Long-term Plan for the NHS

Lord O'Shaughnessy Excerpts

Tuesday 19th June 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord O’Shaughnessy) (Con)]

My Lords, with permission I will repeat the Statement made yesterday in the other place by my right honourable friend the Secretary of State for Health and Social Care about the Prime Minister’s announcement of a new, long-term funding plan for the NHS. The Statement is as follows:

“The NHS was built on the principle that good healthcare should be available for everyone, whatever their background and whatever their needs. Seventy years on, it remains this country’s most valued public service—an institution that is there for every family, everywhere, at the best of times and the worst. No one in this House underestimates the importance of putting the NHS on a steady financial footing, not just for the sake of their constituents but for their own families and loved ones. That is why I am proud today that this Government have announced their commitment to a long-term funding settlement for the NHS.

From vaccinations and IVF to radiotherapy and next-generation immunotherapies, the NHS has always been at the forefront of excellence in medicine. However, as only the sixth universal healthcare system in the world, it has also come to symbolise equity both at home and abroad. Despite pressures in recent years, the Commonwealth Fund rates the NHS as the best healthcare system in the world; cancer survival rates are at a record high; stroke mortality is improving faster than almost anywhere else in the OECD; and heart disease mortality rates continue to fall. All this is thanks to NHS staff, who continue to work tirelessly day in, day out, to make it the world-class service that it truly is.

However, alongside advances in medicine, demographic pressures pose a potentially existential threat to the NHS as we know it. With the number of over-75s expected to increase by 1.5 million in the next 10 years, these pressures, far from reducing, will intensify. So in March the Prime Minister made the bold decision to commit to a 10-year plan for the NHS, backed up by a multiyear funding settlement. Since then I have been working closely with the Prime Minister and the Chancellor, and I can announce today that the NHS will receive an increase of £20.5 billion a year in real terms by 2023-24—an average of 3.4% per-year growth over the next five years. The funding will be front-loaded, with increases of 3.6% in the first two years, which means £4 billion extra next year in real terms, with an additional £1.25 billion cash to cope with specific pension pressures. Others talk about their commitment to the NHS, but this settlement makes it clear that it is this Government who deliver, and the details will shortly be placed in the Library of the House.

This intervention is only possible due to difficult decisions made by the Government, opposed by many, to get our nation’s finances back in order and our national debt falling. Some of the new investment in the NHS will be paid for by us no longer having to send annual membership subscriptions to the EU after we have left. But the commitment that the Government are making goes further, and we will all need to make a greater contribution through the tax system in a way that is fair and balanced. My right honourable friend the Prime Minister said that we will listen to views about how we do that, and my right honourable friend the Chancellor will set out the detail in due course. I pay particular tribute to the Chancellor, whose careful stewardship of the economy, alongside that of George Osborne before him, is what makes today’s announcement possible.

The British public also rightly want to know that every pound in the NHS budget is spent wisely. It is therefore critical to the success of the plan that the whole NHS improves productivity and efficiency; eliminates provider deficits; reduces unwarranted variation in the system so that people get consistently high standards of care wherever they live; gets better at managing demand effectively; and makes more effective use of capital investment. We have set the NHS five key financial tests to show how it will play its part in putting its service on a more sustainable footing, and I expect the NHS to give this work the utmost priority. The tests will be a key part of the long-term plan.

However, this is more than just a plan to get finances back on track. In its 70th year, we also want our NHS to make strides towards being the safest, highest-quality healthcare system in the world. That means making a number of improvements to the treatment and care currently offered, including getting back on track to delivering agreed performance standards, locking in and further building on the recent progress made in the safety and quality of care, and transforming the care offered to our most frail and vulnerable patients so that we prioritise prevention as much as cure. It also means transforming our cancer care, where we still lag behind France and Germany despite record survival rates. There is no family in this country that has not been touched by cancer, so the whole House will want to know how the NHS intends to make our cancer treatment and care among the best in Europe.

Many of our constituents worry about the mental health of their loved ones, families and friends. Again, I am proud of this Government’s record here: investing more in mental health than ever before and legislating for true parity as part of one of the biggest expansions of mental health provision in Europe. A critical part of the plan will be to decide what next steps will enable us to claim not just that we aspire to parity of provision with mental health but that we are actually delivering it.

For our most vulnerable citizens with both health and care needs, we also recognise that NHS and social care provision are two sides of the same coin. It is not possible to have a plan for one sector without having a plan for the other. Indeed, we have been clear with the NHS that a key plank of its plan must be the full integration of the two services. As part of the NHS plan, we will review the current functioning and structure of the better care fund to make sure that it supports that. While the long-term funding profile of the social care system will not be settled until the spending review, we will publish the social care Green Paper ahead of that. However, because we want to integrate plans for social care with the new NHS plan, it does not make sense to publish it before the NHS plan has even been drafted, so we now intend to publish the social care Green Paper in the autumn, around the same time as the NHS plan.

