National Health Service

John Pugh Excerpts

Wednesday 26th October 2011 Commons Chamber

[John Pugh (Southport) (LD)]

May I take it as read that the NHS will struggle to find the £20 billion savings agreed in the Labour Budget? May I take it as read that that will impact on services and that people will notice and probably blame this Government’s legislation regardless of whether or not it compounds the problem? The debate we have been having on how NHS spending is or is not to be ring-fenced is almost a sideshow, compared with the huge challenge that is consistently emphasised by the Chairman of the Health Committee.

I draw Members’ attention to the fact that serious financial trouble is already breaking out in the acute sector. Seven of the 19 foundation trusts in the north-west have a red light, and that region is one of the more stable ones that we could consider. I cannot see any obvious happy endings, even without the Bill. Without the Bill we would still have competition by price, competition law would still be applicable, PCTs would still be capable of looking for the lowest common denominator and we would still have an unaccountable NHS.

To add to the general misery I am trying to perpetuate, on Saturday I had a severe abscess on my tooth, which was extraordinarily painful and unpleasant. After taking large doses of ibuprofen, which gave me a little relief for an hour, and my face being swollen and peculiar—a little more peculiar than it currently is—I sat up in bed in the middle of the night with my iPad looking up home remedies on the internet—cloves, bicarbonate of soda and so on. I found forums populated by desperate sufferers looking for a fix. What surprised me most were the American contributors, a considerable number of whom were obviously afraid to go to a dentist, despite the fact that the US is a rich country with no shortage of good dentists. They were settling for severe and continuous pain or for hit-and-miss experimentation, rather than risking debt and bankruptcy. Thankfully, I was in the UK and we have the NHS. On Sunday night, almost unbelievably, I was seen at 6.15 by an emergency dentist, a Polish dentist at the former Litherland town hall, which is now a busy Sefton NHS walk-in centre with a pharmacy attached—a service I did not know existed prior to these events.

Thankfully, the NHS is an institution built on solidarity. Through the state, we guarantee by our taxes each other treatment according to need and irrespective of means. It is a moral compact and Governments have been prepared to carry out that compact by ensuring that the services that are needed exist. Historically, they have done this in two ways: first, by buying services on our behalf; and secondly by providing services directly on our behalf. Governments and the people working in the NHS have done this relatively well and relatively efficiently, as the Wanless report and the Commonwealth Fund report have rigorously and exhaustively demonstrated. That is indisputable.

What is strange about recent developments is the Government shying away from their role as a provider of health care. The original debate was over the renouncing of the Secretary of State’s role as a provider, but we can also see the cutting loose of all hospitals as free-standing foundation trusts; the blurring of boundaries between NHS providers and other sorts of providers, with NHS providers doing more private work and the private sector doing more public work; the forcing—genuine forcing in some places—of non-hospital staff working for the NHS to become independent social enterprises; the neutrality of the Department of Health on whether individual NHS providers or provider networks survive, a neutrality that will be severely tested in the months to come; and the willingness to make NHS provision contestable as a matter of principle, rather than one of pragmatism. Not many people have noticed the ending of the Secretary of State’s powers to create a new foundation trust or hospital post-2015. We might have seen the last new NHS hospital opened by a Secretary of State in this country.

I found the Secretary of State’s unwillingness to stick to the wording of the Health Act 2006 slightly bizarre, if only because that would easily have brought peace, and may have brought peace now, depending on what exactly has happened in the House of Lords. In a sense, we all know that the Secretary of State does not, has not and cannot provide all the services himself and should not try to micro-manage. I did not seriously expect him to turn up at Litherland town hall on Sunday—visions of Marathon Man come before me. What concerns me is the ideological presumption that the Secretary of State should only be a purchaser or commissioner. There is a good reason for that concern; it is only possible to purchase in a market what that market offers. Markets are splendid things, offering choice and variety, but they do not have a guarantee that people will get what they are entitled to, and they do not ensure that health inequalities, or any sort of inequality, can be eroded, and they do not guarantee that public resources are spent and used in the most efficient way. They may lead to that, but not necessarily. Direct state provision is often a better option.

[Dr Thérèse Coffey]

I respect my hon. Friend’s point of view, but surely what matters is quality of care for patients, which can be provided as well in the private sector as it can in the public sector, and it is not necessarily guaranteed in the public sector, as events at the Mid Staffordshire hospital have shown.

[John Pugh]

I did not say that it was guaranteed by the public sector. That is not the point I was making at all. Guaranteeing entitlement, addressing inequalities and ensuring public value are, to be blunt, largely the point of the NHS. I can quite understand—I partly regret it—that a degree of cynicism might exist about the public service ethos, and a sort of nostalgic support for that can sometimes be in place when the reality is that it is not there. There is doubt about its true impact and people inside and outside the NHS sometimes show that degree of cynicism, which is regrettable. I can understand the worry that NHS providers can become lax or inefficient or unambitious if they are not challenged, but the answer to that is not necessarily or obviously to get out of the provision business full stop, embrace the market, set up strange control markets with huge transactional costs, strange tariffs and the multiplicity of bean counters that go along with that. Of course there is also greater legal complexity. The end result of that is something that has few of the virtues of a real market and most of the vices. The Labour Government were to some extent part and parcel of producing such a market. I see no reason to make the state just a purchaser and never a provider, and it is not obvious to me that the answer is to hand over the money to one set of providers, the GPs, particularly if the pretext for doing so is to harden the commissioner-provider split, because GPs are providers.

In conclusion, publicly funded provision—public service infused with the right ethos—is often the most efficient and effective option, provided that it is coupled with genuine, local and rigorous accountability. That is what happens in many successful systems, such as Sweden’s, and it is a liberal solution. So far, there is not enough of it, although the Bill makes laudable moves in that direction, with health and wellbeing boards and so on, but this strange, unargued and ideological withdrawal from provision or interest in provision taints everything and leaks poison into the system—like an abscess.

--- Later in debate ---

[Liz Kendall]

The hon. Gentleman, who is a constituency neighbour of mine, would do better focusing his attention on the RCN and RCM in our area, which are asking us why the Government are not fulfilling their commitment on extra midwives. If he goes to the hospitals in Leicester, as his constituents do, he will know that there are concerns about that.

The Government deny that the number of front-line NHS staff is being cut, that waiting lists are rising and, worst of all, that there is still widespread and growing opposition to their NHS plans.

[John Pugh]

Does the hon. Lady seriously believe that the £20 billion-worth of savings required by the last Labour Budget could be achieved without cuts?

[Liz Kendall]

We have been clear on this side of the House. My right hon. Friend the Member for Leigh (Andy Burnham) took some difficult decisions when he was Secretary of State for Health, unlike the current Secretary of State. My right hon. Friend looked at what was happening in local hospitals and took the difficult decisions, based on clinical advice, to improve patient care. That is what this Government should be doing.

The Prime Minister says that

“the whole health profession is on board for what is now being done,”

but that is simply not the case. The RCN says that the Bill

“will have a seriously detrimental effect upon the NHS and the delivery of patient care”.

Four hundred of the country’s leading public health experts warn that the Government’s plans will cause “irreparable harm” and fail to deliver

“efficiency, quality, fairness or choice”.

The British Medical Association says that the Bill

“poses an unacceptably high risk to the NHS”.

Government Members now like to criticise the BMA, but before the general election they applauded everything the BMA said. They always want to have it both ways. Three quarters of GPs—the very people this Government claim they want to empower—have said through the Royal College of General Practitioners that the Bill should be withdrawn. [Interruption.] The Minister of State, the right hon. Member for Chelmsford (Mr Burns), says from a sedentary position that those groups—the RCN, public health experts, the BMA and the Royal College of General Practitioners—are self-selecting. That is the kind of dismissal of front-line staff that has caused such problems for the Government.

It is not just NHS staff whom the Government refuse to listen to. Organisations such as Age UK and Carers UK say that social care is in financial crisis too. The Government repeatedly claim that they have increased funding for social care, but eight out of 10 local councils are now restricting services to cover only those with substantial or critical needs. Two thirds say that they are closing care homes or day care centres too. The Government’s huge cuts to local council budgets mean that vital services and support for older people, their carers and their families are being eroded. That is not protecting the most vulnerable in our society, nor is it protecting taxpayers’ interests, because if we do not help older people to stay healthy and independent in their own homes, they end up in hospital.

In conclusion, when people think back to what the Prime Minister said before the election and the personal promises he made on the NHS, they now see the truth: a Government who are out of touch with what is really happening; a Government who refuse to listen to front-line staff; a Government in total denial about the true impact of their reckless NHS plans. This Government’s record on the NHS is one of promises cynically made and shamelessly being broken. I commend the motion to the House.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 18th October 2011 Commons Chamber

[Mr Lansley]

Nothing that is being done pre-empts legislation. What is being done in relation to primary care trust clusters is being done under existing legislation, and was necessary not least to enable us to achieve a reduction of £329 million in management costs in the first year following the election. In contrast, there was a £350 million increase in the year before the election under the hon. Gentleman’s right hon. Friend the Member for Leigh (Andy Burnham).

