baroness, Lady Wheeler, said.

The Minister is new to this legislation. He has joined the party a little late on the Bill. I ask him to stand back and look at some of the terminology used in it. It skips lightly through about four different terms: health service medicines, medicinal products, medical supplies and health service products. It zigzags in and out of those terms throughout the Bill. It then gives a set of definitions at the end which, on the most generous interpretation, overlap with each other. So we are imposing new obligations on a whole set of people in and around the NHS and the pharmaceutical industry without being very clear which group of products we are most concerned about. We are taking powers in the Bill to put obligations on all suppliers of those products to keep a lot of information in case the Government should at some point in future call on them to provide it. That does not seem to me a sound basis on which to legislate when we are trying to reduce the regulatory burden on not just small but medium-sized companies. We always talk about the small companies, but Amendment 19 is useful because it involves reducing the burden on medium-sized companies as well.

The impact assessment then adds to the problem by giving no idea of the impact of these provisions on those companies. At least these amendments narrow the focus to where there is an acknowledged problem—medicinal products—which is where the Bill started. If you read the Long Title, it looks as though it started as a Bill about medicines to which someone has tacked on “and related issues”, or similar words. I suspect that the Bill started off trying to deal with a genuine problem but has grown just in case it might be helpful to have some other provisions. Then, to add unnecessary complexity, it has moved around on what products are to be covered to the point where we are putting obligations on a very large number of organisations in case the Government come calling for information.

That is why I shall return to this subject when we come to Amendment 33, which tries, at the very least, to put some obligation on the Secretary of State to show that he has good reason for requiring the information sought in this Bill. That is a debate for another day, but the Minister should look very carefully at whether the Bill has a confusing set of definitions and a use of words that is going to cause a lot of confusion for the world outside.

Mental Health and NHS Performance Update

Lord Warner Excerpts

Monday 9th January 2017 Lords Chamber

[Lord O'Shaughnessy]

I thank the noble Lord for his welcome. He is quite right, of course, that to deal with the problems of mental illness in every setting the staff need to be trained to spot them and do something about it. In the announcement today, a couple of things are relevant to his question. The first is on supporting schools and every secondary school having a mental first aid trained teacher, so they can spot the signs of mental illness and then refer them on if necessary, if they cannot deal with them themselves—although they will have the skills to deal with some instances. The other is the investment of £60 million—£30 million from government and £30 million from trusts—of digitally assisted mental health services, which will bring global digital exemplars for mental health. That will mean that we will be able to provide better information for both staff and patients about the quality of care and safety and effectiveness.

[Lord Warner (CB)]

I welcome the Minister to his new job and raise the issue of CAMHS and the security of funding for CAMHS. It is no good making fine words in this area. The raiding of budgets in this area has taken place in the NHS over a very long period of time. It is not just a question of ring-fencing for a short time; it is guaranteeing budgets over a longish period, so that staffing levels can be built up with people who are expert in this field. Will this issue be addressed in the Green Paper?

[Lord O'Shaughnessy]

I thank the noble Lord for his question. He speaks with great knowledge and experience, particularly from his work in the Department of Health. There are two separate issues here. First, there need to be more resources, and we are providing those. Secondly, we need to make sure that those resources are applied in the right setting, so that money designed to support mental health goes there. The primary way we deliver that is through transparency: making sure that CCGs—which are, of course, independent of government and making clinical commissioning decisions based on local need—are reporting on the money they are spending and the services they are commissioning in mental health and then making sure that we work with NHS England to look at any CCGs where that is not happening. It is clearly wrong that money which is intended to support mental health does not do so, but the way to deal with that is to work with the CCGs where it is not happening and to make them report on their own performance.

Health Service Medical Supplies (Costs) Bill

Lord Warner Excerpts

2nd reading (Hansard): House of Lords
Wednesday 21st December 2016 Lords Chamber

[Lord Warner (CB)]

My Lords, I am sure we are all grateful to the Minister for taking us through the provisions of the Bill and explaining the Government’s approach to the pharmaceutical and devices sectors. I am not altogether sure I followed his metaphor on treacle and icing, but we will let that pass.