Finally, there are two further elements crucial to putting the NHS on a sustainable footing. Alongside the 10-year plan, we will also publish a long-term workforce plan, recognising that there can be no transformation without the right number of staff, in the right settings and with the right skills. This applies to both new and existing staff. As part of this, we will consider a multiyear funding plan for clinical training to support this aim. Similarly, we know that capital funding is critical for building the NHS services of the future and, again, we will consider proposals from the NHS for a multiyear capital plan to support the transformation plans outlined in the long-term plan.

Given the national economic situation, yesterday’s announcement is bold and ambitious. For the first time, national leaders of the NHS will develop a plan for the next decade that is clinically led, listens to the views of patients and the public and is backed by five years of core funding. We want to give the NHS the space, certainty and funds to deliver a comprehensive, long-term plan to transform health and care and to ensure that our children and grandchildren benefit from the same ground-breaking health service in the next 70 years as we all have in the first 70. That is the Government’s commitment to our NHS, and I commend this Statement to the House”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Baroness Jolly (LD)]

My Lords, I too thank the Minister for his Statement. I welcome any increase in funding. Should the Chancellor be wondering how to pay for it, we on these Benches would be quite happy to see a 1% increase on income tax, for starters. The IFS has said that increases of close to 4% are needed for social care, as well as a funding boost for the NHS. Yet the Statement had nothing to say on this vital issue. We all know that the NHS cannot function efficiently unless social care is working well too. Many local authority leaders are indignant that the Green Paper has been moved further down the track, so when the new funding does arrive there is already a sizeable deficit to claw back. They are extremely anxious about the situation with adult social care funding being insufficient for this financial year.

What conversations have been held with the LGA, local council leaders and the Ministry of Housing, Communities and Local Government in advance of these statements? We are also dismayed about the silence on mental health, public health and community health funding. One in four of us will be affected by mental illness, there is an obesity epidemic among our children, too few health visitors, and we are critically short of psychiatric social workers. Is the Minister confident that these issues can wait until the autumn NHS plan and the Budget?

[Lord O'Shaughnessy]

I thank the noble Baronesses, Lady Thornton and Lady Jolly, for their questions. I think that our debate on the report of the Lords Select Committee on the sustainability of the NHS and social care was revealing, in that we got a hint that, while the settlement would receive a broad welcome across the House, the party opposite might not be in quite the same positive mood, and, unfortunately, we have had that confirmed today. Perhaps that might generously be described as a cautious welcome.

The noble Baroness asked about the funding of this settlement. We were very clear yesterday that it will come, effectively, from three sources: from taxation, from economic growth, and from the fact that, as we are leaving the European Union, we will not be paying annual subscriptions any more. It will be a combination of those factors that determines the spending. Indeed, the Treasury is confident in that, and it would not have signed off this deal if it had not been.

On the noble Baroness’s specific questions about the legal obligations under the NHS constitution, actually the money that was given to the NHS at the Budget was to help it to get back on target—in the case of A&E, by the end of this financial year and, for elective procedures, to halt the growth in the expansion of the waiting list. Clearly, one of the reasons for this settlement, which is set out explicitly, is to get back to those key standards, which we know are the yardsticks by which people judge their everyday experience of the NHS.

On the point about there not being enough money, there can always be arguments for more, but it is instructive that two former Health Ministers, one from the Labour Party and one from the Conservative Party—my noble friend Lord Prior and the noble Lord, Lord Darzi—set out last week that they felt that 3.5% was the right figure, which we have got very close to. We should take the suggestion of those two very experienced and knowledgeable former Health Ministers as a good yardstick for our achievement.

The noble Baroness asked about social care funding, as did the noble Baroness, Lady Jolly. The intention behind the delay in the Green Paper—which I recognise is a source of regret for people in this House and elsewhere—is to make sure that integration, which we all agree has got to be at the heart of this 10-year plan, actually happens in planning terms and policy terms as well as in announcements and delivery. That is why there is that co-ordination between the two. Again, it is worth stating that, over the current three-year period, at previous Budgets an extra £2 billion was put into the social care budget, which is rising now for the first time in a number of years, and that is obviously important as we put together that long-term solution.

Finally, let me deal with two other points. On the repair bill and the capital settlement, again at previous Budgets the Chancellor has pledged £10 billion through a number of sources towards the capital settlement for the NHS, but we are expecting the NHS, through this process, to come forward with long-term, multi-year capital proposals, because clearly that underpins so much of the transformation.

