Operational Productivity in NHS Providers

Andrew Gwynne Excerpts

Wednesday 1st July 2015 Westminster Hall

[Mike Weir]

The hon. Gentleman makes a good point. He is right about incentives. A happy workforce will be a much more productive workforce. There is a danger of putting increasing pressure on the workforce, especially in the NHS, where mistakes can be disastrous and can do a lot of damage in the long term, both to the system and patients. We have to be careful about some of these things. I was interested in what the hon. Member for Hendon said about the cost of agency workers. I think we would all agree on that point. It would be preferable to have full-time staff in the NHS, but agency workers are used for a reason: shortages.

The hon. Gentleman also talked about people from outside the EU working in the NHS, but again, this shows that there needs to be a more holistic Government policy. The Government recently announced an earnings threshold of £36,000, under immigration policy, for those who have been working in this country for six years. Many nurses working in the NHS throughout the United Kingdom are not earning that sort of money and have been in the NHS for many years. The Royal College of Nursing stated that if this policy was imposed, thousands of nurses could leave the NHS and could have to leave the UK. That is not in the best interests of the health service at the moment. When considering efficiency savings and how the NHS can better work for all our constituents throughout the UK, we have to think about such things .

[Andrew Gwynne (Denton and Reddish) (Lab)]

The hon. Gentleman is making an important point. Would it not be counterproductive if NHS nurses left to work abroad? That would leave a massive gap in the NHS workforce, probably requiring an increase in agency workers, which would cost the NHS more.

[Mike Weir]

The hon. Gentleman read my mind: that was my next point. Agency nurses are causing a drain on resources, because we have to employ so many already. That will not get any better if nurses cannot work in the NHS because of immigration policy. These people did not come to this country a few months ago; some have been here for many years. Many of these nurses are working in hospitals in all parts of the UK, whether Scotland, Northern Ireland or England. They are also working in the care system.

The Government are making a bad situation worse, perhaps because of other pressures on them to do with immigration, and are not dealing with the realities of the health service. Training new nurses to take the place of those who may leave will not happen overnight. It takes years to train a nurse properly. If these people have to leave suddenly, they will leave a huge hole in the NHS. That raises a question about the sustainability of the system. In summing up, the Minister might like to consider that; and perhaps he will take the matter up with Home Office colleagues and discuss the impact this policy may have on the NHS.

Efficiency savings are fine where they can be made. We are all looking for efficiency savings, and we understand that there can be some. For example, there are some interesting responses in the Carter review on medicines and prescriptions. Savings could be made there. A lot of medicines can be wasted if prescriptions are too large. Such system changes can save money, but it is wrong to look for the silver bullet that is going to change things and produce the £22 billion in efficiency and improvement savings.

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[Andrew Gwynne (Denton and Reddish) (Lab)]

It is a pleasure to see you in the Chair, Mr Pritchard. I congratulate the hon. Member for Hendon (Dr Offord) on securing this important debate. We have had a good debate, although fairly brief, and some important issues have been raised.

I formally welcome the Minister. We have had Health Questions and an Opposition day debate on health since he assumed his role, but this is my first opportunity to welcome him. I trust that his time at the Department of Health will be enjoyable and successful.

I am pleased to respond to the debate on behalf of the Opposition. The hon. Member for Hendon is right: the efficiency challenge for the coming years will dominate the debate about healthcare and shape our NHS in England for decades. As Members know—indeed, several referred to it specifically—the Government are committed to seeing £22 billion of efficiency savings in the NHS by 2020 to meet the £30 billion funding challenge. We have not yet heard any details of where the £8 billion in funding will come from; perhaps I can tease some of the detail out of the Minister. I do not wish to prejudge what may or may not be in the Budget, but it would be nice to have some indication, aside from the usual spin about a growing economy, of where he thinks the £8 billion will come from. Setting aside that question, we need to think carefully about how to meet the £22 billion gap that will remain once that £8 billion is found. To achieve savings on that scale would be a huge ask at any time, but when NHS trusts have huge deficits to tackle and providers say they are experiencing the biggest financial pressures they have ever seen, making these efficiencies will be a huge challenge.

