Oral Answers to Questions

Debate between David Mowat and Steve Baker

Tuesday 21st March 2017 Commons Chamber

[David Mowat]

We do recognise that in parts of the country there are shortages of GPs. As Members have heard, we are planning to have 5,000 more doctors working in general practice by 2020, and a proportion of those will be in Teesside. It is important that we meet that goal.

[Mr Steve Baker (Wycombe) (Con)]

GPs in Wycombe cite long hours, bureaucracy and the declining attractiveness of the partnership model as reasons why people do not want to be in general practice. Will the Minister ensure that funding within the forward view is directed to deal with those key problems?

[David Mowat]

Yes, and the contract discussions that we have just completed with the British Medical Association addressed a number of the issues that my hon. Friend talks about, in terms of the pressures on doctors working in general practice. We acknowledge that the workload pressures are enormous, and, through the contract, we need to do all that we can to mitigate them.

GP Indemnity Costs: England

Debate between David Mowat and Steve Baker

Wednesday 15th March 2017 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Turner, and I congratulate my hon. Friend the Member for Cheltenham (Alex Chalk) on bringing this really important subject to Westminster Hall this afternoon. The NHS spends between £1.5 billion and £2 billion a year on legal and indemnity costs. If we could find a way to spend that massive slug of money better, that would be better for patients and our constituents, and all that goes with that.

I will start where my hon. Friend started in his really lucid speech. We need to emphasise how much we value GPs, as all Members did who have spoken today. In a speech that I gave recently to GPs, I used a sentence from the foreword by Simon Stevens to the “General Practice Forward View”, and I will use it again now:

“There is no more important job”

in the country

“than that of the family doctor.”

I think that is very good—everybody is nodding, so I think we all agree. There is no harm in our reminding any family doctor who may be listening to this debate of the esteem in which they are held.

My hon. Friend the Member for Cheltenham made some interesting points about the potential for legal reform. We are consulting on that and I will say a bit more about what we are doing. I will give the House one statistic that stuck in my mind as I was preparing for this debate: for legal cases with awards of £10,000 or less, the average costs are three to four times higher than the actual amount paid to the patient. That is indicative of a broken system that we need to fix. He made a point about using the central scheme, which applies to hospital doctors, for GPs. That is an option, but as he also said, the three insurance organisations are non-profit-making, so it is not absolutely clear how it would help.

Another thing I was surprised about was an interesting point that my hon. Friend and, I think, the hon. Member for Burnley (Julie Cooper) made about the way in which costs are estimated for difficult and complex cases. We would all concede that it is right that we properly recompense people who have been damaged through negligence and so on, but one of the things that that is based on is private health insurance rates, not the NHS doing the work. I have discovered the reason for that: it is what was set out in the National Health Service Act 1948, which set up the NHS. We are looking at options around that, but the history of how that evolved and why it became the case is interesting.

[Mr Baker]

I am grateful for the opportunity to recommend an excellent book: “Working-Class Patients and the Medical Establishment”, by David G. Green, who now runs Civitas. It tells that history, and there are a great many similar examples where we might look at how we can reconnect the whole system with the patient.

--- Later in debate ---

[David Mowat]

I thank my hon. Friend for that intervention and for the interesting comments he made. He talked about the transfer of risk due to specialisation, which is an interesting concept. I will push back a little on that, however. Of the £50 billion of reserve that the NHS needs to hold for legal cases and compensation payments into the future, the vast majority is around maternity, because the money tends to be focused on babies who are injured and have to be supported throughout their life. I am not absolutely sure he is right about that concept.

My hon. Friend made a point about the status of partners in GP practices. Partners have unlimited liability unless they have indemnity, which potentially makes it less attractive to be a partner than a salaried GP. We are seeing that trend. There is a double edge to that, and I will not go into other aspects of how GP practices are structured, but increasingly—I do not know whether this applies to my hon. Friend’s wife—we are finding that things are working better with GP practices being put into hubs of 35,000 to 40,000 people. They are able to employ pharmacists and physios and do more things at scale than they could as a single GP practice or as a practice of two or three GPs, which has historically been the norm.

We are migrating over time from a position where we have 7,500 GP practices to one with something more like 1,500 super-hubs, but it is true to say that the contract position has not caught up with that, and it is a long road. Tomorrow, I am going to visit a hub in Dudley. Super-practices are emerging, which have tens and possibly hundreds of GPs who can provide services across much wider areas. That is a different model, and there is some evidence that such hubs can provide more career structure for GPs and the opportunity to specialise in a way that they have not been able to in the past.

