Leaving the EU: NHS Funding

David Mowat Excerpts

Tuesday 15th November 2016 Commons Chamber

[The Parliamentary Under-Secretary of State for Health (David Mowat)]

I congratulate the hon. Member for Streatham (Mr Umunna) on securing the debate, and on the points that he made. Like him, I voted and campaigned for the remain side, and, like him, I accept the result. I am now part of a Government who are responsible for delivering what was democratically decided by the British people. I should say at the outset, however, that I am speaking today for the Government and not for the leave campaign. If the hon. Gentleman feels that he is taking part in the wrong debate, I apologise for that in advance.

I will, however, address some of the points that have been made about the impact of Brexit on the NHS, because valid points were made about staff morale, the level of funding and the exchange rate. All those are variables, and I think it is good for us to spend a bit of time talking about them this evening. I will also talk about what stage I think we have reached on the pledge and the amount of money that we will no longer be giving to the European Union when we leave—although, as the hon. Gentleman knows, that depends on how we leave, and on the nature of the agreement that we eventually reach.

Let us begin by agreeing on one point. The single most important thing that the NHS needs to be properly funded is a strong economy. To the extent that Brexit may have positives and negatives, that fact is relevant, but the NHS is properly funded at the moment. We have heard some stuff about budgets and all the rest of it, but let me tell the hon. Gentleman that the OECD’s analysis of health and social care spending in every OECD country shows that we are now above average, although that has not always been the case. We are possibly 1% lower than the best of class, including France and Germany. That figure was for 2014, and the gap is likely to have been filled because this year we gave an increase to NHS spending of three times the rate of inflation and we have pledged that NHS England’s budget will increase in real terms by £10 billion between now and 2021. I do not believe Brexit will make any difference to that; indeed it is a commitment and priority of this Government that it will not.

We do know, however, that there are issues in how that money is allocated within the NHS. We are broadly at the average point of the OECD, and we do and could spend that money more efficiently and effectively. We could spend more on primary care, cancer and mental health than we do, and those are Government priorities, and we hope the sustainability and transformation plan process will help to deliver that because at the moment we spend too much on acute care.

Of course we can find efficiencies, too. Agency staffing is too high and we need to address that. There is a lot we can do on procurement—Carter and new care models and all that go with that.

[Stella Creasy]

The Minister could also work to renegotiate the private finance initiative loans that are crippling our NHS, and not use PF2 to do that. In order to do that, we need money in the NHS to be able to renegotiate. Surely the £350 million would help get us to that place; it would help us to renegotiate our debt, get our constituents back into work and get our NHS fit for purpose in the 21st century?

[David Mowat]

Nobody in this House would be more pleased than me if we did not have the PFI millstone around our neck. The hon. Lady talks of renegotiation; this is real money, and these are real contracts that were signed more or less entirely by the last Labour Government. There is no magic wand that enables us just to set those PFI contracts aside, although I wish there was; that is not how the commercial world works.

[Mr Umunna]

I am sure the Minister will be aware that the £10 billion figure for increased funding he has just cited is rejected by the cross-party Select Committee on Health. It is also very well him referring to what he alleges are increases in NHS funding, but the other cuts his Government have made over the last five to six years, in particular to local authority budgets, have put huge pressure on social care, which has led to a knock-on impact on the NHS and its funding.

[David Mowat]

The hon. Gentleman mentions social care, and that is fair. It is funded separately to the NHS, and the budgets are separate. During the course of this Parliament the social care budget will increase in real terms. I do accept that the social care system is under pressure, but there is a massive disparity in performance in social care between councils. The top 10% of councils are about 20 to 25 times better in terms of outcomes for delayed transfers of care and so forth than the bottom 10%. There are many facets to this, therefore, but I accept the basic point. I think that, all other things being equal, Members on both sides of the House would like the NHS to have more money; let us agree on that and see how we make progress on it.