I do not know the circumstances of the centre to which the hon. Gentleman referred because the decision will have been made locally and will not have involved me, but I will gladly write to him about it.

[John Pugh (Southport) (LD)]

The full roll-out of 111 services is now proceeding. Is the Secretary of State satisfied that imploding PCTs can get the procurement right in the time allowed?

[Mr Lansley]

I am confident that we will make the progress that we seek. If we are not ready in any location, we will not be able to proceed with that procurement, but the PCTs will act on the basis of an evaluation of four pilots. To that extent, the character of what they are procuring through the 111 system will be well defined through piloting.

Health and Social Care (Re-committed) Bill

John Pugh Excerpts

Wednesday 7th September 2011 Commons Chamber

[Paul Burstow]

I am grateful to my right hon. Friend for having given me the opportunity to talk about this at some length, and I want to give him some reassurance. However, it is hardly a back-stop to have in clause 1 something that is not what the Secretary of State on a day-to-day basis actually does. It is a back-stop to say that when things fail, the Secretary of State should be able to exercise those functions to make sure that things are put right. I would like to say a bit more about that now.

I want it to be clear that we do not envisage the Secretary of State having to intervene other than in exceptional circumstances. Nevertheless, the measures are the legislative back-stops in the Bill and it is right that they are there to protect the comprehensive nature of our NHS and to provide reassurance. To answer my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) directly, there are a number of ways in which the Secretary of State could secure the provision of services. In particular, he could impose requirements on the NHS commissioning board and clinical commissioning groups using both the mandate and the standing rules. He could establish, and has the powers to do so, a special health authority, and could direct it to carry out any NHS function. That power has been used in the past to establish NHS Direct—a service-providing organisation. Also, he could intervene, including by replacing the management and directing them in the event of a significant failure. Those measures are the belt and braces in the Bill to make absolutely sure that the NHS and the public are protected from all eventualities. We have ensured that the Secretary of State’s powers are sufficient to ensure that a comprehensive NHS is provided, including through the public sector, rather than simply relying on existing providers and the market.

The position is clear: we are giving the NHS more freedoms and autonomy—something that many of us in the House have for many years argued should take place—and we are increasing its accountability. We are making watertight the obligations to provide a comprehensive health service that is free to all, based on need and not ability to pay.

[John Pugh (Southport) (LD)]

Will the Minister confirm that the Secretary of State will retain his powers to create new hospital trusts and that the Bill does not change that power ?

[Paul Burstow]

The power to establish NHS trusts is contained in previous legislation. The Bill provides for, in due course, the repeal of the provision to establish NHS trusts. As we indicated in our response to the NHS Future Forum, that will not take place for several years to come. Regardless of that, however, the Secretary of State will retain the power to establish special health authorities that can exercise a provider function.

Health and Social Care (Re-committed) Bill

John Pugh Excerpts

Tuesday 6th September 2011 Commons Chamber

[Frank Dobson]

No, I will not.

I believe that the national health service is popular for two reasons: because, in most parts of the country and for most of the time, it does a good job for people; and because people value the thought that it not only looks after them but looks after their families, looks after their neighbours, and looks after all of us. I believe that, in many ways, that is its most important function.

We live at a time when everyone is filled with growing concern about the divisive elements in our society, and the national health service, along with the feeling that people have for it as a collaborative organisation, is one of the few exceptions to that. The health service does not just bind the wounds of people in this country, but helps to bind us together. That, I believe, is why it is so dangerous that the Government are going against its basic principles, thus risking not only its performance, but its relationship with us and its binding function in our increasingly divided society.

[John Pugh (Southport) (LD)]

I wish to speak to my amendments 1219 and 1220, and against amendment 10. The House is right to be sceptical about the blessings of the internal market in health. It is right to be worried about price competition, which everyone thinks is a race to the bottom. It is right to be concerned about the reckless extension of “any willing provider”, and it is correct in fearing that health services will be increasingly exposed to competition law, including EU competition law. It should fear the huge transactional costs that will be incurred in the hardening of the commissioner-provider split. It should fear the threat to integration, and it should fear cherry-picking, particularly in a narrow tariff system based on payment by results. It should also fear the blurring of the difference between public and private hospitals, and the financial incentives given to the private sector under the banner of choice.

That is why I dislike the greater part of what Tony Blair did to the NHS. Those who are now Opposition Members voted for all that, and that is where we are now: it is the default position. As one Opposition Member said, Labour has put all the bricks in place. A few moments ago we witnessed the strange anomaly of the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) complaining about a feature of foundation trusts—their ability to borrow on the private market—which I consider to be a direct consequence of Labour legislation.

The choice for the House is not between Aneurin Bevan’s NHS and the Bill, but between Blair’s NHS and Secretary of State’s version. If I were to sum it up neatly, I would say that the Secretary of State’s version most closely resembled Blairism with clearer and more equitable rules. First, there is an overt sector regulator instead of the powerful covert regulating body, the Co-operation and Competition Panel, which has been making all the decisions that Monitor will make in a more overt way. Secondly, there is the outlawing of subsidy to the private sector, which is perfectly possible: the Secretary of State is not minded to take such action at present, but current legislation does not prohibit him from doing so. Thirdly, as Members must acknowledge, the Bill makes a clear attempt to forfend cherry-picking and protect clinical networks by safeguarding integrated provision. It is possible to have an argument about how well that is done, but there is certainly an explicit intention to do it—as, to be fair, there was in some of the activities of the CCP, although in that instance the constraints were somewhat weaker.

Fourthly, since the pause a clear attempt has been made to ensure that Monitor merely regulates, without performing a strategic role in promoting much except the interests of patients. It functions as a regulator and adjudicator on what it is intended to do, rather than occupying an unaccountable strategic role in promoting competition. Clearly much will depend on the mandate that it continues to be given and on its personnel: that will vary over time, and we should be watchful in that regard.

I recently had the benefit—as I think other Members have, too—of the legal advice of 38 Degrees, which is in danger of rapidly becoming the provisional wing of the “Evan Harris organisation.” I carefully read what Mr Roderick said, and I would like to share the details of his comments with the House. He says:

“contracting out services to the private sector is anything but a novel proposition in the NHS”

and

“the government has for some years rolled out the policy of Any Qualified Provider”.

Presumably, that is a reference to the previous Government, not the current one.

Mr Roderick also says:

“the application of procurement law is not by any means new to the NHS”.

Referring again to Labour party principles, he says:

“the current internal Principles and Rules for Cooperation and Competition”—

which were set up by Labour—

“seek to inject…promotion of choice and competition principles into the operation of the NHS”.

On the thorny subject of the definition of “undertaking”, which we debated ad nauseam in Committee, he has this to say:

“The NHS has already developed a structure whereby it is more likely than not that NHS Trusts are undertakings for the purposes of competition”.

Mr Roderick is often cited by Labour Members as representing independent legal advice, but that is what he says. He concludes by saying that Labour’s

“recent reforms…have done much to alter”

the basic

“landscape, even in the absence of legislative change.”

As we have both commissioning and a mixed economy—people are not saying that we ought not to have such an economy—there is a chance that there will be challenges from disappointed providers, and we must try to understand how that would go. In terms of EU law it does not matter how many providers there are out there, as even one will do, and it does not even have to be in the UK. The law can be applied in such circumstances. If these issues are to be taken up by providers who are disappointed in one context or another, it is better for that to be handled by a sector regulator such as Monitor than by the Office of Fair Trading, which would be the default situation.

[Diana Johnson (Kingston upon Hull North) (Lab)]

I have been listening carefully to the hon. Gentleman’s contribution. He has been talking a lot about Labour party principles—but I wondered about Liberal Democrat principles, and whether he feels completely relaxed about the opening up of the NHS to privatisation.

[John Pugh]

Perhaps the hon. Lady has not understood the point that I was making. Her own Government were responsible for the opening up that she talks about and fears, and most Labour Members voted for it. I did not vote for foundation trusts, nor did many of my party colleagues. Clearly Labour Members did, however, and we will return to that.

It is a fair point to say that if we have Monitor, that does not take us out of the whole legal web, as it cannot stop other legal processes, or a disappointed provider going further. However, it dramatically lessens the impact, and dramatically reduces the probability of that happening. We can only escape this legal web effectively if we take Mr Roderick’s advice and re-examine each and every element and characteristic of the NHS structure—or, to put it simply, if we reverse Blairism.

--- Later in debate ---

[John Pugh]

Is there not a big difference between making fundamental decisions, as we accept Monitor will sometimes have to do, and what the hon. Lady has just described, which is about taking the lead in the integration and sourcing out of services, which presumably is what the commissioners do? If she has read the other bits of the Bill, as I am sure she has thoroughly, she will be aware that the commissioners have a pivotal role in determining the shape, structure and character of local services.