It is probably appropriate at this stage for me to place on record my appreciation of and thanks to those who work in our national health service—at every level. It is not always popular to praise managers, but to meet the challenge the NHS will need a great deal of expert management. We therefore need to praise the work of not just the doctors, nurses, clinicians, porters and support staff, but the good managers, because they will face the real challenge of finding these efficiencies.

It is vital, not just for us but for all those who work in the NHS, that the Minister is as open and honest as he can be today about where the efficiencies will come from. One of the few people who has seen the detail of the planned efficiency savings is the former Care Minister, the right hon. Member for North Norfolk (Norman Lamb). Just last week, he said that the £22 billion efficiency savings in the five-year forward view are “virtually impossible” to achieve—words that will not fill people with confidence.

As the Minister knows, the Opposition have pressed the Government on a number of occasions to publish the assumptions underlying the £22 billion figure. I hope he will take that message back to the Secretary of State today, because we need to have a properly informed debate about the NHS’s long-term funding requirements. That is true not just of England, because the proposals will have knock-on consequences for the NHS in all the constituent parts of the United Kingdom, including Scotland and Northern Ireland, which have been represented in the debate.

We need to be honest about the fact that, whatever the scale of the efficiencies that need to be found, there will be no quick fix—a point eloquently made by my hon. Friend the Member for Bristol South (Karin Smyth). However, when budgets are tight, it is right that we debate how money can be better spent to meet the growing cost of delivering world-class healthcare.

With that in mind, let me cover a couple of pertinent areas. The first is procurement. Any doctor will tell us of sales representatives pushing every bit of kit and course of medicine under the sun—that is just the nature of salespeople, and that is what they do. In the NHS, there are around 500,000 product lines for everyday consumables, with cost variances of sometimes more than 35%, which is massive. The Carter review suggested that a catalogue of 6,000 to 9,000 product lines represents best practice. In part, the huge variety of products is a symptom of a more fragmented NHS. These days, we do not have the opportunity to use the NHS’s national purchasing muscle as much as we did, which is a shame and a wasted opportunity. However, having a reduced range of products—perhaps set out in a national catalogue, but definitely coming through the NHS supply chain—would be good for cost-effectiveness. I hope the Minister can take that point on board.

Part of the problem is the army of sales representatives, who are proliferating at all levels of the NHS. Their very existence represents a large dead-weight cost to providers. They can provide a useful service when it comes to selecting the best product for practitioners’ needs, but it is obviously not in their interests to provide products at the lowest practical cost; nor is it in their interests to promote other products or to give practitioners more information about the choices that may be available to them and their patients. It is, to some extent, an imperfect market, with smaller suppliers pushed out from the very beginning. There will always be a need for companies to provide high-end support and advice, but while representatives have a big influence on buying decisions, we must ensure that that influence is at least partly tracked.

Let me talk briefly about the cost of competition. The Minister is new to his post, but he will have paid close attention to the many debates we had on these issues before the election, so he will be aware of the Opposition’s concerns about the competition rules introduced in the Health and Social Care Act 2012. We know that the new competition framework is causing

“significant cost to the system”—

not my words, but those of the former chief executive of the NHS. Last year, we identified at least £100 million that in trusts and clinical commissioning groups alone was being spent on staff and lawyers to analyse tenders and to administer the tendering process. If the Minister is serious about making substantial savings, may I gently advise him that it would be a good start to look at the waste generated by the Act’s competition provisions?

One crucial area to analyse is the poor workflow in hospitals, and specifically the lack of adequate sub-acute services. At the moment, many discharged patients, particularly elderly ones, have nowhere to go. That is attributable mainly to the drastic cuts to adult social care we have seen in recent years. Sadly, I can only anticipate that those pressures will remain, and perhaps become more acute with coming spending reviews. We all know that if patients are not discharged, hospital beds are wasted and hospital workflow is disrupted, which costs the system an absolute fortune. That is to leave aside the fact that hospital is not the best or most appropriate place for such patients to be or for their care to be delivered.

[Karin Smyth]

The consequences of the 2012 Act included fragmentation of responsibility for the flow of patients through the system. Different commissioning organisations now commission primary care to support the patient outside hospital, there is separate provision of community services, and NHS England has an oversight role as well as a role in commissioning specialised services. In Bristol there are two major acute trusts that are largely commissioned by three different clinical commissioning groups, supported by NHS England and involving the Trust Development Authority and Monitor. A large room is needed for people to get around the table at meetings to consider things such as flow, and it is very complicated.