Brexit introduced a number of variables that may not have been there before. What will be the impact of Brexit on our economy? Our GDP in three or four years could be higher, but also could be lower, because of Brexit. The truth is that neither the hon. Gentleman nor I knows the answer to that. There are different views on that in this House, too, although some with other views may not be here today. This is important and relevant because if the economy were to have a significant difficulty, that could impact on spending commitments.

The second variable is a very substantive one and was mentioned earlier: the exchange rate. Our exchange rate went down about 15%, principally, it would seem reasonable to say, as a consequence of Brexit. That is a good and a bad thing for the economy. Many countries in the world are trying to get their exchange rate down. I represent a constituency in the north of our country where we have a more manufacturing-based economy. Frankly, a lower exchange rate will help the economy there. That may not be the case in other parts of the country and in the City.

The exchange rate has an impact on the NHS. In fact, it has two impacts. As the hon. Member for Nottingham South (Lilian Greenwood) mentioned, it will be more expensive to import products such as scanners and, potentially, to import drugs. She asked what the figure was, but I cannot give her an exact figure. My understanding is that it is considerably less than 5% of the total NHS expenditure of about £100 billion. Nevertheless, this is a relevant factor and it makes a difference.

The other impact of the exchange rate, which the hon. Lady did not mention, is that it will affect the attractiveness to overseas workers of the UK economy in general and the NHS in particular. If someone comes in from the EU to work in our economy and the value of the pound is 15% lower than it was a year ago, they will be earning 15% less in their home currency. That will have an impact on the margin in relation to staffing, and that is an issue that we need to manage.

The third variable is the one that we have spent so much time talking about—namely, the payment that we make to the EU. I am not going to get bogged down in the numbers, but I believe that we pay the EU about £20 billion a year, of which we get roughly £10 billion back. Leaving the EU would therefore create a bonus. The hon. Member for Streatham mentioned a letter. Even if that bonus were to materialise, as I expect it to, it will not happen until after we have left the EU, so his writing a letter to the Chancellor now strikes me as somewhat symbolic.

[Mr Umunna]

To be absolutely clear to the Minister, the ask was that the Chancellor should set out the path for achieving this payment after we have left. I want to ask the Minister two questions. First, given his view that the pledge to make a payment to the NHS was made not by the Government but by the campaign, would he say that it was wrong for people to go around giving the impression that the Government would dish out that money? Secondly, for the record, is he saying that this Government will not meet that pledge?

[David Mowat]

Just for the record, I am not saying that this Government will not meet it. All I can say is that this Government have yet to decide how they will spend any bonus that comes from any rebate we get. This will all depend on the precise negotiations that take place and the precise type of exit that we make from the EU. Nobody in this Chamber knows the answers to those questions. For example, we could get a Norwegian-type deal that could entail paying money to the EU. I am not a member of the Department for Exiting the European Union and I do not know where the current thinking is on that, but this is of course a variable.

[Mr Umunna]

Given what the Minister is saying, does he believe that it was wrong to go around giving people the impression that all they needed to do was vote to leave the European Union in order for £350 million a week to be dished out to the NHS?

[David Mowat]

Had I been writing something on the side of the bus, and had I been campaigning on that cause in the referendum, I might have been more circumspect. I might have said that £350 million could become available and could be spent on whatever the Government’s priorities were, one of which was very likely to be the NHS. I hope that that satisfies the hon. Gentleman.

[Mr Stewart Jackson (Peterborough) (Con)]

I regret that I seem to have stumbled into a sort of elongated primal scream therapy session involving refighting last June’s referendum. The hon. Member for Streatham (Mr Umunna) would have a more persuasive and cogent argument if he saw the other side of the equation. Yes, EU workers have a massive impact on and are committed to the NHS, but unrestricted EU migration over a number of years has put massive strains on the delivery of our health services. He has never conceded that point.

[Mr Umunna]

That is not what I am talking about.

[David Mowat]

I want to make some progress in the debate, although I understand that I have until 7.30.