[Mr Baker]

I must admit that I missed the Government’s plans to move to super-hubs. It sounds quite suitable for Wycombe. Without wishing to make this debate about my wife, she is with the Ministry of Defence. At the moment, the MOD is providing healthcare to units or stations, or whatever bases they may be. How would the super-hub proposal work with the armed forces?

[David Mowat]

I had forgotten to talk about MOD locums. My hon. Friend raised that issue, and I do not know the answer, but I will write to him and give him the information he needs, and he can talk to his wife about that. I was surprised by that example. I am sure that between the various parts of the Government, we can get an answer.

In the hour available to me, I will discuss in more detail the environment in which the NHS finds itself, the impact and the Government actions we are taking, but I will start with this: we all want access to justice. That is a fundamental of our country, and we should do or say nothing that causes people who have been badly treated to lose out. Lawyers have to be part of how they get access to justice, and that is right, but we also need to protect the viability of our NHS.

We are spending towards £2 billion a year in this area. That is £2 billion a year that we are not spending on nurses, doctors and the improvements we would all like to see. We often have debates about the level of NHS spend compared with other countries in Europe and different parts of the world, but one area in which we can say we are a leader in Europe is the amount of money we spend on litigation and all that goes with that. That is not because our NHS is less safe than other systems; it is to do with some of the points that were made earlier about the litigation culture that has built up. To an extent, that has been encouraged to build up because of our treatment of costs and some of those things. That spend of £1.5 billion to £2 billion has been increasing by something like 20% a year in the past three or four years. We cannot afford to continue to spend money in that way.

GPs are not the most expensive part of the system, but as my hon. Friend the Member for Cheltenham said, GPs typically have to spend £7,900 out of their own pocket on indemnity. That figure is increasing by 10% a year. Indemnity costs for GPs who do out-of-hours work are increasing by 20% a year, which has knock-on effects for the attractiveness of that work. As we discussed earlier, it also impacts on people in other ways, such as propensity not to become partners in GP practices.

What has made the acceleration in legal costs evident is not so much the major claims that everyone would agree need to be sorted out and dealt with—for example, babies who are damaged at birth and need to be looked after for their entire life—but the significant increase in the number of minor claims, which tend to have a higher proportion of associated legal costs. As I said, claims of around £10,000 would typically have legal costs in excess of three times the amount that the patient would receive. My hon. Friend the Member for Cheltenham said that many claims are successfully defended, and the fact is that 99% of all claims are settled out of court. There can be a tendency to settle minor claims for relatively small amounts—claims under £100,000—just because of the volume that are coming in and because it is cheaper to settle than fight to the end. All of that takes money out of our NHS.

We have talked a little bit about why this is happening. The life expectancy of people with complex needs is increasing, so if someone is damaged at birth, typically the awards they need go on for much longer than in the past. That is a good thing in terms of life expectancy, but it drives cost. There is a view that the best-quality care becomes more expensive. Technology is a part of that. We also have an environment in which, for whatever reason, there has been an explosion in small claims against the NHS, which particularly affects GPs, and there is a legal environment in which even unsuccessful claims or claims without merit can sometimes be rewarded. All of that is made worse, as we have heard, by the change to the discount rate made by the Lord Chancellor, which will come into effect next week on 20 March.

The time value of money essentially was 2.5% and is now going to be -0.75%. That will have a significant impact on all insurers in the private and public sectors. It particularly affects the health sector. The £59 billion reserve that the NHS has for central litigation costs will increase because of the change that has been made by something in excess of £5 billion or £6 billion. Those are significant and serious sums of money in the public purse. The Government’s position is that doctors will not have to pay as a consequence of the technical change in discount rate. We are working through how that will work in the central litigation authority and the three insurance companies that my hon. Friend the Member for Cheltenham mentioned. Nevertheless, the cost is significant in the context of all the other pressures on the health system.

A couple of Members talked about the fact that the issue affects not only doctors in primary care but pharmacists. Increasingly, clinical or prescribing pharmacists are working in primary care and they need indemnity, as do nurse practitioners. We need to remember that that is all part of the picture.

Community Pharmacy in 2016-17 and Beyond

Debate between David Mowat and Steve Baker

1st reading: House of Commons
Thursday 20th October 2016 Commons Chamber

[David Mowat]

This is the first time ever that we have given pharmacies a two-year planning horizon; usually, these negotiations relate to a one-year period. After the completion of this period, there will be further negotiations, at which point we will take forward what is right to do.

[Mr Steve Baker (Wycombe) (Con)]

I congratulate the Minister on the way he has sorted out this mess. Is this unnecessary and wasteful clustering of pharmacies not a direct consequence of the former Labour Government’s broken payment model?