[Liz Kendall]

I should add that, as the hon. Gentleman will see, page 6 of the briefing notes that the Government published on the Bill says that clause 104 would

“give Monitor discretion in determining where it is appropriate to include standard licence conditions for the purposes of securing continuity of services”.

As the NHS Confederation asks, how will Monitor have the local information and intelligence to make such complex judgments? How should patients and the public be involved? Monitor then has to keep the level of risk of the service under review, as well as taking decisions about whether and how to set differential prices for providers, to ensure the continuity of the process. How it is supposed to do that and how Members of this House, patients, the public or local councils are meant to hold it to account for that process is far from clear.

My biggest concern about the proposals is that they leave Monitor to intervene proactively to prevent services from reaching the point of failure. None of us wants such an outcome, but it is completely unclear when or how Monitor would do that. Page 10 of the technical annexe to the proposals said that the Government would

“expect Monitor to establish transparent and objective tests to determine when intervention is necessary and what level of support a provider would require”,

and claims that

“This would provide certainty to patients and providers”.

However, we have seen none of those details, and nor do we have any way of changing or influencing what Monitor does about the process, which is a real issue for hon. Members. Even under this Government’s flawed approach, it is astonishing that they say that they would only “expect” Monitor to publish criteria for early intervention. Why is that not in the legislation? Why is Monitor not required to publish and widely consult?

I want briefly to set out a couple of other concerns about the process. If it ends up not being possible to prevent a service from failing, what happens next? A trust special administrator will be appointed to take control of the hospital and report to Monitor and then to the Secretary of State. However, there is nothing in the legislation to say that local clinicians, let alone locally elected representatives, have to agree or sign off such proposals. Indeed, page 15 of the technical annexe says that “where possible”, the trust special administrator should

“secure agreement from clinical senates and clinical advisers”.

The idea is that clinicians would not be required to sign off the decision—the trust special administrator might also consult the health and wellbeing board, for example—about which I know many Government and Opposition Members have been concerned. There is nothing in the proposals to say that Monitor has to look at the impact of decisions in one part of a hospital or service on either the rest of the hospital or the wider health community. With the abolition of strategic health authorities, which take that regional view, that becomes a real concern.

The reason these proposals are so important is that there is a risk that there will be more failing services in future, and not only because of the financial squeeze that the NHS is facing—many hon. Members have talked about the real issue out there, which is that services are struggling to keep going, experiencing problems in balancing books and keeping on NHS staff—but as a direct result of Government policy to drive a full market into every part of the service, albeit without any ability to manage the consequences. In fact, the Government’s own documents make it clear that that is the point of competition. Paragraph B112 of the explanatory notes to the Bill states:

“For competition to work effectively, less effective providers must be able to…exit the market entirely”.

The Secretary of State likes to try to explain his way out of this system, but he cannot have it both ways. Either he wants that—for services to fail and new providers to be brought into the system—or he does not.

--- Later in debate ---

[Caroline Lucas]

New clauses 19 and 22 also have my name on them, and I should like to say a few more words in support of them as I have not been reassured by the Minister. I find it unacceptable that taxpayers’ money has ever been used to allow private patients to jump the queue and use NHS facilities. The history of the cap was all very interesting, but the bottom line is that it serves an important purpose, which is why it should stay. The Government argue that income from private patients is put back into the NHS and ultimately benefits the health service, but the reality is that when people become ill and need treatment, it is hard to justify asking them to wait longer because capacity in our NHS hospitals is being taken up by private patients. The bottom line is that an NHS hospital has to treat NHS patients, and I do not believe that we have adequate spare capacity sloshing about in the system to justify private queue-jumping.

Some Members will recall that foundation trusts were brought in after Alan Milburn visited the state-owned but privately run Fundación hospital in Madrid. The then Health Secretary was apparently impressed when he was told that the foundation hospital outperformed the Government-controlled hospitals. However, he ignored the argument put forward by the local unions that it was able to do so precisely because the more costly and difficult patients were sent to the fully public hospital nearby.

It is often argued that foundation trusts are about choice, but I would argue that such private treatment should be offered only when there is surplus provision in the system. It is one thing to talk about a choice of general goods and services, but it is enormously inefficient and massively costly to apply that mentality to the health service. Now, we see the present Government trying to use the model introduced by the previous one to allow foundation trusts to do as they please, and lifting the cap on the income that can be derived from private sources.

The hundreds of constituents who are contacting me about this do not want private queue-jumping; they want NHS services paid for from taxation. The future of the NHS should be about developing whole systems, not isolated institutions, and private health care in the NHS should be phased out. The NHS needs to be about building networks across professional and institutional boundaries, not about creating new barriers. It needs to be about IT and information sharing, not reducing connectivity, and about getting more people treated in the community and in primary care. The danger with this Bill is that it will do exactly the opposite and return us to the fragmentation of the time before the NHS.

[John Pugh]

I supported the amendment tabled by the hon. Member for Islington South and Finsbury (Emily Thornberry)—or, rather, I tabled it independently. I accepted at the time that it was not the most elegant way of dealing with the problem, but I recognise that there is a problem, as do foundation trusts. The cap as it stands has certain perverse consequences, and the NHS cannot fully profit from sources such as intellectual property. NHS profits help to subsidise public services. As the Minister has pointed out, there is no cap on non-foundation trusts, and the current format was to some extent a political compromise because Labour Members raised certain considerations during the passage of the legislation on foundation hospitals. That does not mean that their concerns were not valid at the time.

I am not concerned by the prospect of dramatic privatisation overnight; nor do I think that queue-jumping is the real danger. By abolishing the cap altogether, however, we run the risk that foundation trusts will run on the wrong side of state aid rules, and that their activity will be perceived as economic activity under EU competition law. The more they subsidise general NHS services, the more they will be perceived as engaging in economic activity.

I do not take a doctrinaire view on this issue. Very sensible people, such as Steve Field and the NHS Confederation, have raised the matter. The hon. Member for Leicester West (Liz Kendall) raised it, as did, if I recall correctly, the hon. Member for Islington South and Finsbury in a spirit of compromise in Committee, making the point—I think I am quoting her correctly—that the only alternative to a bad cap is not no cap at all.

There is a genuine fear, however, among people who are far more expert than most hon. Members in this field, which is caused by the blurring of the boundaries between public and private hospitals. We could end up theoretically with a private hospital that has 90% of its patients provided by the NHS. I know we cannot end up with an NHS hospital filled by 90% of private patients, but there is a threshold at which things could quite easily start to become complicated. This a critical issue, which will have to be dealt with in the House of Lords.

[Emily Thornberry]

The hon. Gentleman has quoted me, so let me clarify that I was quoting the Deputy Prime Minister when I said that the only alternative to a bad Bill was not no Bill at all. I was talking about a Bill as opposed to a cap.

[John Pugh]

I may not have paraphrased the hon. Lady correctly, but I believe that the sentiments I described were expressed by her in discussions of a particular amendment on this subject, but we can go and look at the Committee proceedings to find out whether I am right.

It seems to me that what has happened on this occasion is that the Secretary of State has rehearsed the arguments that we have already heard in Committee. That does not advance things massively. He has supplemented that by saying that better efforts should be made to explain how the cap operates by the foundation trusts themselves, which will be more accountable, as I think he said, to the governing body of the foundation trust. That is an explanation and good explanation is to be desired. The point is, however, that expert opinion—independent of this House— perceives this to be a problem, but it has not been addressed.

[Chris Leslie]

I intended to make only a short intervention, but given the Minister’s cap on interventions, I decided that I needed to find a brief opportunity to say that removing the private patient cap is the wrong thing to do. The Minister’s basic argument— “I do not think I’m wrong”—really does not cut it. Removing the cap will remove an incentive for reducing waiting lists. The two issues of waiting lists and waiting times and the degree of private business within the NHS cannot be separated: they go hand in hand.

In a sense, a bit of ancient history is required, because it is important to note that the previous Labour Administration reduced waiting times so much that many of the private health insurers were, frankly, complaining. Long waiting lists matter because they are also the lifeblood of the private medical industry. We need only look at the advertising slogans of many private medical insurers to see how they try to entice people with promises of “speedy service” and “getting your health situation sorted out quickly”. This, however, can happen in the context of NHS hospitals.

What we must do is ensure that we put the needs of NHS patients first. My worry about removing the private patient cap is that it changes the incentives relating to how the foundation trusts will work, putting revenue generation ahead of patient treatment. The allure of revenue will, of course, be there, but keeping waiting lists high is, in a sense, part of ensuring that revenue continues to come in. I want to see trusts focused absolutely and completely on reducing waiting times. That is incredibly important.

It has been interesting to hear some of the important points raised by some Government Members—and not just about state aid rules. To me, however, the issue of waiting times and, particularly, this Administration’s watering down of the targets set for them and the issue of removing the patient cap are two sides of the same coin. It is all about driving people to go in a direction that they often do not want to go. People might have some savings and feel they have no choice but to use them for private provision because of the fear of long waiting lists in future. That might be the only way people feel that they can get treated quickly. It is all part of the design to change the whole fabric and nature of the NHS. That is the wrong direction in which to head, and I hope that we can retain the private patient cap.