I support the main purpose of the Bill, which is to control the cost of unbranded generic medicines if the competitive market is not working properly in respect of particular products. We have all seen what happened when Pfizer and Flynn Pharma hiked the price of an anti-epilepsy drug used by the NHS by over 2,000% when a branded drug came off patent. The proposed £90 million fine from the Competition and Markets Authority should be a salutary warning to others contemplating such action, but I understand why the Government are taking preventive legislative measures, and I fully support that.

However, as the Minister indicated, the Bill goes a good deal wider than stopping the NHS being ripped off when branded drugs go off patent, and that is where we need to probe a little further. Here, I should make it clear that, like the Minister, I have been a Pharmaceuticals Minister negotiating a PPRS deal with big pharma and curbing the excessive profits of generic companies—all areas which such a Minister has to take account of—and I have no illusions about the difficulties of his brief in this area. But it is also part of that brief to ensure flourishing UK pharmaceutical, biotech and devices sectors as part of a buoyant life sciences industry in this country, which provides many high-value jobs. It is not just about getting the cheapest deal on drugs for the NHS.

The Bill includes medical devices and technologies which have nothing whatever to do with the Pfizer-Flynn case. The information provided to me suggests that there has been little consultation with the sector before devices provisions were included in the Bill. The ABHI, the sector trade body, wrote to me to express its concern that the Bill will impose onerous regulation on its members across the country. It points out that SMEs make up 98% of the medical technology industry—I think the Minister accepted that—and that some of those SMEs are already leaving the UK market in favour of more flexible markets. As it says, in the longer run, this will have an adverse effect on the UK’s supply chain and the quality and competitiveness of the products available to the NHS. Given that the Minister has accepted the existing powers to intervene in the devices market if things are going wrong, why are the Government taking these new powers? I have never been very convinced by words such as “streamlining” and “modernising”, and I do not think the sector has been either. Why do they seem to be going in for a heavy-handed way that is bound to alienate many small businesses? Can the Minister explain in more detail what discussion there has been with the ABHI and the sector itself on the Bill’s provisions on devices and technologies, and why the sector was included in the Bill at all? What is the mischief that is being addressed by that inclusion?

Turning to the pharmaceutical industry, it is clear that the Government have not totally taken the sector with them, although the ABPI accepts the Government’s right to act in cases such as Pfizer-Flynn. Companies are clearly uncertain how the Government are going to set the price mechanism in the statutory scheme. I think the Minister was promising consultation, but he will have to do quite a lot of work to convince them that there is not some secret agenda. Can the Minister throw more light on the Government’s current thinking on the issue? How will the provisions ensure that payment levels that seem fair to large multinationals are not punitive to SMEs? I would like to know a bit more about at what level SMEs are excluded from the provisions. Will payment levels in the statutory scheme vary—this is critical to the sector—according to the circumstances of particular producers, some of whom are producing drugs for a very niche market with particular patient interests and concerns?

There are clearly concerns about the drafting of Clause 3 and whether it will penalise innovation. It has been suggested to me that the clause will not achieve the Government’s stated objective of delivering equivalence between the statutory and voluntary schemes. This is because the PPRS excludes sales of branded medicines launched after 1 December 2013 but, so far as I and the industry can see, there seems to be no similar exclusion for such products in the proposed arrangements for the statutory scheme, which would in effect be a penalty on innovative drugs. Does the Minister agree that there is an inconsistency? Is there not a risk that the UK’s already poor record, which he acknowledged, on speedy uptake of new medicines will get worse? Linked to this is the question of what consideration has been given to the impact of the new payment scheme on patient access to medicines where there is little competition. What risk assessment has been made of companies withdrawing supplies from the NHS market? Have there been any discussions with patient interest groups about these issues?

Another issue surfaced by the ABPI is the new power to obtain payments from pharmaceutical companies through the PPRS scheme. They accept that this makes sense if a company leaves the PPRS with a payment outstanding, but the Bill seems to be more widely drawn than that. The ABPI is clearly concerned that the Government may be considering making the voluntary PPRS somewhat less voluntary after the current one has run its course in 2018. What assurances can the Minister give the industry on that?

