NHS Funding (York and North Yorkshire)

Julian Smith Excerpts

Tuesday 18th June 2013 Westminster Hall

[Hugh Bayley (York Central) (Lab)]

Thank you very much, Mr Streeter. At the end of April, the hon. Member for York Outer (Julian Sturdy), who I see in his place, and I met the health overview and scrutiny committee of City of York council to discuss the perilous funding settlement received by Vale of York clinical commissioning group. The meeting was also attended by Patrick Crowley, the chief executive of York teaching hospital NHS foundation trust, who said:

“The NHS system in North Yorkshire and York is on the brink of a crisis”.

At that meeting, the hon. Member for York Outer and I agreed jointly to seek a debate to discuss that crisis in Parliament. In the light of that, I hope, Mr Streeter, that you will allow the hon. Member for York Outer to make his own contribution to the debate. I am also pleased to see that the hon. Member for Selby and Ainsty (Nigel Adams) is present for the debate.

The funding for Vale of York clinical commissioning group has suffered a triple whammy. First, it started from the lowest base in Yorkshire and the Humber, because its predecessor body, the North Yorkshire and York primary care trust, received less money than any other PCT in the region. Secondly, the PCTs’ base funding was not split evenly between the five new clinical commissioning groups in north Yorkshire and York, and Vale of York CCG, which covers the city of York, received the lowest share of the funding. Thirdly, that meagre amount was top-sliced, because the former PCT had overspent its budget in the previous year. I will say a little more about all three issues, after which I will suggest an immediate remedy to the problems and a longer-term solution to the funding crisis.

The baseline funding received by PCTs in Yorkshire and the Humber in 2012-13 varied considerably across the region. North Yorkshire and York PCT received £1,475 per patient; Leeds received £1,550 per patient; Sheffield received £1,700 per patient; Wakefield received £1,800 per patient; and Barnsley received £1,900 per patient. Why did the other PCT areas get more? It was because the NHS funding formula allocates a base amount of money for each member of the public, adds or subtracts an element to reflect the age or youth of each person, and adds additional elements in respect of social deprivation. Areas of Yorkshire and the Humber other than north Yorkshire and York are deemed to face greater deprivation and, therefore, greater unmet health needs, and as a consequence they receive more money per capita.

The funding worked out through that formula, which reflects deprivation, was about £1,300 million for north Yorkshire and York in 2012-13. That sum was reduced this year by some £430 million, largely as a result of top-slicing for services to be provided on a national basis by the NHS Commissioning Board, which left some £865 million to be divided between the five clinical commissioning groups. However, they were not treated equally. Vale of York CCG received £1,050 per patient, whereas Scarborough and Ryedale CCG received £1,234 per patient, which is almost £200—20%—more per patient. The odd thing is that the same NHS foundation trust provides services for patients in Scarborough and Malton, which is part of Ryedale, and in the city of York. For some of those patients, however, there is substantially higher funding, which is likely to exacerbate the problems of postcode rationing. Some patients from the better-funded part of the patch will receive access to a wider range of treatments than those from the city of York.

How is the split justified? We are told that the funding was split between the clinical commissioning groups in north Yorkshire and York on the basis of the use that patients from their areas made of NHS services in the previous year. It is well known that middle-class people in more prosperous areas make greater demands of the NHS than do poorer people in deprived areas, so the two parts of the funding calculation for the Vale of York clinical commissioning group are pulling in diametrically opposite directions. The funding formula that allocates money to north Yorkshire and York reflects disadvantage, so north Yorkshire and York gets less than Barnsley, but the funding for the CCGs in north Yorkshire is split based on the use that they made of services, so relatively deprived inner-city areas of York receive less. The problems in those areas are not as severe as those in Bradford or Sheffield, but they are still greater than the problems faced by Richmondshire or Hambleton. It really is unfair to provide a baseline pot of money based on a lower allocation for north Yorkshire and York because it is deemed to have lower deprivation, but to choose the most deprived part of north Yorkshire and York and cut the funding further because people in deprived areas do not use health services as much as people in more prosperous areas.

I understand that when the funding body was determining how to split funding between the CCGs in north Yorkshire and York—indeed, across the country—it decided to use a demand-led formula rather than a needs-based formula, but it looked at what the results of a needs-based formula would have been. I asked the Minister whether he would release that information, but it was not readily to hand. If at least he released the figures on the north Yorkshire and York split, it would help us to work through with clinicians and health service managers in our patch whether the current double whammy, as I call it, is appropriate.