Hospital Finances

John Pugh Excerpts

Tuesday 19th July 2011 Westminster Hall

[John Pugh (Southport) (LD)]

I could not help thinking on my way here, as I passed the scrum of photographers and reporters, “There are an awful lot of people. They can’t all be coming for the debate on hospital finances, however important it might be.” I apologise in advance to the Members present, who I know debated such themes extensively in the Committee that considered the Health and Social Care Bill. I can only say that I did not anticipate that today would turn out as it has. I wanted to flag up an important issue that I think will dominate next year’s headlines and to put some of my thoughts and concerns on record. I will not suggest that we could all go off quietly, have a cup of tea and discuss it in a genteel way, but if the Minister and the Opposition spokesman give adequate responses, we might curtail this debate before an hour and a half.

When I arrived in this place in 2001, one of the first people whom I met was another new MP, Dr Richard Taylor, a distinguished Member who had just won the Wyre Forest constituency somewhat unexpectedly. David Lock, an unfortunate colleague of yours, Mr Betts, had lost half his votes in the election simply by virtue of his stance on hospital reconfiguration. Since then, an axiom in this place has gone something like this: “If you back hospital changes and any sort of configuration, you lose; if you oppose hospital changes and any sort of configuration, you ordinarily win.” I certainly sat through many debates, somewhat better attended than this, on hospital configuration in many parts of England when I was part of the Liberal Democrat health team, and generally speaking, that has been the invariable subtext to the debate.

Offstage, away from the Commons arena, many groups were set up during the previous Parliament to defend their local hospitals in a variety of ways. An all-party group was set up on community hospitals, and another, of which I was a founding member, was set up on small hospitals. It is recognised that reconfiguration and change in the acute sector is ordinarily political dynamite. Understandably, this and previous Governments have wanted to keep the issue at arm’s length.

One way to do so is to suggest that it is all a matter of local decision making, although somehow it always comes back to the Secretary of State’s desk. Another way is to refer such matters to a reconfiguration panel, a device set up expressly to keep things off the Secretary of State’s desk. A third way is to claim that whatever change is in the offing is the result of extensive work by consultants—McKinsey is often involved. I have never found them particularly helpful myself, as ordinarily they suggest that hospitals solve their financial problems by simply doing less, meaning closing wards and so on. However the technique favoured by most Governments hitherto has been deferral: putting off the agony in the expectation that some other Secretary of State will have to pick up the ball and run with it. The current Secretary of State is a veteran of many hospital configuration debates, having been a health spokesman for his party for a long time.

That is the background to the issue. However, I suggest that the landscape is changing dramatically. First, there is a widely accepted view that more services should be delivered in the community, and, presumably, that fewer services should be delivered in the acute hospital sector. Many of the effects of the “any willing provider” policy and patient choice are already working their way through the system, leading to an increase in the deficit on the acute hospital side. Since the 2010 Budget, there is clearly a need across the health sector to find substantial savings, amounting in national terms to £20 billion.

Added to that is the chronic effect of private finance initiatives, which appear to be crippling many in the hospital sector. An investigation conducted by The Daily Telegraph found, for example, that one fifth of hospital trusts with active PFIs have closed casualty departments, while during the same period only 4% of hospitals without PFIs closed or proposed to close casualty departments. We can clearly see from the cases of some individual hospitals—I shall not name them here—that severe problems have been brought about chiefly, if not exclusively, by long-standing PFI debts. The Daily Telegraph investigation—we do not need to believe The Daily Telegraph, but this is what it says—found that

“Some PFI hospitals—built and run by private firms and effectively rented back to the state—will end up costing taxpayers more than 10 times their capital value.”

Much of that cost, of course, is picked up by the acute sector.

In addition, constant deferral has sometimes made problems more acute, which is particularly true in London. Further grief is generated, to some extent, by adjustments, not uninfluenced by the Department of Health, to the tariff for many acute services. Not long ago, primary care trusts were strapped for cash and acute hospitals were okay; to some extent, intervention in the tariff has changed that, and the acute sector could do absolutely nothing except remonstrate.

Some trusts are in serious trouble, and their problems cannot be eternally deferred. The problems of the South London Healthcare NHS Trust, for example, are critical. The other day—I am sure that the Minister will be familiar with this issue—I picked up a brochure distributed around Merseyside saying, “Save Whiston and St Helens hospital”. He might be surprised to know that it says that

“local politicians have been informed by Ministers in the Department of Health that plans are in place to privatise”

Whiston and St Helens hospitals.

[The Minister of State, Department of Health (Mr Simon Burns)]

As the hon. Gentleman is not an MP for that area, I will explain a bit of the background. One or two hon. Members are scaremongering among the local population. Despite repeated assurances from me and others, they will not accept that there is no intention, in any shape or form, to privatise Whiston or any other hospital.

[John Pugh]

To be fair to the Minister, I was using that case as an illustration not of what is afoot but of how such things become inflamed and distorted and how emotion tends to dominate, rather than facts.

[Mr Burns]

I certainly accept that, but will he join me in saying that hon. Members have a responsibility to be accurate about the true situation? Some hon. Members are prepared to put grubby party politics ahead of accuracy in their public accusations.

--- Later in debate ---

[John Pugh]

I was handed this leaflet during a meeting on Sunday in Southport. A number of inaccuracies were expressed within the room, but I do not know how they were generated or who is chiefly responsible.

[Owen Smith (Pontypridd) (Lab)]

Does the hon. Gentleman also agree that the Minister could clear up today any uncertainty on the question whether failing trusts might be dealt with by privatising or franchising through privatisation? The Minister could tell us what Matthew Kershaw at the Department of Health meant the other day when he told the Health Service Journal that private franchises might be one way to consider dealing with failing trusts.

[John Pugh]

I am sure that the hon. Gentleman can ask his own questions when the time comes. The point that I am making, which could be made about several hospitals, is that financial trouble is not necessarily coupled with clinical trouble, as it is in the case of the hospital that I am discussing. Sometimes they go hand in hand, but in this particular case there is a clear pattern of good clinical delivery, which we all want to see sustained. However, most of us know, even if we do not want to name individual hospitals, that about 20 hospitals—17, 18 or 19 of them—will not be in good shape for foundation trust status, largely because of the financial problems that they currently face.

The issue is how we address these problems without the kind of collateral political damage that we saw in Kidderminster. The solution is not obvious. Mergers between different trusts do not always work well. Nigel Edwards, the previous chief executive of the NHS Confederation, said that no merger has ever done the trick of resolving the problem—not by itself anyway. Neither is it possible to do things and get away with it by shepherding other NHS custom in the direction of those hospitals that are financially challenged. I believe that that is the concern of hon. Members in Warrington apropos what may happen at Whiston. If the facility is PFI and expensive, there is an argument that that will be the one that is maintained. Indeed, the previous Government were accused of doing precisely that in connection with Burnley hospital, where Blackburn was the more expensive proposition in capital terms. I do not think that that is the way to do it.

I do not think we can go back to what used to be called brokerage, whereby basically some hospitals do well, some do badly and the strategic health authority comes along at the end of the year and masks the whole procedure by handing out money. That is a discredited tool that has long been dropped. Plenty of loans are available, however, which hospitals are sitting on and which they have to repay. A few years ago, under the previous Government, if a deficit was incurred, an equivalent amount was taken off the following year’s allowance, but, happily, that scenario no longer exists. This is not a situation in which immediate and obvious solutions exist.

To some extent, the modern view of the NHS—namely, that we need to encourage private autonomy to allow the strong to merge with or to acquire the weak, or to allow the weak to simply fail via a variety of different market adjustments—has some appreciable weaknesses, which I would like to discuss. If we let a hospital’s culture or ecology sort itself out as best it can in any particular area, we may find that at some point in time there will be a conflict with the Secretary of State’s duty to secure a comprehensive health service, because how it turns out might not actually do that. In crude terms, there are many situations in which we would take the view that we cannot let an acute hospital or a district general hospital fail.

The problem, however, persists and our failure as politicians to address it in a mature, sensible way has been subject to a fair amount of criticism. I refer hon. Members to an article in The Times initiated by comments made by Dr Peter Carter of the Royal College of Nursing, who said:

“In our metropolitan areas we have far too many acute hospitals. That’s a drain on the system and it has got to change”.

Dr Carter, of course, represents the nurses. He went on:

“People are going to have to be brave to make these decisions. Some of those hospitals that we have known and loved, and which were performing appropriately in their day, are no longer appropriate.”

In the same article in The Times on 17 June, Chris Ham from the King’s Fund—we know him well—said:

“For too long politicians have not been willing to show the leadership that the health service needs.”

That is a kind of allegation of almost wilful political inertia, which in the view of those experts seems to be compounding the problem.