There are clearly significant industry concerns about the Bill’s provisions on the collection of information at a product level, especially in the international companies. For many of these companies, the UK market is a very small part of their business. What happens if they decline to co-operate over the information provisions in the Bill? It also looks a somewhat cumbersome information collection system that could impose quite rigorous burdens on many smaller companies. How much discussion has there been with the industry on the detail of the information requirements in the Bill and what scope is there for further modification?

Lastly, can the Minister clarify how this new system fits in with the current arrangements for using competitive tendering to purchase innovative drugs which NHS England, for example, does from time to time? Will companies give competitive prices in those tendering arrangements if there is a real risk that the Department of Health will take another cut a bit later on? Indeed, will the Department of Health snaffle money through this statutory levy which will not find its way back to the NHS to purchase innovative drugs more speedily? Can the Minister reassure us that the Department of Health is not creating a more bureaucratic edifice in this Bill that could damage NHS finances rather than confining itself to closing the loophole that Pfizer-Flynn exposed? We may need to probe some of these issues a little further in Committee.

Social Care

Lord Warner Excerpts

Thursday 1st December 2016 Lords Chamber

[Lord Warner (CB)]

My Lords, with the possible exception of the Minister, I am sure we are all grateful to the noble Baroness, Lady Pitkeathley, for providing us with yet another chance to tell the Government what a dire state publicly funded adult social care is in. It is also good to welcome the noble Baroness, Lady Cavendish, to this gathering of the usual suspects, with her excellent maiden speech and her great expertise.

We have now a Chancellor who, we are told, is impressed by data, so I will give just a few figures, even though these stats have not done much to convince his predecessors. In the 2011 Dilnot commission report—I declare my membership—we told the Government that adult social care was underfunded by at least £1 billion a year. Since 2010, another £5 billion at least has been taken out of the system. According to the experts—I am still rather inclined to listen to them—the deficit next year will be around £2.5 billion. Whatever the precise figures, there has been a funding shortfall for over a decade; it is getting worse; great damage is being done to vulnerable people, service providers and the NHS; and the Government have no credible solution.

Although the problems are not of the Government’s making, they are the people now in charge, and I point out to the Minister that the system could well fall over on their watch. The Autumn Statement is a missed opportunity, and the Prime Minister needs to tell her advisers to come up with something more convincing than telling us that social care faces challenges. Her spads should read the briefing we received for this debate, particularly the evidence from the LGA—now Conservative-controlled—and from the regulator, the CQC, which is hardly a vested interest. The LGA makes it absolutely clear that it will not be its fault if, as is highly likely, there is a serious collapse of publicly funded social care in the next couple of years. The CQC points out that for the first time new nursing home providers are not coming into the market and big players in that market are handing back contracts to local authorities. Make no mistake—the rush for the exit has started from publicly funded adult social care providers of all kinds, and their lack of trust in a credible rescue plan means that they will take a lot of convincing to return. A failure to resolve this long-running social care funding crisis quickly has massive implications for the sustainability of the NHS.

Even if they are tempted to avert their gaze, the Prime Minister’s advisers should, even now, think about what is likely to happen in the shorter term. First: a good old-fashioned NHS winter crisis this winter, continuing almost indefinitely up to the next election, with rising avoidable death rates. With hospital bed occupancy already well over 90%, that is now almost inevitable. Secondly: a regular TV diet of ambulances queuing outside hospitals, unable to deliver patients; 24-hour A&E trolley waits for elderly patients; cancelled operations and a whole host of interviews with doctors, nurses and others about the impossibility of their jobs. Thirdly, the Government can say goodbye to delivery of the five-year forward view, which the NHS England chief executive made clear depended on properly funded social care. They can also expect a flow of social care scandals and the CQC reporting next year a further reduction in the providers of publicly-funded social care.

However, this gloomy forecast need not happen. We do not have to watch the NHS collapse under the weight of work it should not be doing. It is much cheaper and better value to put social care on a more sound and sustainable footing than simply propping up the NHS to cope—and it is better for patients as well. Therefore, here is the Warner five-point plan for doing something now. First, commit to the annual funding for social care being increased at least in line with that for the NHS. Secondly, guarantee the funding for social care for at least five years, starting in April 2017. Thirdly, scrap the bureaucratic and small better care fund and use the money as part of a five-year social care renewal fund of at least £6 billion, with £1.5 billion of this going direct to local government in each of the first two years—but on condition that it is used for speeding up hospital discharges and preventing admissions.