[Andrew Gwynne]

My hon. Friend hits the nail on the head, describing the complexities of the NHS in England. We have talked for several years in the House of Commons about the need for a properly integrated health and social care system. My hon. Friend has set out a prime example of the reason we need that.

I anticipate that the Minister will argue that some of the inefficiencies we have discussed will be addressed through integration. My problem is that many of the competition rules and requirements in the 2012 Act work against such an integrated health and social care system, even though both sides of the House want it. The Government will have to look carefully at the role of some of the rules and regulations they introduced, when local health economies reach the point of developing integrated care models. It is clear that representatives of a hospital trust, local authority adult social care and children’s care services, and the clinical commissioning group cannot sit around a table to plan an integrated health and social care system while many of the requirements placed on the NHS by the 2012 Act continue to apply.

To return to the issue of transfer and delays in hospitals, we all know that the NHS operates something of a just-in-time system. Such systems are used in industry, particularly for international stock control, and they make sure that nothing is wasted. There is little room for slack: if a patient is admitted for longer than necessary because of avoidable shortfalls elsewhere in the system, that can lead to the atrocious scenes that happen when desperately sick and injured people are left lying in corridors. I think that on one occasion, somewhere near the constituency of my hon. Friend the Member for Bristol South, someone was treated in a tent in a hospital car park. We hoped such images had long gone from the NHS.

I want to say politely but firmly to the Minister that the NHS is affected by what goes on in the social care system. Social care cuts are to all intents and purposes NHS cuts. I hope that he will get that message loudly and clearly and that the Prime Minister will stop insisting otherwise. All that demonstrates, as my hon. Friend the Member for Bristol South eloquently stated in her intervention, the need for a properly joined-up service. Labour Front Benchers have argued for that for some time and the previous Government were moving towards it. I am happy to provide guidance to the Minister on what we think should happen to that end, and to provide stern criticism if Ministers do not deliver.

I also want to talk briefly about the cost of agency workers, which the hon. Member for Angus (Mike Weir) touched on. The Health Secretary has belatedly sought to address that issue, but it has been years in the making. Ministers will know that hospitals have consistently cited recruitment difficulties, particularly for qualified nursing and medical staff and in accident and emergency departments. It is welcome that the number of training places has been increased in recent years, but it was a short-sighted mistake to cut the number of those places early in the previous Parliament. That has led in part to the present recruitment issues.

The Minister will know that the rising number of staff suffering from work-related stress has resulted in even more workforce pressures in the NHS. He will also know that the decision to cut nurse training posts has meant that many hospitals must either recruit from overseas or hire expensive agency workers. Health Ministers must make strong representations to Home Office Ministers, because if there was ever a sign of disjointed Government decisions, it was the recent announcement of changes to immigration policy. As we have already discussed, those changes may cause massive problems to some NHS trusts across the United Kingdom that already face challenges and have recruited from overseas.

The savings that the NHS will need to make in coming years are far more difficult than the low-hanging fruit or quick wins that some may think are available. All of us across the parties and across the constituent parts of the United Kingdom need to acknowledge that there will be no quick fixes to the challenge. There should be no mistaking how difficult things have been for many trusts in the past few years. The coming years will be just as difficult for them, if not more so. I hope that the Minister will agree in that context that we need a proper open debate, with all the facts, figures and information before us about where we can make the savings, and how we can ensure that more of the NHS’s funding is spent on what it does best—delivering high-quality patient care across the United Kingdom.

[Mark Pritchard (in the Chair)]

Order. Before I call the Minister I remind hon. Members of the new standing orders that allow the mover of the motion to wind up if there is time available. I am sure that the Minister will be mindful of that, with 30-plus minutes on the clock.

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[Ben Gummer]

I was going to come on to that, so I shall do so now that the hon. Gentleman has prompted me. There have been long and deep discussions about this. Our estimate is that no more than 700 nurses will be affected by the time the new rules are in place, which is a different number from that given by the Royal College of Nursing, whose number we do not recognise. It is small challenge given the scale of the workforce and one that we will surmount at the time, but we must see it within the broader policy of reducing immigration to this country from the hundreds of thousands to the tens of thousands—a policy that has broad support across the House and certainly in the country at large. It would be wrong for the largest employer in the country—one of the largest employers in the world—to exempt itself from that overall ambition.