In terms of the impact on other elements of the broader health budget, mental health is included in there, including a clear commitment to deliver on parity of esteem within this period. Public health and community health will be dealt with in the next spending review process, which will be happening in the next year. Again, there are clear commitments that there will not be additional pressures, if you like, created for the NHS by what happens to the public health and social care budgets in the future. Ahead of a spending review process, that is a clear indication that there is not a desire to create trouble, if you like, in those budgets that would land at the feet of the NHS.

[Lord Warner (CB)]

My Lords, could the Minister say something about the economic literacy of this announcement? As I understand it, the Conservative chairman of the Health Select Committee, Dr Sarah Wollaston, has said that the Brexit dividend idea is “tosh”. If we write that one out of the script, can he say something about what economic assumptions the Government are making on the growth of GDP in each of the next five years?

[Lord O'Shaughnessy]

I know that the noble Lord no longer serves the Labour Party, but he might be interested to know that the Labour leader said in February that,

“we will use the funds returned from Brussels after Brexit to invest in our public services”.

Clearly, we are not alone in believing that, once we leave the European Union—and, as a party, we are committed to leaving the European Union—we will no longer be sending subscriptions to Brussels but using them for the NHS. For further detail on the funding settlement, the noble Lord will need to wait until the Budget, when the Chancellor will outline the plans.

[Lord Ribeiro (Con)]

My Lords, I welcome this report, but note that the Statement refers to the number of over-75s increasing by 1.5 million, which will prove a challenge in the future. One of the recommendations of the long-term sustainability report was that we should look at other methods for ensuring funding. I was very pleased to hear the noble Baroness, Lady Thornton, say that the review suggests that the public are prepared to pay more towards the NHS. I suggest that if we look at the experience of Japan, where people over the age of 40 start making contributions towards their long-term care, we may well have an opportunity to resolve this problem. If the public are willing, the Government should look seriously at this in the context of social care.

[Lord O'Shaughnessy]

We have in this debate just started the lively conversation that we will be having on taxation in the next few months. Clearly there are a number of ideas; they have been voiced by Members on the Liberal Democrat and Labour Benches as well as those on my Benches and the Cross Benches. We know that there are a number of ways that this could be done; the Prime Minister has shown incredible leadership to admit that this is necessary. These are very difficult decisions: in polls, people say that they want to pay more tax but when it comes to the crunch they often feel slightly differently. True leadership is being able to take us through that situation, and that is what the Prime Minister is showing.

[Lord Clark of Windermere (Lab)]

I thank the Minister for taking the trouble to repeat the Statement made yesterday in the other place. Of course we welcome the money, but let us not get carried away. Every health trust charity believes that the increase needs to be at least 4%. Secondly, this still leaves only one country in the G7 paying less towards healthcare than we are.

May I ask the Minister three very brief questions? I saw a report saying that the training costs of doctors and nurses were not included in these figures. Is that correct? Secondly, when we pursue the Government’s concept, which is right, of bringing the NHS and social care together, hence delaying the plan, will the extra costs of social care come out of the 3.4%? Finally, when it is discovered that there is no exit bonus when we leave the EU, will the Government guarantee that that shortfall will be made up from elsewhere?

[Lord O'Shaughnessy]

The noble Lord mentions the figure of 4%. I have looked at a number of think tank reports and their assumptions on what is required. They make some very cautious assumptions of the productivity improvements that the NHS is making, based on historical performance. The improvements in productivity over the last five years are very healthy—in fact, in the last year the NHS became more productive at a rate of 1.8%. If you add that to the 3.4%, that gives an increase of more than 5% in terms of bang for your buck. It is incumbent on us during this process not only to put in more money but to make sure that we are driving those productivity gains that we have seen in the last five years. If that then gives a 5% effective increase in funding, that is what we will need to deal with the long-term pressures that the noble Lord has quite rightly highlighted.

On the three questions, there is an explicit commitment to deliver this workforce strategy that the NHS comes up with as part of its plan. On the extra costs of social care, we clearly need a social care settlement that delivers the funding for those rather than their being covered by the NHS. That is what we mean about the commitment not to create extra pressures. As I have said, the funding will come from three sources—whatever the mix, the funding will be there.

[Lord Willis of Knaresborough (LD)]

Will the Minister accept that in terms of productivity, one of the issues that is holding us back in developing things at speed is the overregulation of the whole of the health system? We have two systems regulators and seven professional regulators; we were promised in 2014 that there would be legislation to simplify the regulatory system. Can the noble Lord assure the House that we will have a bonfire of regulations and put the right regulations in place to move this agenda forward?

