Hinchingbrooke Hospital

Liz Kendall Excerpts

Thursday 10th November 2011 Commons Chamber

[Liz Kendall (Leicester West) (Lab) (Urgent Question)]

To ask the Minister of State to make a statement on the decision to allow Circle to run Hinchingbrooke hospital.

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

Today, a 10-year contract was signed by Hinchingbrooke Health Care NHS Trust and Circle allowing Circle to take over management of the trust, which has struggled to be financially viable in recent years. Major service problems have persisted and, despite repeated attempts to tackle it, the trust now has the largest legacy debt as a proportion of turnover in the NHS: £39 million, which amounts to almost half the hospital’s £100 million turnover. Moreover, the Care Quality Commission has expressed concern about the fact that its stroke services are failing and its cancer services under-achieving. The local NHS accepted that major changes were needed, and early in 2007, when the previous Government were in power, established the Hinchingbrooke next steps project to identify options for securing the trust's future.

In 2008, East of England strategy health authority chose a franchise model, and in 2009 it launched a competitive procurement process to identify a preferred bidder. That was agreed with the previous Government, and the power to bring in another person or organisation to manage an NHS hospital was introduced under that Government’s National Health Service Acts 2001 and 2006 and the Health and Social Care Act 2001.

At the end of last year, following a rigorous and open competition that included NHS organisations, NHS East of England announced that Circle had the most viable plans to turn the trust around. That decision has been endorsed by the Department of Health and the Treasury following an equally rigorous approval process this year. It should be noted that it was the Labour Government who set up the initial competition, a process from which many NHS organisations dropped out, leaving only private providers in the competitive tendering frame.

Circle is an established provider of services for NHS patients, although it should be emphasised that under this contract NHS services will continue to be provided by NHS staff, from NHS buildings, and that patients will continue to have access to them as they do now. No NHS staff are leaving, and assets will remain in public ownership. Hinchingbrooke hospital will continue to deliver the same NHS services, as long as commissioners continue to purchase them, adhering to the key NHS principle of care being free at the point of use. This is not a privatisation in any shape or form. Circle will help clinicians and health care professionals improve Hinchingbrooke from the bottom up. Its plans include improvement in length of stay, rationalisation of theatre usage and improvement in back offices. Commissioning leaders, hospital consultants and Royal College of Nursing representatives in Huntingdon clearly support Circle commencing the franchise. Tony Durcan, the RCN professional officer for Cambridgeshire said:

“Circle are very impressive…I welcome working with them.”

He went on to say that he believes the decision to work with Circle

“does secure the long-term future of Hinchingbrooke.”

If Circle achieves its forecasts, the whole of the trust’s accumulated deficit will be repaid by the end of the 10-year contract. Circle is paid from the trust’s surpluses, so if there are no surpluses Circle does not receive a fee. Furthermore, if the trust makes a deficit under Circle’s watch, Circle must fund the first £5 million. At deficits above that, the trust can terminate the contract, so Circle really must perform well.

The Government believe this is a good deal for patients and staff at Hinchingbrooke. It is a new management model being tried in the NHS for the first time, but the trust has had huge problems over the past decade, and it now has an opportunity to turn its fortunes round. The local NHS even stated that without this deal Hinchingbrooke hospital’s future would have been in doubt.

The local NHS will maintain close scrutiny of the contract. The Appointments Commission has appointed a chair and two non-executive director-designates to form a new Hinchingbrooke trust board from February 2012 that will appoint a franchise manager. The franchise manager will be responsible for day-to-day monitoring of contract performance. During the initial mobilisation stages, NHS Midlands and East will continue to oversee the franchise agreement.

Patients and the public deserve, and must get, a safe and sustainable NHS based on its core, historical principles. This contract will deliver that.

[Liz Kendall]

Patients, the public and NHS staff will be concerned about the implications of this unprecedented agreement not only locally in Cambridgeshire, but for the NHS across the country. Let me be clear that Opposition Members accept that there have been problems with this hospital for some time. My right hon. Friend the Member for Leigh (Andy Burnham)—who is currently visiting St James’s university hospital in Leeds—will set out the background to this issue and how it was dealt with by the previous Government in a statement later this morning, but it is the current Government who have made the decision to transfer the management of Hinchingbrooke to the private sector, and it is the current Government who must account for their actions.