Politicians are subject to a twofold accusation. The first is of being inert, cowardly and fearful, and the other is that they agree to certain things in private, but take a completely different stance in public. Under the previous Government, we saw the spectacle of one Minister proposing and supporting radical upheaval in the NHS, while another, the right hon. Member for Salford and Eccles (Hazel Blears), opposed it. Similar points are made by many think-tanks, which do not need to get their hands dirty with the business of reconfiguration.

[Owen Smith]

In a similar vein, does the hon. Gentleman agree that, before the last election, it was less than helpful to see the current Secretary of State standing outside various hospitals with a placard protesting that they would not close on his watch?

[John Pugh]

I have direct experience of the Secretary of State coming to my constituency to support his own party’s candidate and taking the same stance as me on the local configuration issue. He has ample experience of that. To be fair, the Secretary of State has told me that doctors are not necessarily completely blameless. Apparently, some doctors say privately that certain things need to be done, but they are not prepared to attend public meetings to say so, which is understandable. Certainly, some people in the clinical community will propose a reconfiguration, while others will oppose it—often citing differing clinical evidence.

To pull things together, the reality is that this is a tricky problem and solving it by central diktat or dirigisme is attractive only to think-tanks, never to politicians or people who have to work in real time in the NHS. It is probably also insufficient to simply set tests or parameters and let the thing unfold, if we want to end up with a comprehensive service in all areas. The Government are never quite out of the equation, however much they might wish to exit and leave it to the health economy to sort itself out. They are not a bit player in any sense. Hitherto, but maybe not henceforward, they have influenced the tariff, which has an immediate effect on the viability of hospitals. They have subsidised acute sector competition and opened access to alternative providers, all of which impact directly on the acute sector.

More importantly, the Government’s drive—this is accepted as the drive of not only this Government, but the previous Government—to make NHS providers autonomous has reduced opportunities to cut costs across the whole acute sector. I will give three straightforward examples. A lot of NHS property is essentially dormant and not needed at present, and companies would manage it to better revenue and capital effect on the budget. These companies, however, deal in property portfolios, not in isolated plots of land held by an individual hospital. Properly managing the dormant and surplus estates of the NHS is an extraordinarily good way of benefiting the acute sector, but it is difficult to progress when the acute sector is divided into specific, autonomous and relatively small units.

Similarly, we would all regard savings in procurement in the acute sector as relatively painless. If we can, it would be far easier to make savings in procurement rather than in staffing or in actual services, which are more painful to progress.

The recent National Audit Office report established that the autonomy that hospitals individually possess militates to some extent against them making some of the savings that we clearly would wish them to find. I shall read briefly a couple of sections from the NAO report:

“The local control of procurement decisions and budgets in the NHS contrasts with the direction that is being taken for central government procurement.”

It points out that Sir Philip Green has saved appreciable amounts of money across central Government by achieving large-scale efficiencies in procurement. The report goes on to state that

“this approach does not apply to the NHS which operates as a discrete sector, increasingly driven by a regulated market approach, in which the government does not control providers such as hospital trusts. Central government, by contrast, operates as a single body of departments where consistent and collaborative procurement arrangements can be pursued.”

If we read the report and analyse the net effect of that, we realise that NHS hospital trusts pay widely varying prices for the same thing. The NAO report gives examples of hugely different procurement exercises that have resulted in very strange outcomes. It states that

“the 61 trusts in our dataset issued more than 1,000 orders each per year for A4 paper alone.”

It points out that procuring on a scale greater than individual trusts will have benefits. I know that there are procurement hubs and so on, but essentially, as the NAO analyses the problem, it thinks that the current NHS structure means that we are missing out on across-the-board savings within the acute sector. It concludes by saying:

“We estimate that if hospital trusts were to amalgamate small, ad-hoc orders into larger, less frequent ones, rationalise and standardise product choices and strike committed volume deals across multiple trusts, they could make overall savings of at least £500 million, around 10 per cent of the total NHS consumables expenditure”.

[Owen Smith]

Does the hon. Gentleman agree that having listened to or sat through, as I did, 40-odd sittings on the Health and Social Care Bill, it is precisely such fragmentation that we are worried will get worse and will be compounded by the Bill’s measures? Is he concerned that the sort of centrally planned savings that he describes as being achieved through procurement will be forgone?

[John Pugh]

The scenario that the NAO and I have described was actually created by the advent of foundation trusts and the architecture put in the place by the previous Government as much as by anything that the Bill might do. The Bill will not substantially worsen the opportunities for savings. However, we might wish to consider the following issue in the context of the Bill. The NAO states:

“Given the scale of the potential savings which the NHS is currently failing to capture, we believe it is important to find effective ways to hold trusts directly to account to Parliament for their procurement practices.”

That is a perfectly valid point. It is not a political point; if anything, it is a housekeeping point.

The NAO has produced another recent report entitled “Managing High Value Equipment in the NHS in England”. We are talking here about things such as MRI scanners that cost millions of pounds. The NAO points out that, in reducing the costs of high-value equipment and maintenance, it is far preferable if the whole exercise is strategically planned, rather than planned within each individual trust. It concludes that

“the planning, procurement, and use of high value equipment is not achieving value for money across all NHS trusts.”

In other words, NHS trusts are looking after themselves, rather than considering whether there is spare capacity in the equipment of a neighbouring trust, simply because they are, by and large, poised in a competitive relationship. Already the drive to secure quality, innovation, productivity and prevention savings and the rationalisation that follows from that is being hampered—if not blocked—by a degree of obduracy from the foundation trusts, who are looking after themselves rather than the whole health economy. The drive to secure such savings is also being hampered to some extent by the need to satisfy competition requirements, which I should say, in case the hon. Member for Pontypridd (Owen Smith) is going to intervene, were already in place.

I have given the example of Merseyside where centralising pathology, which is a wholly sensible thing to do, has had to get over the hurdle of impressing the co-operation and collaboration panel. It was apparently satisfied when it discovered that pathology could be obtained in Wigan. That was enough competition and was okay. However, the fact that those involved had to get over that hurdle delayed the savings and some of their impact. I pause for a second to ask hon. Members to speculate about something. If Marks & Spencer behaved in exactly the same way with regard to all its separate stores, we would consider that to be an imbecilic business practice. There is no reason why we should not query it when we see it within the NHS.

[Owen Smith]

I have a great deal of respect for the hon. Gentleman, but does he not agree that it is slightly ironic that he should be making this argument now, given that Opposition Members consistently argued throughout the passage of the Health and Social Care Bill that the sort of fragmentation he is talking about will get worse once we get rid of all strategic planning at a regional and national level? If we get rid of strategic health authorities and primary care trusts, that will be a major problem and will compound the issues he is talking about.

[John Pugh]

I am not wholly convinced that we will get rid of that level of planning. Instead, it will go through another avatar or incarnation and reappear as a subset of the national commissioning board’s activities. That organisation is rapidly developing regional tentacles, some of which look very similar to parts of the strategic health authorities. Yes, there is the need for some strategic look at how savings are to be achieved if we are going to make savings across the acute sectors; otherwise, we are missing some very soft savings in times of severe financial restraint. It is not me saying that; it is those people who have looked at the matter in the greatest depth—in this case, the NAO.

However, one cannot roll back the clock; we are where we are. I suspect that there will be a fair amount of merging among trusts so, perhaps with the evolution of super-trusts, we will get real economies of scale. The key question I ask and the reason behind this debate is: what can the Government actually do to manage this process of change, given that all the financial information coming our way now and next year will illustrate that there will be change and that significant problems need to be addressed in London and other parts of the country? The way I see it is this. There is a yawning gap between what the public would like to see and what hospital administrators consider to be financially expedient or workable, and what doctors see as clinically desirable. There is sometimes a tendency to confound the two. I have seen many cases for change based on financial expediency that are represented as cases about promoting a clinically desirable framework. That has always created a degree of cynicism on the part of the public, who see the money rather than the clinical needs of the services driving change.

Financial expediency and clinical desirability are different. None the less, they are both forces that we can do nothing specific about as they stand. Those forces are driving change even though the public, particularly in London, are probably reluctant to accommodate that. One very bad way of resolving such a dilemma—and it will be a difficult dilemma for whoever has to deal with it—is simply to do the politically expedient thing and work out which option loses fewest votes. That does not necessarily produce anything like a desirable situation and it creates a lot of bitterness, particularly if political leverage is used to benefit candidates of one or another party, however tempting that may be.

To make a positive suggestion for a way forward, I accept that this is a very difficult environment, and one that is only going to get more difficult, but I would like to draw attention to what I have picked up in most of the debates I have had, in this Chamber and elsewhere, on reconfiguration, often in parts of the world that I was not directly informed about. In those debates—I remember a well-attended debate, with many Conservative hon. Members, about reconfiguration in the Watford area—the fundamental issue that crops up time and again is access. People spend far more time talking about the way to the service than about the shape of the service—far more time talking about traffic than about clinical processes. We have to draw a lesson from that.

