NHS: Financial Performance

Heidi Alexander Excerpts

Monday 12th October 2015 Commons Chamber

[Heidi Alexander (Lewisham East) (Lab)]

(Urgent Question): To ask the Secretary of State for Health if he will make a statement on the financial performance of the NHS.

[The Parliamentary Under-Secretary of State for Health (Ben Gummer)]

I thank the hon. Lady for giving me this opportunity to come to the House and make a statement on the financial performance of the NHS.

On 9 October, Monitor, the regulator of NHS foundation trusts, reported that foundation trusts ended the first three months of the financial year with an estimated net deficit of £445 million. Monitor’s publication noted that performance in the first quarter of the financial year is usually worse than it is over the rest of the year. The NHS Trust Development Authority also published that day the financial position of NHS trusts for the first quarter of 2015-16, which showed that the NHS trusts sector ended the first quarter of the year £485 million in deficit.

The financial position of the NHS is undoubtedly challenging. It is important to recognise that, despite the difficult decisions we have had to make as a result of the calamitous deficit we inherited, it is the Conservative party that has chosen to prioritise funding for the NHS. That is why we are committing an additional £10 billion over the lifetime of this Parliament, starting with £2 billion this year.

However, additional Government spending is not the only answer to the challenges faced by the NHS. The Government have taken action with our arm’s length bodies to support local organisations to make efficiency savings and reduce their deficits. In the first three months of this year NHS trusts spent £380 million on agency staff, while foundation trusts spent £515 million. That is nearly £10 million a day across the NHS. We need to reduce that spending and challenge the agencies that are charging, frankly, outrageous amounts for their staff. To that end, a package of measures, including a ceiling on the amount each trust can spend on agency nurses and mandatory central framework agreements, was announced by my right hon. Friend the Secretary of State in June.

The Government and NHS leaders have taken national action to support local leaders in managing down those deficits. I very much welcome a constructive discussion with the Opposition on where we might be able to go further in driving the efficiency savings that the NHS must find if it is to provide the exceptional standard of patient care that we all, on both sides of the House, wish to see.

[Heidi Alexander]

I thank the Minister for that response. Where possible, I hope that we can have a mature and constructive relationship. However, he should make no mistake that when responses are as poor and lacking in detail as the one we have just heard, I will provide strong and robust opposition.

Ministers are accountable to patients, and their silence on the growing black hole in NHS finances has been deeply disappointing, as is the absence of the Health Secretary today. Not a single Minister was available to be interviewed about the NHS on Friday: it is not good enough. The deficit for the first three months of this financial year was larger than the deficit for the whole of 2014-15.

So, first things first: what advice has the Minister issued to hospital chief executives and finance directors about managing these pressures? Does he honestly think it is still possible for hospitals to balance the books, maintain current services, and deliver safe patient care? Given that the figures relate to quarter 1 and we are now in quarter 3, will he provide his latest assessment of the NHS financial outlook?

There is clearly not enough money in the current budget to cover existing costs. How on earth does the Minister plan to fund more services spread over seven days? The Conservatives’ election promises of more money have yet to materialise, and now their commitment to transparency in the NHS is looking decidedly shaky. For someone who prides himself on being open, the Health Secretary has been suspiciously silent about the delayed publication of these reports. Let me quote what a senior official in Monitor said just over a week ago:

“We are being leaned on to delay them and I have a suspicion that the sensitivity would be less after the Tory party conference”.

Will the Minister say whether these allegations have been investigated? The figures were presented to the board of Monitor on 30 September, so when was he told? Was it before the Tory party conference?

It may be an inconvenient truth for the Health Secretary and his Ministers, but the public have the right to know what is going on and what the Government plan to do. People across the country depend on NHS services, and Labour Members will stand up for them.

[Ben Gummer]

First, I welcome the hon. Lady to her place. Although he is not in the Chamber, I pay tribute to her predecessor, the right hon. Member for Leigh (Andy Burnham), who occupied her position, both as shadow Secretary of State and as Secretary of State, for a considerable period. I hope we can develop our relationship as constructively as possible in the months and years ahead.

The hon. Lady rightly said that Ministers are accountable to patients. That is precisely why we will not make the same mistakes as her predecessors in trying to trade off patient care and patient safety with the finances of the NHS. That is why we have been entirely open not only about the size of the deficit but, in a manner that the previous Administration were not, the failings of care in the NHS when they occur.

The hon. Lady said that the deficit is larger than it was in the whole of last year. That is not accurate. The deficit is traditionally larger in the first quarter of any one year. [Interruption.] She questions that, but it is a statement of fact.

We took action as soon as we came into office to give providers the opportunity and ability to bear down on deficits: it was one of my right hon. Friend’s first actions in coming into government. In three specific areas—agency staff required because of our need to take urgent action following the calamitous and scandalous events at Mid Staffs, the high and excessive pay of NHS managers and consultancy spend, and NHS property—we have given trusts the ability to bear down on deficits. We expect to see the use of those new tools in the past few months bear fruit in the months to come.

The hon. Lady asked if it is possible to balance books and deliver safe patient care. I point her in the direction of the trusts that are, and have been, successfully balancing their books and providing exceptional patient care. Indeed, it has been observed not only by me and other Ministers, but by those outside the Department of Health, that the trusts that best manage their finances and the efficiency of their hospitals also tend to provide the best patient care.

The hon. Lady made an interesting statement about there clearly not being enough money, but she will be aware that the NHS itself asked for £1.7 billion in this financial year and that we responded not with £1.7 billion, but with £2 billion. We have met the NHS’s own funding requests with more than it has anticipated. For the remainder of this Parliament the NHS itself has requested £8 billion of funding, and we have pledged to give it every single billion—a pledge that was not matched by the Opposition and that they tried to undermine at the last election. They pledged to give only £2.5 billion, as opposed to the £8 billion we promised the electorate. The hon. Lady says that promises have yet to materialise, but the money that we promised, not at the last election but in the previous autumn statement, is already flowing through the system.

The hon. Lady asked specifically about the relationship and the nature of the release of the figures. I completely refute her suggestion and I am certainly looking at investigating why such comments were made. I speak for the ministerial team when I say that we did not put on pressure as she might have suggested.

Finally, the hon. Lady says that the public have a right to know what is going on. We have been completely straight, and I have been direct, about the financial challenges facing the service. The reason for those financial challenges is the extraordinarily challenging situation resulting from the demographic changes in our country. On the Government’s part, that requires making very big decisions about the transformation of the service. We best do that not by making the NHS a political plaything, but by working together to deliver precisely the plan that the NHS has delivered for this Government and that we intend to deliver for the patients and people of this country.