Health and Social Care

Bill Wiggin Excerpts

Monday 27th February 2017 Commons Chamber

[Dr Sarah Wollaston (Totnes) (Con)]

Today’s debate on the supplementary estimates and the financial position of health and social care matters, first and foremost, because of the impact of that financial position on patient care. I start by paying tribute to our health and care staff across the country and, at this particular time, by noting and thanking those who have come from across the European Union to work in this country.

The current financial position is of great concern. As a result of the wider economic downturn, we are now in the seventh year of the longest financial squeeze in the history of the NHS. Although the Department of Health’s budget has been protected in relation to many others, we cannot escape the fact that over the previous Parliament the average annual increase in its budget was 1.1%, which is far lower than the increase in demand and, of course, far lower than the historical increase of 3.8% since the late 1970s. All that is in the context of an extremely challenging position for social care. Between 2009-10 and 2014-15, there was a 10% real-terms reduction in social care spending by local authorities.

All that has taken place in the face of an extraordinary increase in demand, because of not only a rising population but our changing demographics. To put that into context, over the decade to 2015 there was a 31% increase in the number of people living to 85 and beyond, and we estimate that over the next 20 years we will see a 60% increase in the number of individuals who rely on social care. Over the years there has been an abject failure of Governments to plan for that, although it was entirely predictable. We absolutely cannot just keep ducking the question. We need not only to address the immediate financial problems that face health and social care, but to come together as a House to address the problems for the future.

[Bill Wiggin (North Herefordshire) (Con)]

It occurs to me that this is not a uniquely British problem; it is in fact a global one. I have been trying to find out where in the world social care is best delivered and whether we can learn anything from those countries.

[Dr Wollaston]

My hon. Friend makes an important point. We are all looking forward to the publication of the House of Lords report on future sustainability, because of course we have much to learn from other systems. I pay tribute to the Public Accounts Committee, which today published its report on the financial sustainability of the NHS. We have also seen the final position of trusts at the end of the previous quarter, so we now know that 135 providers ended that quarter in deficit. We are on course for a financial deficit across trusts of between £750 million and £850 million at the end of the financial year.

--- Later in debate ---

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

May I pay tribute to the Chair of the Health Committee for her sterling work in this area and to the Chair of the Communities and Local Government Committee? Our three Committees are united in the view that we need to bring the agenda of how we fund health and social care to the front and centre of this House and this Government. It is important that we work together on that. It is quite unusual for three Select Committees to co-ordinate in such an effective way—at least we hope it is effective. Ultimately, the proof will be whether this view will bite with Government.

We are clear that integration of health and social care is vital. In fact, we rushed to the Chamber from Committee Room 6 where we were debating the first phase of the better care fund, which had been used as a way of taking health money to prop up the social care budget. Amazingly, the head of NHS England and the Department of Health, who were appearing in front of us, denied that there was any failure in the better care fund. They said that there were not really any targets; it was all about taking money from one pot to pay for another. If that does not underline the challenges that exist in the many initiatives that are coming forward and the lack of sustainability for long-term funding, I do not know what does. I echo the comments of the Chair of the Health Committee that we need a long-term generational shift in how we are going to deal with this matter. We cannot just keep lurching from crisis to crisis and funding situation to funding situation.

My Committee looks very closely at accounts for many Members of this House. It may not be the most enjoyable bedtime reading, but we lap up the accounts of different Government Departments. We were disappointed that the Secretary of State laid the NHS accounts on the last day of the parliamentary term in July. When we opened them, we realised why: those NHS accounts were within target only by a smoke and mirrors approach and a series of short-term, one-off measures to ensure that they balanced.

I remind the Under-Secretary of State for Health, the hon. Member for Warrington South (David Mowat), that last year the Public Accounts Committee, of which he is a former member and therefore is doubly thoughtful on this subject, gave the Department a yellow card warning that, if in 2016-17, these similar one-off measures and a similar approach to the Budget were carried forward, we would be giving it a red card. The Comptroller and Auditor General, Sir Amyas Morse, issued an unprecedented warning in those accounts, which had been audited by the National Audit Office, and laid out his serious concerns. As he told us, he walked down Whitehall to talk to the permanent secretary at the Department of Health to make it clear that he was concerned about those one-off measures.