It seems fairly straightforward that people who have serious life-threatening diseases have one primary consideration, which is to get the best conceivable service they can to save their life. Recognising that, they will go to where that best service is. For example, in my constituency of Southport people who contract cancer often have to travel to Clatterbridge hospital in the Wirral for some of the specialist cancer services that are not available in Southport. Although they would rather have those services on the doorstep, they would sooner have the best conceivable service. On the other hand, asking people who are travelling for very complex, life-critical services to also travel in order to get triage should they have some mishap, or to travel if they want to do something very ordinary like give birth to a baby, or if they want to attend a clinic, or if they want to get their chronic condition attended to or assessed, or if they want some sort of initial diagnosis of their symptoms, or if they want a routine stay in hospital, then to suggest that they should not go local, that they should travel further, creates uproar. Frankly, if they are asked to travel further than other people and prolong an anxious journey, or encounter some tortuous route, that will enrage them significantly.

A lot of debates about hospital reconfiguration in this place have been about the fears of one community about the basic, simple services for which they will unfairly be made to travel further than other people—fears that, in a sense, they have been rejected and that some other community has been selected to have services on its doorstep. The tendency of many people in the health service is to think that that is an issue, but not a health issue—the Department of Health does not do highways.

I can give a classic example of that in my constituency. There are two hospitals in my local trust—one in Southport and one in Ormskirk. The services were configured, I think largely for political reasons, in a rather strange pattern. A and E for adults is in one hospital, and A and E for children is in another. Theoretically, if there is a car crash with both parents and children involved, they would go off in different directions. That strikes many people as almost perverse. When people in Southport, complain very vocally and emphatically, as they still do, about having to traipse over to Ormskirk even for the most minor ailment affecting a child, they have a legitimate grievance. I have to say that that appeared to be a grievance that was shared by the Secretary of State. When he was campaigning for the Conservative candidate in my constituency, he agreed with me on precisely that point. If one reads the fine print of the Shields report, which did that configuration, one finds a very short sentence saying, in effect, “this is a fine configuration which I, Professor Shields, medical man, wish to stand by.” He treats the weakness—that there is a long and tortuous road between the two communities—as though that really was outwith the particular suggestions that were being made.

I recall similar issues with regard to the debate that we had about hospitals in the Watford area. People said that the configuration had not recognised the fact, unbeknownst to the health authorities, that it may have been possible to get from one part of the community to another at 10 o’clock or mid-afternoon, but not at peak time. That would not work or be satisfactory for the people who would have to negotiate dense traffic and no direct road. I looked at the Secretary of State’s four tests for acceptable configuration. They show progress in the right direction, but the one thing that they did not mention was physical access and time taken in access to health services.

In conclusion, I would like to make a positive suggestion. When we think about configuration, we need to lay down access standards that offer some kind of basis of what people can rationally, reasonably expect: to test proposals coming forward against access standards; to ensure that access is, as far as we can get it, fair for all; to have goals for access that allow for variations in people’s condition, whether life-critical or standard; to allow to some extent for differences in rural and urban environments; and to allow even for factors such as population density. People in London would be flattered, to some extent, by the picture they see of access arrangements in London. They probably feel that they are not as good as they might be, but in comparison with rural environments they are markedly different.

If the Department of Health could take access seriously, then the huge political problems that are on the horizon, and not very far on the horizon, can be resolved in a less politically contentious way. We could then convince people that some of the reconfiguration that may have to be done is fair, if not welcome. Until we do that, we are going to get into precisely the same territory as Dr Taylor and David Lock in Kidderminster. It is the failure on the part of the NHS, I guess, to talk to the department of highways and the Department for Transport effectively. It is a failure to take into account what it means for the ordinary patient, and how it looks from the ordinary patient’s point of view, that really makes these difficult issues absolutely explosive.

--- Later in debate ---

[Owen Smith]

I am not sure that I am the most celebrated politician being asked to apologise today. I do not need to apologise and do not feel that I am holed below the Plimsoll line, because clearly a very different future scenario is being painted as a result of the changes that the Minister and the Government are pushing through in the Bill. Our grave concern is that the local populace, politicians, and, indeed, Parliament, will have far less control over and insight into what different parts of the NHS will be doing after they are afforded that much greater autonomy. Of course, there will also, ultimately, be a far greater ingress of private companies into the NHS at many levels.

[John Pugh]

Does the hon. Gentleman accept that his argument is an argument for all seasons? He can use it whenever he criticises the Government for something and then finds out that his party’s Government have done it; so he has rendered himself undefeatable in argument, but somewhat meaningless.

[Owen Smith]

I would love to be undefeatable in argument, but I am not sure whether that is true. However, I will add one thing before I move on. I did not say—this is the principal reason why I do not need to apologise to the Minister—that the idea of a private company coming in and running an NHS service should never be countenanced. I suggested that in the world envisaged in the Health and Social Care Bill, where there will be a significant increase at many levels in the number of private sector providers in the NHS, there is an immediate local concern, in addition to the far more substantive problems of competition law becoming the norm for organising the NHS and, crucially, dismantling it. The local concern is that there will be less control over a greater proportion of the NHS, once we have more private providers. That clear concern is widely felt across the House and outside it.

The hon. Member for Southport touched on how NHS bureaucracy allows tough decisions to be taken. He talked about politicians not being prepared to take tough decisions, and about the NHS’s own clinicians, bureaucrats and managers being unable to do so. That needs to be recognised, because there are difficulties with an organisation as big, and arguably as unwieldy, as the NHS, with so many different moving parts and so many different agendas in play. However, as to the labyrinthine bureaucracy that the Health and Social Care Bill will create, with the welter of new organisations—the national commissioning board at national and local levels, consortia, senates, clinical networks in addition to the ones that we currently have, health and wellbeing boards, HealthWatch, the Office of Fair Trading and the Competition Commission—it is beyond this simple politician to see how that much more complex architecture will facilitate easier decision making in the NHS about tough reconfigurations. I just cannot see how it will get easier with far more complex architecture.

I thought that the hon. Member for Southport talked interestingly about how, at a more aggregate level, one might imagine better ways to manage what he called the “dormant surplus estate” of the NHS, which is an interesting point. There are ways in which dormant bits of hospitals and dormant land could be better managed. I have grave concerns about the world that I envisage will pertain in several years, if the Bill unfortunately passes, in which different parts of the NHS will have much greater autonomy in making those decisions, and there will be a much greater risk that the motivation behind them will be financial as opposed to clinical. I find it impossible to believe that the likelihood of aggregated strategic decision making in respect of that estate will be improved by allowing the NHS to break up, as I fear it will. The National Audit Office report that the hon. Gentleman prayed in aid was not on precisely that territory, but it pointed to a risk that always attends autonomy—that it results in less strategic decision making, because decisions are made at a more micro level. That risk clearly attended foundation trusts, and it will get worse, not better, under the Bill.

Lastly, the Minister has talked about clinicians sitting at the heart of the decision-making process. Again, I use the analogy of a labyrinth in the NHS; I cannot see how in that new labyrinth clinicians will be at the heart of decision making. It is a labyrinth that would challenge Theseus, let alone the NHS. Those clinicians will be in the maze with many bureaucrats, some of them perhaps rebadged and shifted from primary care trusts and strategic health authorities into consortia, the NCB or the NCB’s regional arms, and some perhaps from BUPA, Assura Medical or one of the other bodies that will no doubt help to manage commissioning for consortia, and, potentially, for acute care.

In reality, the previous Government funded the NHS from a point where it was on its knees. They tripled the funding of the NHS, radically increased capital spending and raised some of the issues that the hon. Member for Southport has mentioned about the private finance initiative—we could have a long debate about that and how we should reconsider some of those capital projects.

--- Later in debate ---

[John Pugh]

The hon. Gentleman is right to say that competition is not a panacea for developing efficiency in all places, but nor was the Darzi prescription, which he has just mentioned and which was written in the same way for everyone throughout the land. My own constituency ended up with a Darzi clinic, which was in the community but actually further away for more people in Southport than the district general hospital—we are now struggling to fill it and to find a use for it. Although I accept that competition is not a universal panacea, there is a problem with top-down prescription.

[Owen Smith]

Darzi was not only about polyclinics—that they were the principal prescription that he came up with is one of the myths. There was a much broader agenda in play which, as I have said, was about integration and pushing more services into primary care, although not necessarily into polyclinics. All I was suggesting was that the Government could legitimately have pointed to that area as a legacy of the previous Government that they could have picked up and run with—one they could have made significant inroads on in the past year. Instead, they have misrepresented the direction of travel as one wholly driven by a belief in market forces, as the ultimate way to get efficiency in the NHS. That is what led to this wasted year.