[Lord O'Shaughnessy]

The noble Lord speaks with great insight and makes a very important point. There is broad agreement on the need to simplify the structure of the health system but there has not to date been broad agreement on how we should do so. We are expecting in the next few months to explore the potential for the kind of streamlining that he is talking about. I hope that that can be done as a collaborative effort and, if it comes to primary legislation, that we can deliver it as a collaborative effort too.

[Lord Kakkar (CB)]

My Lords, I declare my interest as chair of University College London Partners Ltd. Although this substantial increase in funding has quite rightly been welcomed, important questions remain. It is essential that real progress is made in integrated care—integrated care between the community and secondary and tertiary sectors, and integrated care between hospitals and social care. It is vital that progress is made in the rapid adoption of innovation at scale and pace across entire health economies. It is also vital that a programme is put in place to ensure that there is a transformation of the healthcare workforce so that those who have committed themselves to being healthcare professionals can continue to be developed and serve their fellow citizens across an entire professional career. How do Her Majesty’s Government propose to achieve this? There has been much good intention and great commitment in this area over the past two decades, but we are now at a critical moment where a failure to deliver the transformation required will result in failure to achieve the long-term sustainability to which we are all committed.

[Lord O’Shaughnessy]

The noble Lord makes excellent points. It is right at this moment to applaud the wisdom and far-sightedness of the Lords Select Committee on the long-term sustainability of the health and social care system. It called for, among other things, funding of growth in line with GDP, delivering integration, a 10-year workforce strategy, a commitment to reduce variation and a joined-up Department of Health and Social Care, all of which, if we were not able to deliver it in time for our response to the report, we are delivering in short order afterwards.

One of the first ways in which we shall do it is to draw on the wisdom that resides in the NHS, in Parliament and elsewhere in the profession. In the Statement given by my right honourable friend, I point again to the commitment to take on integrated care, that being one of the tests of success. Equally, there is the commitment to transformation of the workforce, to make sure not just that we have enough people but that we have enough flexibility and digital skills, for example.

The final point, on innovation, is very close to my heart—and indeed the Secretary of State’s. We know that doing things in the same way will not deliver the standards we need. We really need a transformation in how we deliver healthcare, much greater digitalisation of the entire sector and the ability to take the amazing innovations that we develop in our laboratories and universities, such as the noble Lord’s own, and get them into use across the NHS. That is one reason why I was so delighted that we were able to announce today that the noble Lord, Lord Darzi, will be chairing our Accelerated Access Collaborative. It is hard to think of anybody more committed to this agenda than him.

[Lord Mackay of Clashfern (Con)]

My Lords, I seem to recollect that some years ago there was a royal commission on social care. Is there any wisdom to be gained from it? I do not think much action was taken on it when it reported.

[Lord O’Shaughnessy]

My noble and learned friend is quite right: these commissions do not always produce action. I realise that there is some frustration in the House over the delay to the social care Green Paper. I hope noble Lords will respect the fact that it is sometimes difficult to fight battles on many fronts. We have made some progress on the NHS and the army moves on to win the war on social care as well.

[Lord Turnberg (Lab)]

My Lords, I for one from these Benches welcome the influx of funds. We have been waiting quite a while for it so it is well received. Everyone knows, however—we have heard today—that without changes and improvement in social care, this 3.5% will go down the drain as well. It is not just that we need to do both together; we need provision for social care at the same time as, if not in front of, the influx of funds for the NHS.

[Lord O’Shaughnessy]

I agree with the noble Lord and thank him for his welcome. We all agree; indeed, the Statement sets out clearly that the two must go hand in glove. I should point out that additional money for social care in the short term was put in a previous Budget by the Chancellor—£2 billion extra over three years, a budget that is now growing. Clearly that was a short-term measure. Now we need to find that long-term settlement that goes hand in hand with the NHS and ensure that we have true service integration as well.

[Lord Hannay of Chiswick (CB)]

My Lords—

--- Later in debate ---

[Baroness Walmsley]

My Lords, first, the Statement mentions £1.25 billion cash to cope with specific pension pressures. Is that because so many doctors are retiring early, and therefore drawing their pensions early, because of the pressures of the job? I know three GPs who are retiring far too early because of those pressures, so will the NHS be able to spend some of that money to relieve those pressures? Secondly, the Statement mentions that the Government want to prioritise prevention and that the NHS should get better at managing demand effectively. There are two factors that limit its ability to do that: social care has been mentioned by many noble Lords but I would also mention prevention. Can the Minister assure us that, when we get the spending review, the amount of money that goes to local authorities co-operating with the NHS on the prevention of ill health will not just be enough to make up for the cuts they have suffered over recent years but enough to really go forward and transform prevention measures?