Fourthly, we should commit to implementing the Dilnot proposals already enshrined in the Care Act 2014, and we should do so in 2018-19 with properly funded local government administrative costs. Fifthly, to oversee all this, we should speedily convert the Department of Health into a department of health and social care, with all social care responsibilities transferred to it from the DCLG, and we should make it responsible for an integrated health and care budget. At least that would give us a bit of time for longer-term planning. The Prime Minister could then say that she was helping not only the JAMs but the NAMS—the “not actually managing”.

Health and Social Care

Lord Warner Excerpts

Thursday 24th November 2016 Lords Chamber

[Lord Warner (CB)]

My Lords, I am sure that we are all grateful to my noble friend Lady Finlay for securing this debate on an issue which has not had the public attention it merits. I say at the outset that I am a remainer who believes we made a massive error of collective judgment on 23 June. However, whatever your views on Brexit, the NHS and social care sectors now face a very uncertain future if they are prevented from recruiting at scale from both within and outside the EU. Far from releasing resources for the NHS, as the more excitable Brexiteers claimed, Brexit is likely to damage our health and care systems in terms of both funding and workforce. It is the latter we are discussing today, rather than the funding consequences of the £60 billion upfront costs of Brexit that the OBR has estimated.

We do not start from a good position for handling the Brexit challenge for our health and care sectors. These are very labour-intensive industries, where about two-thirds of their costs are labour and service demand is growing rapidly—at a rate of at least 4% a year for the foreseeable future. They will need more people of some kind for years ahead. Successive Governments have failed to deliver effective long-term workforce plans. Health Secretaries usually aspire to greater workforce self-sufficiency but fail to stick to the policies and plans that would achieve it. We as a country have become obsessed with avoiding oversupply of the workforce. The result has been that the health and care system never produces the doctors, nurses, other professionals and care workers that it needs for the future. It has also been lacklustre at retaining and upskilling the workforce that it has. Even now, we are cutting education and training budgets to deal with acute hospital overspends. We have a serious addictive habit of relying on recruitment from overseas to plug our workforce gaps. About 280,000 doctors are registered with the GMC, and about a third are foreign-trained, with 30,000 trained in the EU. About 10% to 12% of the foreign-trained doctors are specialists.

Only this week, the Royal College of Surgeons told this House’s Select Committee on the Long-Term Sustainability of the NHS, of which I am a member, that 40% of surgeons on the specialist register were trained overseas—about half of them from the EU. The Royal College of Physicians told us that its figure was 20%. Shortage specialties such as radiology cannot cope without overseas recruitment. A very high proportion of patient diagnoses, especially for cancer, depend on radiologists interpreting scans. I gather that about 250,000 scans are awaiting interpretation, yet there is a 9% vacancy rate for radiologists, with about 40% of those posts remaining unfilled for more than a year. Radiographers cannot help much, because their vacancy rate is even higher. This specialty will continue to be dependent on the recruitment of overseas radiologists and radiographers for as far ahead as we can see.

It is not just overseas doctors we depend on. The NHS has to compete in a total pool of 90,000 registered nurses who were trained overseas, and secures about two-thirds of them—about one in seven NHS nurses. There are also about 15,000 other NHS staff from overseas, nearly half of whom come from the EU. The picture in social care is similar, with about 30% of the professional workforce coming from overseas, and just over a third of those coming from the EU. Approaching 20% of the total social care workforce comes from overseas.

Some parts of the country are more dependent on overseas staff than others. In London, about 40% of the adult social care workforce comes from overseas. The former chief executive of Addenbrooke’s—ironically, an Australian—has said that about a third of its nurses are from overseas. Recruitment is going on from everywhere within the EU: radiologists from Latvia, Hungary and Greece; paramedics for ambulance trusts from Poland; nurses from Italy, Portugal and Spain; doctors from almost anywhere, providing they meet the requirements of the GMC. The health and care system is now so dependent on overseas recruitment that it is difficult to see where plan B is, should access to overseas skills be closed—either by design or by sheer neglect.