[David Mowat]

I am not sure that takes us forward, but it is right to say that spending NHS money on payments of £25,000 to many pharmacies within half a mile of one other is the wrong way to spend money when we need more in cancer drugs funds, in GP surgeries and in accident and emergency—that is what we need to be doing.

Oral Answers to Questions

Debate between David Mowat and Steve Baker

Tuesday 11th October 2016 Commons Chamber

[Mr Steve Baker (Wycombe) (Con)]

5. If he will take steps to ensure that clinical commissioning groups publish their proposals for implementing the NHS “Five Year Forward View”.

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

The “Five Year Forward View” will be delivered through sustainability and transformation plans which are currently being developed by clinical commissioning groups in collaboration with local authorities and providers. NHS England expects that all STPs will be published, although in some areas discussions are already taking place.

[Mr Baker]

I am led to understand that in Wycombe we should expect no dramatic changes and possibly no publication of a strategic plan. Does my hon. Friend agree that public confidence would be much enhanced by the clear articulation in public of a strategy for meeting the “Five Year Forward View”?

[David Mowat]

I agree with my hon. Friend, and I will try to give a clear answer. NHS England is determined that all 44 areas will publish their plans shortly. For those that have not already done so, publication will take place after the formal checkpoint review at the end of October. Areas are working to different timescales, but the plans will all be published by the end of November. For the avoidance of doubt, that includes the STP for Buckinghamshire, Oxfordshire and Berkshire West.

Energy Prices

Debate between David Mowat and Steve Baker

Wednesday 19th October 2011 Commons Chamber

[Steve Baker]

I think perhaps the hon. Gentleman and I will have to put our researchers in a room and have them fight it out, because my information is that the Deutsche Bank report has stated that a quarter of UK households could be driven into fuel poverty by being priced out of the market; that the most effective policy to bring energy costs down would be to abandon our unilateral renewables obligation, which would save 15% on costs; and that shale gas utilisation would save a further 15%.

[David Mowat]

It is not true to say that shale gas is more expensive than conventional gas. In the US, gas prices are now 50% of those on the European hub. That is a huge and unprecedented thing to have happened, and it is why the US is about to become a net exporter of gas. It has decoupled gas and oil prices due to shale gas. I am not saying that we can do that easily, but it has happened in the US, and it is wrong to say that shale gas is more expensive than other methods.

[Steve Baker]

I am grateful, and with that I will perhaps move past shale gas. My point was that there are enormous, abundant resources of shale gas. Of course there are problems, but as an engineer I just see problems to be solved and risks to be mitigated. I think we should get on with it. We must also remember the points that I touched on about the price distortions that we are deliberately introducing into the market, including the subsidising of large corporations through surplus permits to emit, which have a market value. Such distortions in the market tend to push prices up.

Of course, prices are expressed in money, and I wish to move on to my favourite subject—the distortions that have been introduced to the market through the financial system. I have a wonderful chart before me that prices crude oil from a base figure of 100 in 1945. It shows that the oil price has only been high and volatile since 1971. The two lines—one is US dollars and one is gold grams—are coincident until 1971, but once we came off Bretton Woods and the dollar was decoupled from gold, oil prices were suddenly high and volatile. I showed the chart to an EU energy regulator and he was astonished because all the main events in the history of crude oil prices are simply missing from the price in gold.

Let me move on to the chart that shows crude oil simply priced in gold and blown up. We can see that oil in gold is cheaper now than it was in 1950 and that the oscillations have been pretty much around the same mean. I have other charts relating to gold and they show that gas prices are cheaper today in gold than they were in 1994.

It seems to me that if we are serious about energy prices, we ought to be asking serious questions about the value of money. Right now, one of the biggest problems we face is that “Helicopter Ben” Bernanke is printing dollars and distorting energy prices worldwide. That brings us back to the imperative that has been discussed: people will be in fuel poverty, choosing between heating and eating.

I ask the Government to consider how we can deliver a shale gas revolution. I want them to consider along with the EU Commission whether we should continue aggressive green policies in isolation. I want them to consider those policies and whether it is sensible to keep pushing up prices. Finally, I want them at least to consider some of the monetary effects on energy prices that, in my view, are now crucifying us all.

Banking Reform

Debate between David Mowat and Steve Baker

Monday 29th November 2010 Commons Chamber

[David Mowat]

I intended to address that later in my remarks, but I shall take it head on. Lehman Brothers was a bad bank and it rightly went bust. However, that affected a whole lot of other banks, which required massive Government bail-outs, because there was no firewall. Nothing in my remarks will imply that retail banks such as Northern Rock will never go wrong or need to be saved. Frankly, my hon. Friend’s example makes my point rather than contradicts it.