In the end, we will achieve a sustainable workforce in this country only if we do all we can to ensure that those who are British and have grown up here and want to work in the NHS have the opportunity to do so. That is why it is important that we widen and open the avenues into working in the NHS, as the hon. Member for Bristol South suggested, over the next few years, in order to meet the challenge to which the hon. Member for Strangford alluded.

I want to quickly run through the other issues raised by my hon. Friend the Member for Hendon. On master vendors, he has a specific issue regarding some constituents with whom he has been dealing, but I understand that master vendors are managed under a series of arrangements with the Crown Commercial Service. Officials will meet with that organisation soon to discuss the overall issues around master vendors. It is for individual trusts to make such purchasing decisions, but I understand the issue he has raised and the terms in which he put it, and I will ensure that it is investigated properly.

My hon. Friend identified two areas involving agencies and fraud. Fraud is of course unacceptable, and the NHS has quite good systems for identifying it. Given the scale of the NHS, I find it surprising—it is entirely to the credit of those who work in the NHS—that fraud makes up such a tiny proportion of the excessive costs in the NHS.

On the revalidation of locum doctors, for which the General Medical Council is responsible, some doctors find it difficult to gather all the required supporting information needed for revalidation due to the peripatetic nature of the work. To help with that, specific guidance is available for both the doctors and their employers via NHS England and NHS Employers. Locum doctors are part of a larger issue about agency spend and foreign workers working in the NHS. I imagine that the three organisations will come together in the next few years to produce a more stable situation.

[Mr James Gray in the Chair]

Let me turn to the remaining points of the hon. Member for Bristol South. On the stability of the system, I hope and anticipate that one product of the general election is that the system will be broadly stable over the next five years. We intend to continue with the current structure of the NHS. There will be some small changes, such as that identified by my right hon. Friend the Secretary of State last week concerning the NHS Trust Development Authority and Monitor, but we are broadly content with how the system is set up. We must now proceed to ensure that it works.

The shadow Minister made a point about structures and fragmentation. There will always be a genuine dilemma here, because one can approach any system and say that change can be achieved by altering structures, but changing structures can lead to the same outcome. That has been the story of the NHS since its inception. It would be a mistake to think—the hon. Member for Bristol South and the shadow Minister were not suggesting this—that a structural change would somehow produce the outcomes that we all want. The priority is to ensure that the system’s wiring works correctly—that everyone’s interests are aligned and that the incentives are correct—so that people want to sit around the table and come to a considered decision, which can too often not be the case when there is an adversarial relationship between providers, producers and purchasers. That is why I hope that the system’s stability over the next five years will allow us to focus on the significant challenges mentioned by the shadow Minister.

[Andrew Gwynne]

When discussing competition rules, we often talk of public versus private, but two public parts of the NHS can also compete. Another NHS trust might have the tender for providing a service in another area and an integrated care organisation might want to bring that back in-house.

[Ben Gummer]

Absolutely. There are examples of that all over the country, but there are also examples of people working together in what might be considered competitive situations, so it is about ensuring that we copy the best and delete the worst.

Before I turn to the shadow Minister’s comments, I want to reflect on the contribution of the hon. Member for Angus (Mike Weir). The SNP spokesperson on health, the hon. Member for Central Ayrshire (Dr Whitford), has used a constructive tone in the Chamber so far, bringing some of her expert experiences as a clinician and also the experiences from Scotland. It is nice to be able to sit here and hear the experiences of people in Northern Ireland and in Scotland, and it would have been nice to have heard from Wales in this debate. Indeed, we do not yet properly learn from the best in Scotland, which would be all to our good, let alone the best in America or India.

The £22 billion in savings is an estimate not from the King’s Fund but from NHS England. It formed part of its plan, devised at the end of last year and some years in the making, which identified £30 billion of additional money that needs to be put into the service over the next five years. It stated that £22 billion could be generated internally—that was Simon Stevens’ estimate—which leaves an £8 billion shortfall. That is what we are pledged to provide. None the less, he, like everyone in the Chamber, has correctly seen that £22 billion is a large number and one that will take a great deal of intellectual and moral work to deliver. I welcome the tone with which everyone has approached this challenge in the debate.