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.

National Health Service (Licensing and Pricing) (Amendment) Regulations 2015

Lord Warner Excerpts

Tuesday 1st December 2015 Lords Chamber

[Lord Warner (Non-Afl)]

My Lords, I start by thanking the Minister for his briefing yesterday, which I found very helpful. I also declare a forthcoming interest in that I shall shortly be chairing a short-term commission to consider the approach to commissioning specialised services, which will report next April. That may well, in the light of the debate this evening, have some fairly uncomfortable things to say about the commissioning of these services in today’s financially straitened NHS. It is very difficult to argue technically with the points made by my former noble friend—still my noble friend—the noble Lord, Lord Hunt, about this set of regulations, but in a sense that misses the bigger point raised by the noble Lord, Lord Patel.

I express my sympathy for the Minister. He is, to all intents and purposes, between a rock and a very hard place. He has to operate within the extremely clunky system provided for setting the tariff for specialist services in the Health and Social Care Act 2012—which, if I may say so, is one of the less distinguished pieces of legislation passed by Parliament. Trying to set a tariff using a system of objection thresholds is a somewhat bizarre way of doing it, even by the standards of the 2012 Act. That so-called new transparent system for reconciling the needs of commissioners and providers has clearly not worked. It is very difficult to see it working, not least because we end up leaving the decision on the tariff right up close to the start of the next financial year. If we want a five-year plan for reforming the NHS, that is about the daftest way to go about setting a national tariff. I understand why no one wants to go back to the 2012 Act and revise part of it but it is pretty bizarre, in a fast-changing world, to set the detail of how you negotiate the tariff in primary legislation. That is a fundamental flaw which we are now struggling with, as a result of that legislation. That is why we are getting into this tangle over the technicalities of this set of regulations.

If I was still the Minister trying to set acute hospital tariffs at a time of tight NHS finance and, at the same time, trying to prioritise community health services and mental health—as the Minister rightly suggests people are trying to do—I would probably be doing the same thing as the Minister, stuck as he is with this piece of legislation. I might even, if I was feeling particularly crotchety, go for 75% instead of 66%. But that is the fault of the system we have landed ourselves with, not because of a devious NHS England, devious Ministers or a devious Department of Health. We need to get to a different system. NHS providers have opened up some issues to talk about. It is certainly very difficult, in today’s age, to argue with the idea of a more open-book approach. But it also requires the open-book approach to take place further back down the food chain, before we get close to the beginning of the financial year. That is the only way these specialised services can look ahead.

It is true when I look back on my time as a Minister —this is where I start to part company with the noble Lord, Lord Hunt—that there is a pretty strong track record of the big NHS acute hospital providers having everything their own way. Even when, as a Minister, I said that the commissioner’s view should determine the outcome, those providers went on pushing and pushing, way up to and past the start of the new financial year. Of course, I am not talking about trusts chaired by the noble Lord, Lord Hunt—I am sure nothing like that ever happened in Birmingham. However, let us be clear, that is how some of the big London providers, in particular, behave—not in our second city, of course; heaven forbid.

There is a long history, then, of big providers pushing the envelope on the price for the job and weak commissioners being unable to stand up to them and deal with them. We now move to a situation where that problem must be tackled, and quickly. We can quibble about the technicalities of the way NHS England and Monitor have handled this episode, but it does not get away from the point that the Minister made: at the end of the day, these guys and girls have to make the decision. They have to decide on a canvas that is much bigger than that being painted by the acute hospital sector.

We should be a bit more forgiving towards the Minister on that. It takes a bit of bottle to say that we are going to put more money into community services and give more money and parity of esteem to mental health, even in a difficult financial climate. That means taking some fairly tough decisions about how much of the collective resources you put into acute hospitals and specialised services. This is where commissioning must play its part. It may mean that we want a smaller number of providers for some of those service lines; it may mean that we have to concentrate them.

NHS providers may not have realised that an open-book approach means that we start to find out more about those who are less productive or effective. I hope the Minister will listen to some of those ideas, particularly the points made by the noble Lord, Lord Hunt, at the end of his speech and by the noble Lord, Lord Patel. We have a clunky system and we need to change how we set the tariff if we really want to deliver the vision in the Five Year Forward View. I hope the Minister will respond positively to some of those ideas for a new approach.

[Lord Turnberg (Lab)]

My Lords, I must first apologise to the Minister for not appearing at his briefing yesterday and for coming late to his initial remarks. That will not stop me speaking, if I may.

The regulations are clearly designed to save money. They have little to do with correcting what is a major underlying defect in the tariff system: the perverse incentives that tariffs have introduced. My noble friend Lord Hunt has dealt pretty well with how the regulations were aimed at raising the threshold at which objections can be raised and, equally importantly, levelling the playing field to allow small providers with limited budgets to have the same voting power as very large teaching hospitals with billion-pound budgets, which provide more than 95% of the service. It is rather like non-league football clubs and those in the Premier League having the same voice in their commercial activities. The problem is that, to get 66% of all organisations, including all the small ones, puts those trusts that provide more than 90% of the service in hock to those who provide less than 10%. So it is not much wonder that the highly specialised hospitals—the Marsden and Great Ormond Street, the Institute of Neurology, the Christie hospital and so on—are voicing strong concerns about the impact on them. Of course, that is why the Government want to shackle them—to keep costs down—but that is at the risk of denying high-quality specialised care to those who need it.

All that has been well rehearsed by my noble friend Lord Hunt and other noble Lords. I really wanted to point out that the regulations do nothing to get round the unintended consequences and perverse incentives of the tariff system, which I raised with the Minister in a previous debate. That system encourages trusts to go down the route of using devices to gain higher incomes and discourages cross-referral between specialists within a hospital when a trust can gain two fees for two referrals from general practice. It discourages consultants from using phone-in follow-up out-patient clinics to save patients the need to travel in to be seen, as a visit to a hospital incurs a higher fee on the tariff. I agree with the noble Lord, Lord Warner, as he rails against the acute hospitals, but I do not necessarily agree with all his solutions.

I support my noble friend’s amendment. The regulations are unwarranted and damage those who provide the vast majority of the service, while doing nothing to get at one of the major defects in the tariff system.