Two or three hundred years ago, capitalism was developed by joint stock companies, which was a clever and wonderful thing. If such companies made the right decisions and were wise, they prospered and grew. The other side of that was that companies failed if they made unwise decisions or mistakes, lost money, or failed to recognise risk—Gaussian distribution or not. In the past 15 to 20 years, unintentionally, a new type of company has emerged. Such companies are not subject to the same penalties for risk as other businesses. That creates moral hazards and poor decisions. In the end, that was a large contributing factor to what happened in this country two years ago.

The arguments in favour of a firewall are overwhelming, but what are the arguments against it? The principal argument against a firewall has been the subject of the most intense banking industry lobbying imaginable, and I hope that when the time comes to legislate, hon. Members and the Government do not bow to it.

The first argument is that such a separation implies that investment banking, derivatives and all that goes with that are casino-type activities and of less value to society. I do not think that at all. I sold my business to investment bankers, I like investment bankers and I understand why we sometimes need derivatives. I have no problem with those instruments, but I do have a problem with the fact that if the people using them mess up, they cannot go bust, because there is not a firewall between their activities and the rest of the banking world. That is the problem.

The second argument was raised just now by my hon. Friend the Member for Central Devon (Mel Stride)—the Northern Rock and Lehman Brothers example. I will not repeat what I said, except to say that Lehman Brothers should have been allowed to go bust, but should not have been able to bring in billions of dollars of taxpayers’ money after it, as it did.

The third argument is that a firewall would be too complicated: banking has now got global and is so mixed up that we cannot separate out investment banking and retail banking. Well, we can. The Basel III agreement contains a requirement that the capital considerations for each part of the banking portfolio be different. That can be done.

The fourth argument is that we can do all this with capital ratios and that if we impose them on banks we will not need this firewall, this separation. That is partly true, but actually they are not mutually exclusive—we need both—and, as was said earlier, capital ratios, unless we are careful, will shrink bank balance sheets and reduce lending at a time when we want more credit. What I am proposing would not do that.

The fifth argument is that, if we did this in this country, in front of the rest of the world, it would put our banks at a competitive disadvantage. That might be true—it is a reasonable argument—but I would say two things in response: first, the banking sector in this country is about four to five times as significant, as a proportion of GDP, as it is in any other country, so we ought to be leading the world in this regard. It matters more to us. Secondly, even if the argument is right, it is not a reason for us not to try to get the world behind us, create these firewalls and get this under control.

[Steve Baker]

My hon. Friend makes a compelling case. Will he consider the case of fixed-rate products—fixed-rate savings or fixed-rate mortgages—because it seems to me that such products are bound to bring the savings and loans business into contact with the investment business, through interest rate swaps?

[David Mowat]

I thank my hon. Friend for that intervention. My third argument was that these things are all so complicated and mixed that we cannot separate them out in the way I propose. I made the further point, however, that we have to do that, under Basel III. However, as recently as 15 years ago, firewalls were in place, so it is not that difficult and it can be done, if there is the will. The requirement on moral hazard is such an overriding necessity of capitalism that when it goes, it is terribly dangerous. And it has gone now, which is the guts of what we have been talking about for most of this afternoon.

I am not the only one saying that. Paul Volcker, who was previously head of the Federal Reserve, and John Reed—not the John Reid who used to sit on the Labour Benches, but the John Reed who used to run Citigroup—have asked for this firewall to be put back in place. The Governor of the Bank of England, too, said that of all the different ways we could choose to organise a banking system, the way we have chosen to do it in the UK is among the worst imaginable. We have to act on this. It is very important, and I hope that, notwithstanding the Vickers report, the Government will show leadership on this matter.

High Speed 2

Debate between David Mowat and Steve Baker

Tuesday 23rd November 2010 Westminster Hall

[Steve Baker]

I am grateful to the hon. Lady for her intervention and I will return to some of those points, in particular how we make a judgment between road, rail and air travel.

If it is not true that high-speed rail is in the national interest, and if such a project will offer only marginal and uncertain benefits at vast expense, it would be in no one’s interest. I am delighted that the Government wish to ensure the prosperity of the whole nation, but it has not been demonstrated that HS 2 will deliver that. To justify such a grievous impact on the people and landscape of Buckinghamshire—and indeed along the entire length of the route, wherever it is located—the Government must place the economic and environmental case for the programme beyond all doubt. I do not believe they have yet done so.