By one of life’s splendid ironies, some of the areas that voted most emphatically for Brexit have the greatest dependency on overseas recruitment, with little immediate prospect of Brits filling the gaps. Fans of Tennessee Williams, like me, may remember the fading southern belle Blanche Dubois in “A Streetcar Named Desire” saying that she had become dependent on the kindness of strangers—I will not do the accent. That describes the position of large parts of our health and care system, as we face the rather unappetising prospect of a shambolic Brexit.

In conclusion, I say to the Minister that the Government need to work much harder than they have done so far to convince both overseas staff already working in health and care that we want them to stay and to reassure their potential successors that the Government will negotiate a Brexit that keeps an open door for them in a future immigration system. Controlling our borders should not mean shutting out the very people we desperately need to deliver NHS and care services to our citizens. Using these personnel as an EU negotiating chip will only drive them away and reduce the longer-term inward flow. We need to move on from the tautology that “Brexit means Brexit” and articulate a plan for safeguarding the essential workforce until we can be more self-sufficient, which cannot be before the 2030s.

Can the Minister enlighten us on what the Department of Health Brexit plans are for dealing with this issue, and is it working with the Home Office on visa arrangements that secure the health and care workers, both from the EU and from outside, whom we need for at least another two decades?

--- Later in debate ---

[Lord Prior of Brampton]

I repeat what I said earlier: the contribution made by people coming into this country from the EU and elsewhere has been enormous. It was clear in the Statement yesterday that one of the great fundamental problems we face in this country is low levels of productivity. If we are to afford the kind of social care system and health system that we want, we have got to increase levels of productivity. It has been too easy for us in this country to rely upon people coming from overseas rather than training our own people.

I strongly believe that that is why we must focus on areas such as life sciences, for example, where we have huge strength in research and high levels of productivity. That is the only way that we are going to be able to afford to have the kind of health and social care system that we need. I agree with David Davis. The Conservative Party is unashamedly internationalist, outward-looking and global in its outlook. There is no place for jingoistic, xenophobic or little England views in our party. On the contrary, we look out to the world, a world that includes Europe, but is not defined by Europe. Noble Lords deplored the xenophobia that appears to have increased since Brexit, and I entirely share their views. There can never be any excuse for that kind of attitude.

We recognise that we cannot continue to rely on people from overseas to maintain the level of staff that is required within our health and care system, nor is it right to do so. If we are honest with ourselves, we knew this before Brexit. We must become more self-sufficient. Indeed, this is consistent with our commitment to the World Health Organization’s priorities on human resources for health. It cannot be morally right for a rich country such as the UK to recruit skilled doctors, nurses and other workers from countries whose need is so much greater than ours, so we will take a range of actions to increase the supply of domestically trained staff and to increase efficiency through better use of technology and skill-mix solutions.

In respect of the NHS, we have already increased the number of key professional groups being trained. For example, since 2013 the number of nurse training commissions has increased year on year by some 15%, and we expect to have 40,000 more nurses by 2020 than we had in 2015. We are committed to ensuring that there will be 5,000 more doctors working in general practice by 2020. From September 2018, the Government will fund up to 1,500 additional undergraduate student places through medical schools in England each year. This is in addition to the 6,000 medical school places currently available in England. That is a very significant increase. It is 1,500 places each year on a five-year course, so that is an extra 7,500 doctors coming through the system. The recent reforms to the funding of training for nurses and allied health professionals will further increase supply by removing restrictions on the number of training places, so that universities are enabled to deliver up to 10,000 additional nursing, midwifery and allied health training places over the course of this Parliament.

Nevertheless, it is important to recognise that it takes time to train skilled health and care professionals, and therefore we have introduced initiatives to improve retention and to encourage trained staff to return to practice. We are also working to increase the efficiency with which we use our existing staff and to improve productivity by changing the skill mix through the introduction of new roles, such as physician associates and nursing associates. This will ensure that highly trained professional staff are properly supported and more productive. We will also see over the next five years a huge increase in the use of digital technology to enable more people to be looked after outside hospital settings.

