King’s College Hospital

Dan Poulter Excerpts

Tuesday 16th January 2018 Westminster Hall

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I draw your attention and that of Members to my declaration in the Register of Members’ Financial Interests. It is probably worth pointing out, too, that I had the pleasure of being a medical student at King’s many years ago.

I pay tribute to the hon. Member for Dulwich and West Norwood (Helen Hayes) for securing this important debate. King’s certainly crystallises a number of the challenges faced by the NHS more generally in terms of financial pressures and those pressures manifested by difficult finances in the ability of hospitals to care appropriately for patients.

I want to pick up on a couple of the points that the hon. Lady made. I was the Minister who took through the Care Act 2014, together with the right hon. Member for North Norfolk (Norman Lamb). Through the Act, we considered and learned lessons from some of the problems in the reconfiguration of the South London Healthcare NHS Trust that failed in 2013. I am sure that the hon. Lady is absolutely right that we could learn lessons about how not to do hospital reconfiguration from how that reconfiguration was done.

I again reference the Register of Members’ Financial Interests. At the time, there was a natural synergy, in medical school terms and in other terms, developing between King’s, Guy’s and St Thomas’, and the King’s Health Partners. There is a shared local health economy between those hospitals and a shared interest in patient care. Each of those hospitals are centres of international excellence and tertiary centres of care, and are important local general hospitals for their communities. That synergy would have been a much more natural alignment of healthcare interests in that area but, unfortunately, that did not happen. Lessons have been learned from what occurred.

One of the major issues was the inheritance by King’s of the huge private finance initiative debt of the Princess Royal University Hospital, which in 2017-18 I believe amounts to about £37 million a year—about half the King’s deficit. It would be wrong to blame those running King’s for that deficit. It was very unfortunate for Lord Kerslake—I will come to him later—as chair of that trust, to inherit a de facto deficit due to that huge PFI cost.

The hon. Lady was right to talk about the rate of funding increases for the NHS being at a record low for many years. We had a very difficult economic situation in 2010, but I do not think that anybody expected austerity to last for the best part of a decade. Certainly, many of our public services are now feeling the squeeze as a result of the funding pressures that they face.

The funding pressure on the social care system has an impact on the NHS. Local government finances are in a challenging situation in many areas. Pressures on the social care system reduce the ability of the NHS to work in an integrated, joined-up way with social care and reduce the ability of hospitals such as King’s to discharge patients effectively into the community, because the resources are not there to look after them. There are also additional pressures on admissions, because there is not the preventive care in the community that a well-funded, properly integrated health and social care system would be able to provide.

There is welcome talk from the Secretary of State of a Green Paper on better integrating health and social care—I am sure the Minister will be involved, too, and I welcome him to his place and to his role. Having a sustainably funded, fully integrated system must be part of that and must be part of dealing with the challenges faced by King’s, by the local health economy and nationally.

I had not intended to speak for very long, but as I said, the example of King’s College Hospital crystallises and pulls together the overwhelming challenges faced by NHS trusts. The overwhelming majority of NHS trusts and foundation trusts are in debt. That was not the case five years ago. As in the case of King’s, many of those trusts have worked very hard to bring those annual deficits under control and to manage the additional challenges of increasing patient demand and pressure from more and more patients with multiple medical comorbidities. In 2018, there are around 3 million patients with three or more long-term conditions in England. It is a very big human challenge to look after those patients, but it is also a very big financial challenge.

The percentage of GDP in this country spent on health and social care falls well below that which is spent in many comparable western economies on healthcare. I know that the Government will look at that as part of their plans for the sustainability of the health and social care system in the Green Paper. I do not expect the Minister to talk about that in detail today, but it is well overdue and I know he will pay keen attention to that.

I had the pleasure of working with Lord Kerslake when I was in Government. He and the board did a lot to reduce what the hospital paid out in temporary staffing costs; some good work was done to reduce unnecessary expenditure on agency and other costs. It is a great shame when a very distinguished and long-standing public servant feels that, despite all their experience and their best efforts to grapple with some of the challenges of King’s finances, they need to stand down from their role because there is no other option. I am sure that Members from all parts of the House will echo that sentiment.

Some good efforts were made in 2015-16 to begin to tackle some of the hospital’s deficit and debt, but in this financial year the finances have worsened and as a result, as the hon. Lady outlined, the hospital has been put on special measures. It seems extraordinary that the hospital and the board have been put in that position when, as I mentioned earlier, one of the reasons for the hospital’s deficit is the PFI, which effectively they had no choice but to accept when they merged with the PRUH. As I mentioned, in 2017-18 that amounts to an estimated £36.9 million, which is a substantial amount of money. Without that PFI debt, the hospital would not be in robust finances but it would be in a better state to meet some of the challenges.

The problem faced by King’s and other hospitals is that when their finances become pressurised, they have to meet annual targets and the financial situation becomes paramount, patient care begins to suffer. That is not because the staff want it to suffer—staff always do their best to look after patients—but because they are not necessarily given the resources to deal with day-to-day care. There are winter pressures, but for many hospitals in debt such as King’s, there are year-round pressures.