We have mentioned the payments to the EU, and there is also the point about staff. Another point that has not been mentioned—I shall mention it for completeness—is that there will be an impact on EU institutions. For example, the European Medicines Agency is located in London, which is of benefit to our pharmaceuticals industry. Where it ends up should be an issue for the people negotiating this deal, because of the potential impact involved. From my point of view, we talk too often about the conditions in relation to the EU for the City of London and passporting and all that goes with it, but not enough about other world-class industries, one of which is pharmaceuticals. I hope that those responsible will listen to that.

We have talked about the economy, which is a big variable. To be frank, neither I nor the hon. Member for Streatham knows whether the economy will be better or worse as consequence of leaving the EU, but it is true that the 15% fall in the value of the pound is helping manufacturing firms in the north and will have an effect on GDP, but it will also have some effect on imports of, for example, scanners, accelerators and drugs.

The NHS is hugely reliant on staff from the EU. Some 58,000 people from EU countries work in the NHS, and another 90,000 work in social care. I want to take this opportunity to reiterate the Government’s position that we understand that massive contribution and know that it is important to our NHS that it continues. The Secretary of State said exactly that to the Health Committee and the Prime Minister has said that she hopes and expects citizens from the EU to stay in our vital services. I would like—perhaps the hon. Gentleman and the group he is speaking for today can help with this—some of our EU colleagues and friends to make a similar commitment about people from this country who are working in EU countries, because that has not yet happened.

[Mr Umunna]

I speak for my constituents above all others whenever I speak on such issues in this House. On that specific point, will the Minister explain why the Government do not simply guarantee the right to stay of EU citizens working in our health service? I understand the demand for the reciprocal right to be given to UK citizens living in other EU countries, but they should not be used as a bargaining chip. When the Immigration Minister appeared before the Home Affairs Committee, he admitted that we do not know where most of the EU citizens are in this country or who they are, so if we were not to deliver on the promise to guarantee them the right to stay we would have no way of removing them.

[David Mowat]

It is not for me to make that specific guarantee. The Prime Minister clearly said that she hopes and expects them to remain. It is disappointing that a similarly strong statement has not been made by any Head of State in any other European country.

It is also right that we do more to train more of our own nurses and doctors—not because we need to replace people from the EU, but because it is the right thing to do. We should try to become self-sufficient in these matters, and that will happen.

We have knocked around this point quite a lot during the debate and have talked about variables such as the exchange rate, GDP and the EU bonus or payment that we will get, but there is one thing that is not a variable and it is probably the single most important constant: the extent to which this Government give priority to the health service in their spending commitments. That constant is absolutely clear. The previous Prime Minister treated the NHS as his No. 1 commitment, as does the current Prime Minister. Many of the points we have discussed this evening are things that should properly form part of the negotiation that we are going to have after we trigger article 50, as we hope to do by the end of March, and I am certain that that will be the case. What is not negotiable is that our commitments to NHS funding and social care funding are unmoved by any of these things; this is the No. 1 priority for this Government.

[Mr Jackson]

Is it not the case that in the future dispensation after Brexit we might have a fairer system of recruitment and retention of NHS staff? In all our constituencies, we have staff from outside the EU—my constituency has Nigerian, Ghanaian and, in particular, Filipino nursing staff—who have hitherto been discriminated against inadvertently vis-à-vis those from the European Union, and we will have a much fairer system in reaching out and getting the brightest and best to work in our NHS in the future.

[David Mowat]

My hon. Friend uses the word “fairer”, and of course we do have staff from other parts of the world. I will be honest and say that part of me has difficulty with this country taking large numbers of doctors and nurses from places such as Nigeria and others parts of Africa that need them more than we do. So it is right that we try to train more of the people that we need in these vital public services, but it is also right that we make it absolutely clear how important the people who currently work in our NHS and in social care are—those from the EU and from outside it, as my hon. Friend reminded us. That is important.

I make the point again, because I will not go on until 7.30 pm, that the NHS is this Government’s No.1 spending priority and it will continue to be so.

Question put and agreed to.