Finally, I entirely agree that politicians need to be a lot braver about the NHS. Politicians of all stripes need to take difficult decisions about how services must be restructured and reorganised for the 21st century. The way to go about it is not the Government’s method, whereby they abdicate a greater degree of responsibility for the NHS—pushing it, at arm’s length, to the NCB and others, including the private sector. Nor is it wise for the current Government to have come into office with so many hospitals able to parade a photo of the current Secretary of State or local Tory MPs holding placards saying, “We will not allow this service or that hospital to close.” That was not wise, and it might have sown false hope for some hospitals, which I suspect that the Government will come to rue in future.

Reform of Social Care

John Pugh Excerpts

Monday 4th July 2011 Commons Chamber

[Mr Lansley]

The hon. Lady very well illustrates one reason why Andrew Dilnot’s commission is, among its recommendations, looking to eliminate discrimination between residential and domiciliary care services. We should not have a system that tends to provide perverse incentives to go into residential care, or indeed one that prevents that from happening when it is the right thing. However, part of the reason why the Dilnot commission should be seen in its wider context is that we are looking towards innovative and more effective means of supporting people’s independence at home. The Department is now looking towards the evaluation of the telehealth whole system demonstrator pilots, the world’s largest randomised controlled trial of telehealth, which should come in a matter of weeks.

[John Pugh (Southport) (LD)]

Will the Secretary of State acknowledge that it will be easier to get agreement on the principles underlying the proposals than on the mathematics and the cost? Does he agree that only a renewed NHS focus on the chronic diseases of old age will ultimately make the latter bearable?

[Mr Lansley]

My hon. Friend is absolutely right. Although we are looking to ensure that we have a sustainable system of social care and support both for social care and the NHS, the linked priority of our Department and our Government is to improve and increase the effectiveness of our public health services. That is why I was this morning with the Faculty of Public Health to discuss precisely how we can improve health planning at local level, not least with local government, to try to reduce the prospective burden of disease in future.

Health and Social Care Bill (Programme) (No. 2)

John Pugh Excerpts

Tuesday 21st June 2011 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

Last week, we had a political fix on the Government’s health Bill. This week, we have a procedural fix. The way the Government are dealing with the national health service and with the House of Commons is a disgrace. Last week, the Prime Minister was forced to backtrack in some areas to buy off the many critics of his health plans. This week, to head off proper parliamentary scrutiny of his plans, he refuses to put the whole Bill back into Committee.

The changes announced last week to the Prime Minister’s NHS changes are not a proper plan for improving patient care, or for a better or more efficient NHS. Those aims could largely be met without legislation, and certainly without the huge risk and cost of the biggest reorganisation in NHS history. The big quality and efficiency challenges the NHS must meet for the future will be made harder, not easier, by the reorganisation and the announcements last week.

The NHS has seen a wasted year of chaos, confusion and incompetence from the Government. Today, it is clear from the motion that that will continue. The motion signals the onset of sclerosis in the health service. The Bill will mean that the NHS is deeply mired in more centralisation, more complex bureaucracy and more wasted cost in the years to come. There will be five new national quangos and five new local bodies doing the job that one—the primary care trust—does at present.

Today, the motion signals that the essential elements of the Tories’ long-term plan to see the NHS broken up as a national service and set up as a full-scale market are still intact.

[John Pugh (Southport) (LD)]

Regardless of the merits of the Bill, does the right hon. Gentleman accept that what the NHS and the public want is to find out whether the House supports it? They do not want to prolong the agony.

[John Healey]

What the public and patients want is to get to the bottom of the changes the Government said they were bringing in. They want us to do our proper job of scrutinising the detail, and for that we need the time to do so, with the full Bill recommitted to the Public Bill Committee. Even some of the hon. Gentleman’s Lib Dem colleagues are beginning to see through this. Yesterday, the hon. Member for St Ives (Andrew George) wrote that the Government

“leaves many of the previous concerns—about the risk of a marketised NHS, a missed opportunity to better streamline health and social care and a lack of accountability—still unresolved.”

[John Pugh]

But does the right hon. Gentleman accept that those concerns will all be covered in the areas of the Bill to be discussed? Nothing will be left out.

[John Healey]

I do not normally quote the hon. Gentleman’s party leader, but a few weeks ago, the Deputy Prime Minister said:

“It is very important that MPs, who represent millions of patients up and down the country, have the opportunity to really look at the details that we are proposing…I have always said that it is best to take our time to get it right rather than move too fast and risk getting the details wrong.”

The Prime Minister has stopped listening to the Deputy Prime Minister, and that is exactly the mistake the Government are making with the motion.

--- Later in debate ---

[John Pugh (Southport) (LD)]

I will briefly specify three linked reasons, good and bad, why we support the Government’s programme motion. We oppose the Opposition’s amendment to the motion because it would simply lead to unnecessary delay. The Government have identified through the listening exercise, perhaps belatedly, the controversial, difficult and unworkable aspects of the legislation and want to change them. In deference to the people they have consulted, they want to change those aspects promptly and subject them to proper scrutiny, not only in Committee, but in an evidence session that we will also have.

Surprisingly, many areas of the Bill are relatively uncontentious and ought not to detain the House a great deal longer, such as the aspects relating to social work, the health and care professions or the National Institute for Health and Clinical Excellence. Those areas are relatively uncontentious and need not be massively reconsidered. In addition, there is the summer recess, as the right hon. Member for Wentworth and Dearne (John Healey) said, which means that after the Committee has concluded its considerations there will be ample time for him and anyone in the NHS, including all the consultees, to make adequate representations. The Bill will then go to the Lords and return for our further consideration.

[Bill Esterson (Sefton Central) (Lab)]

The hon. Gentleman will have been lobbied by constituents in the same way that I and other Members have been. Does he agree that the public’s real concern is the potential for cherry-picking by private companies, even with the amendments that are being made, and that this approach will be unable to stop such a process?

[John Pugh]

The public are perfectly entitled to an answer on whether the Bill contains cherry-picking or not, but it is better that they have that answer sooner rather than later. There is a second reason—[Interruption.] May I just set my stall out? The second reason why this must be done properly is that the Bill has so far led to uncertainty and the implosion of primary care trusts. Whoever’s fault it is—[Interruption.] People will know that I did not support the original Bill. It has led de facto to the implosion of PCTs and to some irregular adjustments and appointments being made on the hoof—Members can ask their constituents about that—and to some premature arrangements being made.

[Karl Turner (Kingston upon Hull East) (Lab)]

I am obliged to the hon. Gentleman for giving way. How many times did he support my colleagues and I in the Bill Committee?

[Several hon. Members]

None.

[John Pugh]

None is not the correct answer. The issue that Labour Members need to understand is that the NHS, as a result of the Budget that most of them voted for in 2010, needs to find £20 billion, and we cannot do that unless—[Interruption.] If it is a disgrace, it is a disgrace that the Labour party inflicted on us. We cannot do that against a background of complete and utter uncertainty, not knowing who will be running the NHS and having to find those savings. Members can check for themselves, but that is the view of the local people running their hospitals. Regardless of the merits of the legislation, they now want a decision.

[Angela Smith]

Given that the hon. Gentleman voted for the Bill on Second Reading and got that wrong, how can we be confident that he has got it right today?

[John Pugh]

If the hon. Lady checks Hansard, she will find that I did not vote for the Bill on Second Reading––okay?

A third and more consensual reason—I might now withdraw it—is that I can assure the House that, having served on the Bill Committee, it could not find a better or more informed set of individuals who are on the ball. The Opposition drilled down on every clause with laser-like precision. There are some very talented individuals sitting on the Opposition Benches, and there is still that galaxy of informed talent. They might feel, as I do, that it is a little like being sent back to the trenches, but the fact is that if that team cannot win the arguments for either accepting or rejecting these changes in the time allotted, frankly there is no hope for this House. They must approach the matter in the right spirit, although that seems somewhat in doubt. I urge Opposition Members to have confidence in their team, the timetable and the ability of the British public to judge if it all goes horribly wrong, but it will not go horribly wrong simply because of the programme motion.

NHS Future Forum

John Pugh Excerpts

Tuesday 14th June 2011 Commons Chamber

[Mr Lansley]

It is slightly confusing, because the right hon. Gentleman’s right hon. Friend on the Opposition Front Bench, the Member for Wentworth and Dearne (John Healey), was just telling us—erroneously—that we could have done this without legislation anyway, but now the right hon. Gentleman is accusing us of proceeding without legislation. It is not true: we are doing things in the NHS by way of changes that are absolutely essential in any case. I have to tell him and the House that sustaining the structure that we inherited from the Labour party, with all the strategic health authorities and all the primary care trusts—this vast bureaucracy— could never have happened. We had to take out administration costs in the service, and empower clinicians and patients, and we are doing it now regardless of whether the legislation has made progress.

[John Pugh (Southport) (LD)]

I welcome the statement and the change. I have a list here. The Government’s response has satisfied 70% of the demands for change on that list, but it is seemingly not enough—nor can it be enough—because ironically, it is the list of amendments tabled by the Labour party in Committee. Why does the Secretary of State think that it is so hard to build consensus? Given that in many cases the amendments are ones that Labour has asked for, why is the Labour party being so pointlessly churlish?