We all recognise that social care is a vital service for many older and disabled people. The Department of Health is working with Skills for Care, employers and Health Education England to support activity to recruit and, importantly, retain our caring and skilled workers who work in social care. In many ways, these people are the unsung heroes of the health and social care system, delivering very personal care to very vulnerable people at very low salary levels. Since 2010, we have seen more than 340,000 new apprentices into the workplace in the care sector, which is more than any other sector. So we are taking action to increase our home-trained workforce in medicine, nursing and social care.

I do not want anyone in this House to think for one minute that we underestimate the challenges that Brexit presents to the health and social care system, but I think it also presents huge opportunities. It behoves us in this House just occasionally to look on the slightly more optimistic side, and not to be quite as depressing as we sometimes are.

[Lord Warner]

Before the Minister sits down, could he address the issue of reciprocity, which some of us raised? There is no incentive for the EU to give guarantees on reciprocity, so why should it move on this area at this point? We stand to lose because those people will actually leave unless they are given guarantees. If we are going to wait to reassure these people until there is reciprocity, we are bound to lose that argument. Why can we not move on this issue before reciprocity?

[Lord Prior of Brampton]

My Lords, we have not even triggered Article 50 at this point. It would be pretty strange for us to start taking unilateral action until at least the article had been triggered and negotiations had begun.

Junior Doctors: Industrial Action

Lord Warner Excerpts

Monday 5th September 2016 Lords Chamber

[Lord Prior of Brampton]

My Lords, it is important that we distinguish between junior doctors, who are working incredibly hard in the NHS, and the BMA leadership in this case. I think the vast majority of junior doctors bitterly regret having to go on strike and will be extremely concerned about the huge damage it will do to patients’ interests. We are perfectly entitled to remind everybody that it was the leadership of the BMA who characterised this contract as being safe for patients and good for doctors.

[Lord Warner (Non-Afl)]

My Lords, I ask the Minister to go back to the non-contractual issues. As Sir Simon Wessely explained very well, they are the nub of this. The Secretary of State now has a major trust problem because these negotiations have gone on for so long. It has become very personal. If he wishes to convince the medical profession, in particular those thinking of coming into the medical profession, that he is serious about putting the medical workforce’s house in order, he has to do something—possibly step aside—to develop these ideas with the profession.

Can the Minister confirm that the number of people applying to medical school has dropped by nearly 14% over the last two years? There are so many vacancies now in medical schools that they have to recruit people to fill those slots through UCAS clearing. One-fifth of middle grades in the junior grades are vacant. In this situation—with people emigrating and with Brexit—we cannot expect young people to join this profession. The Secretary of State has to take some responsibility for changing that culture, bringing in some people to help change it and convincing the profession that it has a future.

[Lord Prior of Brampton]

My Lords, the noble Lord makes a number of extremely good points. I am not aware of that 14% decline in applications to medical school. If that is true, it is clearly very serious. I did hear a rumour that one medical school had to use clearing to fill the number of students coming in, but overall there is still a huge demand for people who want to go to medical school and they are still recruiting people with the best academic and other qualifications. On the noble Lord’s fundamental point, we have to rebuild trust in the medical profession. It was for that reason, in the main, that the Secretary of State asked Health Education England to lead the discussions on non-contractual issues, rather than being involved with it directly himself. I am sure that is the right way to approach this issue.

Junior Doctors

Lord Warner Excerpts

Monday 8th February 2016 Lords Chamber

[Lord Prior of Brampton]

My Lords, I apologise for not replying to the question earlier about the number of chief execs. The point is that this is not just about junior doctors; I think we all understand that totally. We are hoping to have more primary care, more social care, more diagnostics and more senior consultant cover at weekends, which will support junior doctors and make their lives better at night time and over the weekend. As far as the hours are concerned, the new contract proposal puts far greater safeguards over the amount of time that junior doctors will be working. I think that is largely accepted by the junior doctors. Going forward, the maximum number of consecutive nights will be down from seven to four; the maximum number of long shifts—that is, over 10 hours—will be down from seven to five; the number of consecutive late shifts will be down from 12. We are putting in those safeguards to ensure that we do not go back to the bad old days of very long hours. They were the bad old days on one level but if you actually talk to most doctors, they did get tired and it affected safety but it built a sense of teamwork, camaraderie and purpose in hospitals. We need to be careful about rubbishing the old days when they built up a lot of really serious, good professional work.