High-speed rail is not commercially viable, so the expense is justified with a wider cost-benefit analysis. That analysis relies on assumptions, including excessive demand, generous benefits and a flawed analysis of the alternatives. I shall only touch on each point today, but I am sure that campaigners will furnish us with full details during the course of the inquiry.

The projected increase in demand is open to challenges that include demand saturation, a broken relationship with GDP, out-of-date data, neglect of new technology, and inadequate anticipation of competition from classic rail—a problem that blighted HS 1. The case for benefits neglects the fact that many of us work on the train, and it depends on implausible levels of crowding. The Department for Transport’s alternative, Rail Package 2, is paid too little attention, despite meeting demand with less crowding than would occur should the HS 2 programme go ahead. At £2 billion, the package is much less expensive. It is better value for money and capable of incremental delivery, setting it free from the risks associated with long-range economic forecasting. Rail companies could lengthen trains to nine, 10 or 11 cars. That would increase capacity from 294 to 444 seats—an increase of 51%. Unused first-class capacity could also be swapped for standard seats, thereby further increasing total capacity.

It is a myth that the UK lacks a fast national railway network; we have had one for a long time. We have routes capable of 125 mph, with quicker rail journey times between the capital and the five largest cities than in other major western European countries. For instance, the average journey time in the UK is 145 minutes. It is 151 minutes in Spain, 184 in Italy, 221 in France and 244 in Germany. In short, it appears that for £2 billion, the Government could have a complete, low-risk but unglamorous solution to the problem of rail capacity, and rather sooner than HS 2 could be delivered. Therefore, I am not convinced that £30 billion—or more—of taxpayers’ money would be wisely risked on HS 2.

[David Mowat (Warrington South) (Con)]

Does my hon. Friend accept that every infrastructure investment and transport initiative imaginable could, in the short term, be done more cost-effectively with the sort of incremental approach he has just mentioned? That does not take away the need to think strategically, and occasionally to do things that are more than just incremental.

[Steve Baker]

My hon. Friend makes an interesting point that we should explore at some length. In the final part of my speech I shall set out why I think we have been taking the wrong approach to infrastructure in this country.

Targeted investment in existing infrastructure would ultimately offer greater benefits to the whole country not served by HS 2, including the south-west, south Wales, East Anglia and the north-east. Such an approach would provide a visible demonstration of productive investment during a time of austerity. I am aware that the environmental case for HS 2 can be similarly attacked, but given the time, I shall simply quote Mr Steve Rodrick, chief officer of the Chilterns Conservation Board:

“The case for HS 2 is largely built on capturing the internal aviation market, but 80% of all journeys between Manchester and London already involve the train…These trains will use double, possibly triple, the energy of normal trains. Where’s that energy going to come from? You either have to bank on nuclear coming on stream or, more likely, power stations running on fossil fuels, which will involve significant carbon emissions.”

I also recommend Christian Wolmar’s 15 September article for RAIL magazine, which states that the arguments against HS 2 are mounting. His tour de force concludes by explaining that HS 2 would absorb money that would otherwise be spent on classic rail in an environment of reduced funding. He writes:

“We cannot have it all. Let’s work to protect what is essential, rather than trying to reach for the moon.”

Finally, I will turn to rail policy and transport strategy in the round. If transport resources and the necessary land and capital are scarce, what is the best approach to ensure optimal resource allocation? It has long been argued by the Conservative party, as it was once argued by Liberals, that unhampered social co-operation in the free market is the most efficient and effective way to allocate resources and relieve scarcity. With that in mind, I asked the House of Commons Library to prepare a summary entitled “Price controls and state intervention in the rail market.” It is not, of course, a simple statement that there are no price controls or state interventions in the rail market; it is six pages long and covers passenger franchise specification, the control of fares and rolling stock procurement. It also sketches the process of almost continuous organisational change that has dogged rail since nationalisation in 1948. Contemporary rail is not characterised by property rights, freedom to contract, open competition and unhampered prices.

My task today is not that of setting out a new free market transport strategy, and I will not pretend I am able to do so. However, I wish to emphasise that rail, and road transport in particular, are not capitalist systems in the conventional sense but hybrid systems of heavily regulated and subsidised public and private companies. We have inherited a rail system whose franchise agreements descend into such detail as specifying a “biennial talent management programme” and even “time with your manager sessions.” That is not freedom to contract, and clearly rail operators are not free to set market fares.

Of course, I do not want fares to rise any more than my colleagues do, but we should admit that the rail system does not operate in a free market and that therefore economic calculation is likely to be hampered, if not irrational. We simply cannot know whether today’s rail economics are optimal, but it seems likely that they are not.