[Mr Lansley]

I am grateful to my hon. Friend. There are many things that are beyond many of us to understand. One of them is the Labour party and the way it approaches policy. As he and the House will know, the fact is that the Labour party has no policy; it simply had opposition for opposition’s sake.

Information Technology (NHS)

John Pugh Excerpts

Tuesday 14th June 2011 Westminster Hall

[John Pugh (Southport) (LD)]

I congratulate the hon. Member for South Norfolk (Mr Bacon) on securing the debate. In this field, he is very expert, persistent and learned, and I believe that he is writing a book on the subject—I shall give him a plug because he is too modest to do it himself. We have both followed the debate for a fairly long time. We have had Commons debates and there have been PAC sessions on the subject. We have attended meetings with Mr Granger and been to numerous conferences. We have even sat in Richmond house and watched the Lorenzo system work—it proved to be a little more difficult to get it to work in a hospital in real time, but none the less it looked good when we saw it.

I do not want to sketch out the sorry history, as the hon. Member for South Norfolk has done so most lucidly. Everybody in the Chamber realises that it was a procurement disaster, and a project management disaster. It did all the things that are not supposed to be done, such as failing to shift risk to the private sector, failing to be clear about the actual benefits, failing to involve practitioners and stakeholders, and failing to control costs. It was a bright idea, but it was not realistically assessed and ultimately had to be scaled back.

Much of it, as the hon. Gentleman said, might have happened anyway. The good side of it, if I can so describe it—the PACS, e-prescriptions, improved broadband access, telemedicine and so on—might well have happened, and we ought to recognise the fact. However, the project would not have done well in front of Alan Sugar on “The Apprentice”, let alone the Public Accounts Committee. That is history, however, and to some extent we must now consider the present.

We are in unprecedented times of cash restraint, and we have to find £20 billion within the health service over the next few years. I doubt whether we will succeed, but we cannot abandon that target. Twenty or so hospitals will not achieve foundation trust status, and we cannot magic away their PFI debts or ignore the consequences that flow from dodging difficult reconfiguration issues. However, as we roll out Connecting for Health, the cost certainly matters. I believe that some of the costs, particularly those of the patient administration systems, are still being picked up by the ailing hospitals.

It is not easy to see how current health reforms will ease matters, as they will increase the diversity of providers and complicate somewhat the recording of data, as providers do it in different ways. That will add to the potential problems of data sharing and interoperability. Ultimately, we will require some merging of social care and medical records, and the changed landscape will necessitate appreciable changes in the choose and book system. I do not know whether we will be transferring or binning the existing IT programmes of PCTs, but it could be said that what we originally designed is now inappropriate—that NPfIT, an awful pun, no longer fits.

I believe that the Government have done all the sensible things in response to a difficult situation. They have allowed NHS trusts to adapt and develop existing systems. They have emphasised open standards and interoperability, and continue to do so, in order that we can have variety without undue chaos and do not end up being captive to a major supplier. That is the ultimate nightmare, and it was a big fear throughout the process. Indeed, although Granger tried to prevent it, it seems that he could not. The Government have sought to reduce and shave costs through negotiation or by cutting back on specifications. However, there appear to be a few problems with what is otherwise a sensible strategy.

First, I understand that, in these difficult circumstances, some of the key managers of the programme are to be the chief executives of strategic health authorities, but when they have gone I have no idea who will persist with the task and take up the burden. Secondly, savings within the NHS will lead to many of the much-maligned back-office staff going, and I presume that that will include NHS client-side IT people. The loss of client-side expertise will be a big worry, as it will make us even more dependent on the expensive consultants who got us into this mess. I note that McKinsey was pivotal in advising us to go ahead. I note also that, to this day, McKinsey has its feet well under the table in Richmond house, and is advising the Government on a number of problems.

The big problem, however, appears to be that we do not seem able easily to extricate ourselves or to revise contracts. Everyone agrees that that is necessary at the moment. Rather, I should say that we seem unable to do so without making matters worse. We seem doomed to spend another £4.3 billion, yet we need to save a further £20 billion. The fatal breakfast that Mr Blair had with the IT industry in February 2002 has come back to haunt us. Mr Blair might have been worried about his legacy, but it is now a worry for us.

I understand through the grapevine that this was a matter of heated debate at the last meeting of the PAC, which was a rather rumbustious affair. I saw Mr Nicholson shortly after that meeting, and I have to say that his account of events differed slightly from that of some hon. Members, in terms of how satisfactory an occasion he thought it was and how far they had got in their Socratic examination of the flaws. However, it seems that he and we are trapped between a rock and a hard place, and that there is not an easy way out.

The dilemma is not only ours; it is one also for the IT industry. The industry can help us to meet the Nicholson challenge, or it can compound it. It can work ever more closely in areas such as telemedicine and so on, and on how to produce genuine cost savings, including on the implementation of IT; or it can simply go on as before, selling us more kit that we do not need and software that we cannot use. If that is the industry’s choice—it is the industry’s choice as much as ours; we have to throw down the challenge to suppliers—it will face years of adversarial attrition as we try to cut costs, presumably followed by bad feeling and empty order books, and endless fulmination from the hon. Member for South Norfolk, who becomes increasingly frustrated as the drama continues. However, the industry could accept that it is a collective problem.

It is a very big collective problem, because at some point in time it will throw into stark relief what we do with the summary care record, which has less utility than we ever imagined and more complexity than we ever realised.

[Ian Swales (Redcar) (LD)]

As a member of the PAC who was present at the rumbustious meeting to which my hon. Friend referred, I gained the impression that the suppliers were completely unprepared to consider the correct option of considering things differently and trying to be positive. It seemed that they were prepared to protect their positions to the hilt, which is partly why it was a rumbustious sitting. Does my hon. Friend have any advice on how to change the attitude of the suppliers?

[John Pugh]

Given that, uniquely in the UK, many suppliers are dependent on Government contracts in the long term, they have a stark choice between pleasing their shareholders and pleasing their long-term customers. They must recognise that. However, I am not sure how to achieve that while doing anything useful with the summary care record. I suspect that that may be a matter for another debate—and possibly a longer one.

--- Later in debate ---

[Jackie Doyle-Price]

My hon. Friend makes an extremely good point. To be fair, those suppliers have acted extremely honourably with regard to their obligations under the contract. When it became clear that they could not deliver the software under Lorenzo because it was not fit for purpose, they took the honourable action and negotiated their way out. Such behaviour shows a lot about those suppliers. It is increasingly worrying that CSC in particular is finding itself in a monopoly position because it has acquired and strengthened its shareholding in iSOFT. Who we negotiate with in the future is a long-term worry.

I associate myself with the conclusions of my hon. Friend the Member for South Norfolk about when we should take a decision on this project. Is it time for an emperor’s new clothes moment, or are we going to continue throwing good money after bad in a project that is clearly not going to deliver?

[John Pugh]

Is it not enormously hard for parliamentarians to form a judgment on that when we are not party to the actual contractual details? We do not know what cancellation involves for the firm or for the development of the project.

[Jackie Doyle-Price]

That is a good point. I was coming on to say to the Minister that he must examine this matter with considerable rigour before deciding on the right course. The message that we got from the Department was that such contracts are complex, although it was rather unclear just how complex this one was. I urge the Minister to achieve maximum value for money because ultimately this is a lot of money that could have been spent on patient care rather than on delivering this programme.

My final point relates to how these big procurement projects should be managed. We have examined a number of them on the Public Accounts Committee. Too often we find examples of poor project management. Poor leadership is assigned to these projects, which then go on to spend incredibly large amounts of taxpayers’ money.

When Sir David Nicholson appeared before the Committee, he was unable to answer a number of questions that my hon. Friend the Member for South Norfolk put to him even though he has been the senior responsible owner of the project since 2006. Until the machinery of government can put in place good project management disciplines to deliver effective leadership, we will continue to spend a lot of money and to fail to deliver on the intended project. I hope that this is a lesson not just for the Department of Health but for the Government as a whole and especially the Cabinet Office as it looks at how it delivers these projects and puts in place good disciplines, so that this unhappy experience is not repeated.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 7th June 2011 Commons Chamber

[Paul Burstow]

Within the current legal framework established in the Health and Social Care Act 2008, there are requirements on financial viability, but we will undoubtedly want to look at those issues when we come to publish a White Paper on social care reform later this year.

[John Pugh (Southport) (LD)]

Does the Minister agree that to avoid similar issues we need to build consensus throughout the House on the future of social care—and its financial governance?

[Paul Burstow]

I could simply say yes to my hon. Friend, but I agree entirely, and that is why last year we acted quickly to establish an independent commission, led by Andrew Dilnot, to undertake a review of how we fund social care. His report will be coming forward shortly, and I would certainly welcome all necessary discussions to ensure that we deliver effective reform.