[Lord Warner (Non-Afl)]

My Lords, can the Minister clarify whether this dispute has to be settled within the Government’s pay guidelines of a 1% annual increase for the rest of this Parliament?

[Lord Prior of Brampton]

It was always agreed that the package offered to junior doctors would be cost-neutral.

NHS: Trust Finances

Lord Warner Excerpts

Monday 1st February 2016 Lords Chamber

[Lord Prior of Brampton]

I think that the noble Baroness’s party was in government when that contract was negotiated, although it seems a bit churlish to remind her of that. The fact is that, as we move to these new ways in which to deliver care, risk is going to have to be taken. Some of the new ways in which we do it are not going to work. In this case, it clearly did not work. It was a very big project—£800 million in total value, I believe, over five years, for older people in Cambridgeshire. It was a highly complex contract and, tragically, it has not worked out. I shall have to come back to the noble Baroness if I can about how much it cost in fees.

[Lord Warner (Non-Afl)]

My Lords, the Minister mentioned the chief executive of NHS Improvement in very approving terms. Is he aware that that same chief executive told the House of Commons Public Accounts Committee that the sector’s deficit for the current financial year, 2015-16, looks,

“like it is heading towards £2.5 billion or perhaps even north of that”.

Capital to revenue transfers and “accounting adjustments” will kick in before April to bring the number down. Does that mean that the much-touted £3.8 billion that will come into the NHS next financial year, 2016-17, already has £2.5 billion to be offset against it before the financial year starts?

[Lord Prior of Brampton]

My Lords, it is true indeed that Jim Mackey mentioned those figures. He is hoping that he can get that deficit down to £1.8 billion by the end of the year as a result of some of the capital to revenue and other accounting adjustments to which the noble Lord referred. We are also hoping that the reduction in agency spend will start to have a big impact in the final quarter of the year. We will get the third quarter results in two weeks’ time, when we will have a better idea as to where we will end up at the end of the year.

National Health Service

Lord Warner Excerpts

Thursday 14th January 2016 Lords Chamber

[Lord Warner (Non-Afl)]

My Lords, except to congratulate the noble Baroness, Lady Watkins of Tavistock, on her excellent maiden speech, our restricted time means that I will skip the usual niceties and nuances and concentrate on the absence of a credible funding system.

We are in the middle of a decade when we expect the NHS to cope with substantially increased demand and service expectations on an annual budget increase of roughly 1% a year in real terms for 10 years. Before this decade, successive Governments provided the NHS with a real-terms annual increase averaging 3% to 4%. It is virtually impossible, I suggest, to retain a good-quality labour force, meet rising demands, improve quality, and redesign service delivery on a 1% annual real-terms increase for a whole decade, ending up with 7% of GDP, roughly, being spent on our NHS.

By 2020, the combined health and care system will face a funding gap, I would suggest, of some £35 billion a year, with the 2015 spending review closing that gap, on the most favourable interpretation, by about £10 billion. The rest of the money comes from our old friends: pay restraint, new ways of working, and better productivity. I accept that the NHS could use its existing resources much better but, even if the NHS delivered all the proposals of the noble Lord, Lord Carter of Coles—a very big “if”—it would not close the funding gap. The 2015 spending review totally fails to deliver a credible funding strategy and actually makes a bad situation worse by failing to provide any kind of viable funding system for publicly funded adult social care or public health. The NHS and social care are confronted not with a managerial or professional failure but with a failure by politicians across the political spectrum to engage with the public on how we fund a sustainable, integrated health and social care system over the longer term.

To have good-quality and readily accessible health and care services, largely free at the point of clinical need, the public have to be helped to understand that they must pay for them, whether through more taxation, some form of co-payment, or a combination of the two. To get to grips with this rather politically unpalatable truth, we need an authoritative, independent inquiry that will work quickly to examine the possible options for new funding streams to provide some buoyancy and future-proofing. The Front Benches in both Houses need to get behind the ideas of either the noble Lord, Lord Fowler, or the Liberal Democrats, outlined by Norman Lamb in his 10-minute rule Bill. We need to start acting now to future-proof the NHS’s funding.