[Julian Smith (Skipton and Ripon) (Con)]

When the group of North Yorkshire MPs met the NHS on several occasions this year, did the hon. Gentleman feel, as I did, as though it was less than transparent with us about how any of the calculations were made?

[Hugh Bayley]

All of us in north Yorkshire and York share concerns about the low level of funding for our patch. I share the hon. Gentleman’s concern about the lack of transparency, which is why it would be enormously helpful for the Minister to ask his funding advisory panel to carry out the calculation I have mentioned. That would illustrate whether there is a problem such as I have suggested, and it would help us to tease out an appropriate solution.

The third part of the triple whammy is that as a result of historical underfunding—under the previous Government as well as the current one—the North Yorkshire and York PCT had a deficit of some £20 million or £30 million year after year. As a consequence of the deficit in the final year of its operation, some £12 million was top-sliced from the baseline funding for the CCGs in our patch. I was afraid that that would happen, so on 4 July last year, I asked the former Secretary of State, the right hon. Member for South Cambridgeshire (Mr Lansley), whether he would guarantee that each CCG would start off with a clean balance sheet, and he replied that

“we, along with the NHS Commissioning Board, intend all the new clinical commissioning groups across England to start on 1 April 2013 with clean balance sheets and without legacy debt from primary care trusts.”—[Official Report, 4 July 2012; Vol. 547, c. 930.]

I do not think that anyone could argue that that was a slip of the tongue, because paragraph 3.2 of the Department of Health’s “Handover and Closedown Guidance” for 2012-13 states:

“CCGs will not inherit legacy debt.”

Furthermore, paragraph 4.5 of “The Operating Framework for the NHS in England 2012/13” states:

“CCGs will not be responsible for resolving PCT legacy debt”.

What should the Government do about this issue?

The first, and immediate, action should be to honour the commitment given to me in the House—similar commitments have been given to other hon. Members from north Yorkshire—and agree, as was requested by York’s director of public health in a letter at the end of April, that the Department of Health will “absorb and manage” the final north Yorkshire and York deficit, which is some £10 million to £12 million. I understand that that has happened in some areas, and has given those new commissioning groups a start without carrying debt that has arisen from management by predecessor bodies.

Secondly, I ask the Minister to assure us that in good time for next year’s funding allocation the contradiction between the needs-based formula that divides funding between the old PCT areas and the demand-based fix, which was used this year to divide the PCT patch budgets between the various commissioning groups, will be resolved.

--- Later in debate ---

[Julian Sturdy]

I entirely agree with my hon. Friend. That is why in my short contribution this afternoon I will focus solely on age.

We must note that under the previous Government the funding formula was changed and more money put into the national health service. In addition, deprivation was given more weight in the formula. On paper, ensuring that deprivation is the most important factor, seems, morally, the right thing to do. However, I believe that when that reasoning is put into practice it starts to fall down. The distortion within the funding formula has resulted in some areas being awash with money, leading to well-publicised vanity health care projects, such as the one in Hull, with its 72-foot ocean-going yacht at the cool price of £500,000. At the same time, York and north Yorkshire have consistently struggled, as ably put across by the hon. Member for York Central, to balance the books, which has resulted in their continuing to take difficult decisions about health care provision.

An example of such decisions is that the primary care trust had to stop offering routine relief injections for sufferers of chronic back pain. That decision has had a massive impact on the quality of life of many of my constituents—it has hampered their ability to work and has affected carers. I have raised that issue previously in this Chamber, yet people are again coming through my surgeries, as I am sure they are through the surgeries of other hon. Members here today, suffering from a lack of access to those important injections. The decision is consequently putting more financial pressure on areas such as welfare, and that far outweighs the cost savings made by local authorities under the funding formula. That demonstrates the lack of joined-up thinking under the current system.

It costs approximately eight times more on average for the NHS to care for a patient who is over the age of 85 than one who is in their 40s. York and north Yorkshire, as my hon. Friend the Member for Selby and Ainsty (Nigel Adams) has set out, has one of the highest population of over-85s in the north, and my constituents are really suffering under the current formula. York and north Yorkshire also has a high number of care homes, and a typical GP practice states that 50% of home visits can be taken up just by care home residents, even though that group makes up only 2% of the patients on its roll.

I therefore urge the Minister, through NHS England, to review the current funding formula, to ensure that age is given more weighting.

[Julian Smith]

Was my hon. Friend not appalled, as I was, that when as a group of north Yorkshire MPs we sought clarification about why the NHS Commissioning Board had not given weight to the new Advisory Committee on Resource Allocation formula on age, we were told that the minutes of the meeting in which the decision was made could not be released, against the interests of all the people in our constituencies?