Health and Care Services

Andrew George Excerpts

Wednesday 3rd July 2013 Commons Chamber

[Mr Stephen Dorrell (Charnwood) (Con)]

It is one of the more endearing characteristics of the House of Commons that although the motion before us and those that follow it involve £517 billion of public expenditure, it falls to a Back Bencher to make the case on behalf of the absent Financial Secretary. It is obviously a minor detail that the House of Commons should be asked to approve £517 billion of public expenditure. Also, I suspect that all parties in the House are on a one-line Whip on this minor matter.

Having made that observation on the slight absurdity of parliamentary process, I will begin by saying a word about the approach to public expenditure and health policy that the Health Committee, which I have the honour to chair, has adopted since the beginning of this Parliament. We have our differences within the Committee; it would be absurd to pretend otherwise. We were elected from different party platforms and have different views about how health care can best be delivered in our society. However, from the beginning of this Parliament, we have taken the view that there is not much point in using the Select Committee as the platform for elaborating those differences, because there are many other platforms where they may be amplified. We have sought consciously to explore areas of common ground in the delivery of health and social care, and to establish where there can be cross-party agreement.

The easy way to achieve that objective would be to avoid all the difficult political questions. We have consciously not done that—we have dealt with the difficult questions. We have talked about commissioning in the context of the Health and Social Care Act 2012. We had a hearing this morning on the developments in the Care Quality Commission. We have not sought to avoid difficult territory, but when we are in it, we look for areas of common ground. That means that we are not grandstanding on health policy, but seeking to develop a coherent or, given what I will go on to say, integrated view of how health care ought to develop on a cross-party basis.

Against that background, it is significant that we have had a consistent and serious view since the beginning of this Parliament on the questions that are raised for those who work in the health and care sector by the pressures on public expenditure that exist in this Parliament and, I believe, will exist for the foreseeable future. It is not a coincidence that the first substantive report that we issued in this Parliament was on public expenditure. In that report, the Committee coined the phrase “the Nicholson challenge”, which has passed into common parlance, to refer to the challenge faced by the health and care system to deliver quality care against the background of rising demand and, roughly speaking, flat real-terms budgets.

That challenge was articulated first not by the Select Committee or the coalition Government but by Sir David Nicholson, a distinguished public servant, in his capacity as chief executive of the national health service in May 2009. It was endorsed by the previous Government. The Committee has sought to explore the success of the coalition Government in meeting that challenge and to bring to the surface some of the choices and challenges that are implicit in the phrase “the Nicholson challenge”. Incidentally, we know that the challenge lives beyond Sir David Nicholson.

Let us be clear what we are talking about. Since May 2009, the core issue has been that resources are growing extremely slowly, if at all, while demand continues to rise. One does not need a degree in mathematics to know that if demand for health and care services rises, as it has in this and every other country for the last 50 years, by roughly 4% per annum and there is no new money coming into the system, the only way in which demand can be met is by increasing the efficiency with which the resources are used by an equivalent percentage each year. In other words, the Nicholson challenge is how to deliver health and care to the required standard—I will come back to that point—4% more efficiently year on year.

I emphasise that it is not my view, nor the Committee’s view, that there are no political choices to be made about the level of resources that are committed to health and care. It falls to the Government of the day to make those choices every year when resources are voted on, as we are doing this afternoon on the estimate of £105 billion. That represents a political choice. However, members of the Committee read the newspapers, understand the laws of arithmetic and understand the broader political environment in which we live. We hear it when the Leader of the Opposition says that an incoming Labour Government would have to live with the spending plans of the current Government, at least for their first year in office. That is, to put it mildly, an exercise in expectation management by the Leader of the Opposition.

It is against that background that the Committee recommends in paragraph 16 of the report on health and social care:

“In our view it would be unwise for the NHS to rely on any significant net increase in annual funding in 2015-16 and beyond. Given trends in cost and demand pressures, the only way to sustain or improve present service levels in the NHS will be to continue the disciplines of the Nicholson Challenge after 2015, focusing on a transformation of care through genuine and sustained service integration.”

That is an example of a recommendation that was reached on a cross-party basis. We are not signing up to decisions about funding, but saying that the health and care system faces a huge challenge to deliver more integrated services if it is to meet the quality and economic standards that are likely in any political scenario.

[Andrew George (St Ives) (LD)]

I thank my right hon. Friend for the way in which he is introducing this subject. He will acknowledge that the Nicholson challenge and the need for year-on-year efficiency gains of 4% were originally proposed under the last Labour Government. There is therefore continuity from the previous Government, through the coalition and on to any subsequent Government. Does he agree that the result of the efficiency gains must not be that NHS rank and file staff are subjected to lower regional pay and conditions, as was proposed in one region of the country?

[Mr Dorrell]

I will come on to the impact on pay later. My hon. Friend is right that the challenge antedates the election of this Government and that it increasingly looks beyond this Parliament, as did last week’s public expenditure announcements. There are specific challenges implicit in the Nicholson challenge for the coalition and for the Opposition. To my colleagues in the Conservative party, who sometimes ask why we have a ring fence around the national health service, I simply say, “Understand what you are asking.” We are already strapping ourselves to the mast indefinitely into the future of meeting a rise in demand of 4% per annum without substantial growth in real resources. Looking back, we see that the national health service has delivered a 1% efficiency gain trend rate over its first 60 years, and the national average for the rest of the economy is 2%. We are expecting the health and care system to deliver a 4% efficiency gain. To anyone believing that we are likely to be able to meet demand for health and care to acceptable standards against a background of reduced resources—in other words, more than a 4% efficiency gain year on year—I say, “Do the maths.” That is the challenge to the Conservative party.