First, I want to deal with the practicalities of the agreement. How many bids to take over the running of the hospital did the Government receive, and what criteria were used to judge them? Circle’s chief executive confirmed on the “Today” programme this morning that Circle has no experience of running emergency and maternity services, so why was the company chosen? What confidence can patients and NHS staff have in the chief executive’s claim this morning that Circle will be able to pay off Hinchingbrooke’s £40 million debt simply by cutting waste and bureaucracy when all previous attempts have failed—at the same time as, apparently, providing patients with Michelin-star meals and delivering profits for Circle’s shareholders? Can the Minister assure the House that this agreement will not, in reality, lead to staff jobs being cut and services being closed, and can he give a firm guarantee that all services currently run at Hinchingbrooke, including accident and emergency and maternity, will remain open throughout the entire period of the deal? Will he also set out whether the agreement requires Circle to work with other local NHS services and the council, what profits are permitted under the agreement, and how decisions will be held to account locally under it? Will he also place a copy of the agreement contract in the Library of the House?

The Minister must also today answer serious questions about the implications of this agreement for the wider NHS. He must set out whether the Government envisage any limit to the role of the private sector in the NHS. We know that Department of Health officials have been discussing the takeover of 20 other hospitals by private companies, so will the Minister tell the House how many of these hospitals will be taken over by the private sector? What steps have the Government taken to ensure the financial stability of Circle and its parent company, Circle Holdings? What will be the implications if the company goes bust, as Southern Cross did, for patients and taxpayers?

Finally, important questions need to be answered about why this company has been chosen. Given its close links to the Conservative party, there needs to be full transparency about all meetings—formal and informal—between Department of Health and Treasury Ministers and this company and any of its paid advisers. So will the Minister agree to publish full details of these meetings so that patients and NHS staff can have full confidence that the Government followed proper due process in their decisions?

Patients and the public will be deeply worried that this morning they have seen this Government’s true vision for the future of our NHS with the wholesale transfer of the management of entire hospitals to the private sector. The Health and Social Care Bill currently before Parliament not only allows that to happen but actively encourages it. Patients and NHS staff do not want this and the public have not voted for it. It is time that the Government agreed to drop their reckless NHS Bill.

[Mr Burns]

I am rarely speechless, but I am left speechless by the sheer effrontery of the hon. Lady. I have to remind hon. Members that this process stems from the previous Labour Government’s legislation in 2001, which was consolidated in 2006. This process started in 2007 at strategic health authority level, when she was a special adviser in the Department of Health. It continued, and the decision to move forward from a Department of Health level was taken in 2009 by the then Secretary of State for Health, who is now the shadow Secretary of State. It is often thought that shadowing a Department that one ran is helpful because one knows where the bodies are buried. The problem for the shadow Secretary of State is that not only does he know where the bodies are buried, but he was the one who buried them in the first place.

The hon. Lady asks how many bidders there were. As she will appreciate, a number of processes have taken place. There were 11 bidders at the start, the vast majority of which were private sector bidders, although there were some NHS ones—this was in 2009, under a Labour Government. The number reduced to six in December 2009, again under a Labour Government. Of those six bids, one was from an NHS body and one was from an NHS body in conjunction with the private sector. In February 2010, when I believe the right hon. Member for Leigh (Andy Burnham) was the Secretary of State, the number reduced again, this time to five. All these bids were from the private sector, except one, which was made in conjunction with an NHS trust. In March 2010, again under a Labour Government, the number reduced to three, with one bid associated with an NHS body, and then it reduced to two, with both bidders in the private sector.

--- Later in debate ---

[Mr Burns]

I do not know who has been briefing the hon. Lady, but the lines are wrong, I am afraid. She is right that the final decision was taken by me, in this Administration, but—[Interruption]—if she will just wait a minute, I will tell her that all we were doing was following what the previous Government set in motion. I will tell her something else: if there were a Labour Government in power and not this Conservative Government, the Labour Minister of State would be standing here today and making exactly the same points—

[Liz Kendall]

You don’t know that.

[Mr Burns]

The hon. Lady says that I do not know that, but surely she accepts that Labour politicians are consistent and would consistently follow their own policy. I am sure that they would be here doing so.