We do not want to see more distinguished public servants who bring a vast wealth of experience to hospital boards, such as Lord Kerslake, being put in a positon where they feel that their only option is to resign. We need a better way of supporting hospitals that are in financial difficulty. In this case, part of that has to be to help King’s with some of those PFI debts. PFIs lock hospitals in for a long period of time to sometimes eye-watering and escalating repayment regimes. Sometimes the maintenance costs for the buildings are driven up even further when problems arise.

I hope that the debate provides the opportunity to look at King’s and other hospitals that have large PFI debts that are causing ongoing financial problems. I hope that that issue is looked at to help this hospital and other hospitals around the country that are in a similar position. I hope that the Minister, who I know will take to his post with great vigour, will want to make sure that some of the longer-term challenges that the NHS faces are looked at in the Green Paper for a sustainable, integrated health and care system that is properly funded. I hope that he will take that message away from the debate.

--- Later in debate ---

[The Minister of State, Department of Health and Social Care (Stephen Barclay)]

It is a pleasure to serve under your chairmanship once again, Mr Hollobone, albeit in a different role. I begin by paying tribute to the hon. Member for Dulwich and West Norwood (Helen Hayes) for securing the debate and for the powerful case she set out on behalf of her constituents. I recognise the importance of King’s not just to her family but to the community she serves, to other hon. Members present, and more widely.

In her remarks, the hon. Lady drew out three specific points, suggesting that the Government have responded to this situation as if it had arisen suddenly, that it is reflective of other hospitals and that the roots go back to the Princess Royal decision in 2013. I will seek to address each of those in the course of my remarks, but at the heart of this matter is the concern that the board and King’s have lost or eroded the confidence of the regulator by the manner in which the deficit target has significantly deteriorated, and the concern that the cost improvements are an outlier when pitched against comparable trusts. That is really the crux of the issue.

My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) brought the value of experience both as a clinician and as a former Health Minister. I was very taken by his remarks. Specifically, on the point he raised about the PFI debt, it is helpful to remind colleagues that support was agreed by the Department at the time, in 2013-14, for the additional costs of that PFI financing. That was taken into consideration by the board, which agreed to it at that point. It is not the case that the PFI has been a material contributor to the current deficit.

[Dr Poulter]

My hon. Friend makes a fair point, although it is difficult for a board that has effectively had a merger foisted on it to appreciate fully how a hospital will run across two sites—or even three sites, with Orpington as well. I am sure the Minister will go away and think about that in the context of the PFI and whether something more could be done to help with the PFI debt.

[Stephen Barclay]

Indeed, I am happy to give consideration to the point my hon. Friend makes, although if one looks at the deficit for this year, which I will come on to in my remarks, one will see that the bulk of the deficit is not from the Princess Royal but from the other sites, so it does not pertain to the 2013 decision. I will come on to that more fully as I develop the case.

I will also say to the right hon. and learned Member for Camberwell and Peckham (Ms Harman), who recognised that the staff at King’s want to deliver, that I agree with her on that point. It is not about apportioning blame to those members of staff. Indeed, the financial special measures are about giving additional assistance to King’s to address those points, rather than seeking to blame them. I think there is a shared desire from both sides of the House to get the right outcome for King’s. I am very happy to agree with her on that.

It is a fact that King’s is a challenged organisation. We are putting a lot of effort into supporting it. King’s is receiving substantial financial support from the Department. The trust has received more than £100 million of support to maintain frontline services, the second-highest level of support to any individual trust across England. Placing King’s in special measures for financial reasons is a regulatory action to bring about swift improvement and address the trust’s financial challenges. NHSI is working with the trust to undertake a rapid review and agree a financial recovery plan.

Under the financial special measures programme, the trust will receive extra help and oversight, with the appointment of a financial improvement director. The organisation will also be required to draw up and deliver a plan to improve its finances, which NHSI will closely monitor. That will include support from peer providers where appropriate. On top of those special measures, NHS Improvement has also appointed Ian Smith as a new and experienced interim chair for King’s, to take control of the organisation’s position. He was appointed, as I am sure the hon. Member for Dulwich and West Norwood is aware, on 21 December and took up that role with immediate effect.

It is a fact that some profound financial issues at the trust need to be addressed. The trust agreed a budget deficit of £38.8 million in May 2017, yet just five months after the board had agreed that deficit it submitted a re-forecast deficit of £70.6 million, and a further two months later, in December 2017, the trust informed NHS Improvement that its current mid-case projection had worsened again to around £92 million. So, an agreed board position of a deficit of £38.8 million had within seven months gone up to a deficit of £92 million. That is really at the heart of this. When measured, that level of deterioration is an outlier, which is why the chief financial officer and chief operating officer both resigned in November 2017, and the chair resigned, as hon. Members have pointed out, in December 2017.

When announcing the financial special measures, Ian Dalton, the chief executive of NHSI, noted of other hospitals that

“none has shown the sheer scale and pace of the deterioration at King’s. It is not acceptable for individual organisations to run up such significant deficits when the majority of the sector is working extremely hard to hit their financial plans, and in many cases have made real progress.”