Residential Care: Cost Cap

Lord Warner Excerpts

Thursday 10th December 2015 Lords Chamber

[Lord Warner (Non-Afl)]

My Lords, like others, I congratulate the noble Baroness on securing this timely and important debate and on her excellent analysis. I declare an interest as a member of the Dilnot commission and I am grateful for the kind remarks made about our report in this debate. I am, naturally, disappointed that the Government have chosen to postpone until April 2020 the implementation of our proposals, which were set out in Part 2 of the Care Act 2014.

I start by asking the Minister: what happened in the spending review to the £6 billion set aside for implementation of the Care Act? As far as I can see, only about £700 million has found its way into the social care budgets.

I shall focus on the sheer unsustainability of all publicly funded social care on the path we are now set upon. This is a totally avoidable man-made crisis which has been going on for a long time. We set out in our report that social care funding going back to the 1990s—this has gone on under successive Governments—has not kept pace with the NHS, despite the fact that it was dealing with the same demographics. We said it was underfunded in 2010 by £1 billion and that things had to change. They certainly did—they got worse. Then, up to 2014-15, another £2.5 billion disappears from the social care budget. A Parliamentary Answer to me on 24 November this year by the Minister shows adult social care spending dropping from £17.19 billion in 2010-11 to £15.51 billion in 2014-15, in constant prices and with NHS transfers included. We can debate the precise figures but before we start the next financial year, there is a black hole something north of £3 billion in social care budgets for publicly funded social care. That will get worse with the arrival of the national living wage, which I support, which is estimated to cost more than £300 million in 2016-17 and more than £800 million a year by 2019-20.

What have the Government done in the spending review in response to this financial conundrum? They have promised an increase in the better care fund of about £1.5 billion. However, the small print suggests that little of this money will arrive before 2018-19. As others have said, councils will have the power to raise council tax by 2% a year from next April without a referendum. That is a great idea. However, the Institute for Fiscal Studies suggests that, even after four years, the best that will have done is to get the annual increase up to somewhere approaching £1 billion.

We also have to accept, as the Institute for Fiscal Studies has pointed out, that there will be enormous geographical variation in the way that precept is applied and in the amount of money it will produce. Will there be any smoothing mechanisms after April 2016 regarding these precepts?

Of course, councils could cut other services to fund adult social care, but they have already put £2.5 billion into social care from this source since 2010 and the departmental expenditure limit for local government is to be cut by a further—wait for it—56% by 2019-20. The Government seem to be betting the farm on local retention of business rates to plug the gap, but we will not know how much this will produce until a consultation on retention is undertaken. It looks to me as if the funding hole in adult social care gets worse and worse in the next two years.

The results of this continuing funding failure are that eligibility criteria continue to be tightened, payments to service providers shrink further and standards of services decline, sometimes dangerously. Some 400,000 people have already left local authority-brokered care over the last four to five years. Self-funders in care homes are now subsidising publicly funded residents in the same homes by up to 40% more than councils are willing to pay. Another recent parliamentary Answer to me by the Minister shows the number of registered residential care homes declining by about 1,100 to just over 17,000 between April 2010 and April 2015. Occupancy is dropping in many homes, and some sources say there are around 60,000 empty care home beds. There are plenty of beds—just no money to buy their use.

Providers are leaving the sector or concentrating on self-funders only, or on higher quality and higher-price offers. The financing models and backing of some big providers now look very fragile. You need do no more than read the financial pages to see this. There is no capacity in the system to cope with another Southern Cross failure. Will the Minister say whether these problems in the care home sector feature in the Department of Health’s risk register?

I do not have time to say much about the knock-on effect on the NHS. Some 20,000 people are now almost a permanent stock awaiting hospital discharge, and the figure can only get worse. If there is a collapse in the residential care home sector, the NHS becomes the carer of last resort. That is an inevitable consequence, and that is not the only factor for the NHS. This will eat up a lot of the resources that the Chancellor has already put, or has promised to put, into the NHS and it will knock Simon Stevens’ five-year forward view seriously off course.

Near where I live, a rather beautiful Georgian house recently collapsed because the misguided owner had hollowed it out so much. The collapse has put in jeopardy the survival of the next-door neighbour. This strikes me as a rather good analogy for what is happening to adult social care.