To help the House, I will lay out how it was that, by some miracle, the Department managed to balance its books last year. First, £2.14 billion was set aside for sustainability and transformation funding, £1.8 billion of which was used to cover hospital trust deficits. The Department of Health did not notify the Treasury of the additional £417 million of national insurance receipts that it had received. It said that it was just a one-off reporting error. I am heartened to see that, in the current estimates, such a practice does not recur.

There was also a one-off super dividend of £100 million for the Department from the Medicines and Healthcare Products Regulatory Agency. That large cash balance was put into its capital departmental expenditure limit budget, which helped it to reach a final balance. Critically, it seems that this is becoming a long-term strategy for NHS budgeting—I hope the Minister will take this seriously and respond. As the Chair of the Health Committee has highlighted, we are seeing a trend of capital funding being pushed into revenue to keep the system going. That is not sustainable. Last year, in 2015-16, the Department of Health transferred £950 million of capital to revenue. The supplementary estimate that we are debating tonight shows that the Department will transfer some £1.2 billion of capital to revenue funding this year—so £250 million more than last year.

[Bill Wiggin]

I am particularly interested in the private finance initiative element of the capital funding, because certainly, for all the years that I have been a Member of Parliament, the PFI burden on Hereford hospital has always held it back. Has the hon. Lady’s Committee had a chance to look at that?

[Meg Hillier]

We have not looked at that directly, but we know that the biggest revenue cost for hospitals is staffing, which is followed, for some hospitals, by servicing a PFI deal. Early analysis suggests—I would not want the House to lay too much on this, because it comes from conversations I have had with auditors—that the challenge is that the cost of refinancing those PFI deals can swamp the potential savings. Perhaps Ministers could look into that further. A lot of technical work has been done to attempt it. The British Medical Association tells me that spreading the payback period over a longer time would reduce the day-to-day resource costs for hospitals, so that might be a way forward. However, I speak from work I have done outside the Committee Room, rather than strictly through the work of the Public Accounts Committee and the National Audit Office.

The supplementary estimate this year is worrying. The trend is going in the wrong direction for taking money out of the capital spend. As the hon. Member for North Herefordshire (Bill Wiggin) highlighted, a lot of the transformation in the NHS will require the reconfiguration of buildings and estate. Those sorts of capital expenditures are important to save money in the long term, so the estimate really is very short-sighted.

If we look at how NHS trusts are managing with their deficits, again we see a worrying trend. At the beginning of this financial year—2016-17—NHS Improvement committed to ensuring that the provider sector deficit did not exceed £580 million at the end of the year, which is now in a month’s time. However, NHS Improvement forecast a deficit of £644 million in quarter one. Its forecast declined further to a deficit of £873 million in quarter three. That pledge did not amount to very much, and it is moving very much in the wrong direction. NHS trusts have been overspending by approximately £300 million a quarter throughout this financial year. If that trend continues into the final quarter of the year, the overspend will be close to £1.2 billion. I have laid out the reality very starkly by picking out uncertain elements in the Department of Health’s consolidated accounts.

We hear a lot of discussion about how much money the Government are putting into the NHS. The Committee had an unedifying experience at a hearing on 11 January, in which the head of NHS England came before us on the very day that anonymous briefings in the national press from sources at No. 10 criticised him and NHS England. He defended his position in the Committee but, frankly, patients do not want anonymous briefings from people to save face when the Committee is actually looking at saving lives and treating patients. They do not want to see a ding-doing about the money. They need to know that the people running our health service, and the Government overseeing and channelling taxpayers’ money into it, are committed to long-term patient care and tackling future long-term challenges.

Let us be clear that protecting the NHS England budget is not the same as protecting the health budget. As the hon. Member for Totnes mentioned, Public Health England and Health Education England are being squeezed, and social care budgets—although not a direct national health cost—went down by 10% in the last Parliament. There are some clever measures by Ministers, saying, “Put up your council tax precept and it’ll all be fine.” That is still taxpayers’ money being found from somewhere to go some way towards solving the problem, but it will not solve it in the long term. Unless we tackle social care and health together, we will have an unsustainable future. There is too much robbing Paul to pay Paul—shifting money from one bit of the budget to another in a clever way that is not transparent to most people out there because it is buried in big numbers.