[Lord O'Shaughnessy]

To answer the noble Baroness’s first question, I believe that changes in actuarial calculations were the driver of that change. However, it is a technical issue and I will write to her and place a copy of the letter in the Library so that other noble Lords can see the rationale for it. Regarding her question about public health funding, obviously it is not for me to make predictions about exactly what will be in the spending review, save to say again that there was a clear commitment in the Statement that we would not create further pressures for the NHS through the settlements delivered for social care and public health.

[Lord Hannay of Chiswick]

My Lords—

--- Later in debate ---

[Baroness Hollins]

My Lords, there is much concern in this House about social care. Can the Minister confirm that the now-promised social care plan will address not only the needs of older people but the needs of all vulnerable people of all ages? It is a little-known fact that the cost of meeting the needs of people with learning disabilities will soon overtake the cost of care of the growing number of older people. It is really important to address that.

[Lord O'Shaughnessy]

The noble Baroness is quite right to highlight the care for this vulnerable group of adults. As she knows, there has been a parallel work stream alongside the work for the Green Paper. Those are two allied but separate pieces of work. At this point in time I do not have a specific date for when that work will emerge into a report or a review, but I will write to her with the details because the Government agree with her that this issue is of equal importance.

[Lord Higgins (Con)]

My Lords, given the Administration’s traditional objection to the hypothecation of revenue, does my noble friend agree that the Chancellor is likely to be reluctant to say that he is putting up taxation specifically for the NHS? In any case, would it be more acceptable to the public for the money to be raised by way of an increase in national insurance contributions rather than through general taxation?

[Lord O'Shaughnessy]

I should not like to put any words in the mouth of my right honourable friend the Chancellor. What I do know, as was evident yesterday, is that he has committed to deliver the finances required to fulfil the plan that the NHS puts forward. Clearly, as my noble friend points out, there are a number of ways that we can do that. Polling suggests that some forms of taxation are more popular than others, and we know that technical challenges are associated with hypothecation. As I said, this is a very important and valuable conversation in which this House has a leading role to play in making sure that we get the right outcome.

[Lord Davies of Stamford (Lab)]

My Lords, this otherwise very welcome announcement was accompanied by quite misleading and—I hope the noble Lord will agree—deplorable PR spin about a Brexit dividend. Does he accept that the OBR, which provides the government economic statistics, has said that there is no such thing as a Brexit dividend? There is a Brexit penalty, because the reduction in tax revenue as a result of lower economic activity than would otherwise have taken place is significantly greater than the saving of our net contribution to the Union. Is it not the case that, in trying to pretend that there is a dividend, the Government have actually tried to mislead the public, and is that not something that, on reflection, the noble Lord would agree is most unfortunate?

[Lord O'Shaughnessy]

I would not agree with that because it is clearly the case that once we have left the European Union we will not be paying for membership of it—and it is those funds which will, in part, go towards helping us solve the funding challenge that we have set ourselves for the NHS.

[Lord McColl of Dulwich (Con)]

My Lords—

--- Later in debate ---

[Baroness Ludford]

My Lords, further to the question from the noble Lord, Lord Davies, is it not true that the OBR forecast budget deficit is twice our net EU contribution? We will also be making continuing payments for participation in EU programmes and agencies, let alone the £39 billion divorce Bill. Is not the Brexit dividend claim on the No. 10 website—which is a government website, not a Tory Party website—a breach of the Government’s duty to ethics, truth and accuracy?

[Lord O'Shaughnessy]

No.

[Lord McColl of Dulwich]

Does the Minister agree that the obesity epidemic is costing well over £25 billion a year? Would he consider having an all-out campaign— including every man, woman and child, every institution, school and government department—not to tell people what to do but to tell them the truth? For instance, there are 4 million people with type 2 diabetes due to overeating. If they ate less the savings would be terrific and most of them would be cured of their diabetes.

[Lord O'Shaughnessy]

My noble friend sets a tremendous personal example in this case. He is a fearless and tireless campaigner on the causes of obesity. He knows that it is our hope and intention that we will return to this topic so that we can start to reduce this plague on children and adults.

[Baroness Pitkeathley (Lab)]

My Lords, in the Statement the Minister referred to full integration between health and social care. Does he mean full integration of services, workforce and budgets? If so, is he confident that it can be done without the kinds of reorganisation that all of us dread?

[Lord O'Shaughnessy]

The noble Baroness makes a good point from her experience. There is agreement across the House—and, indeed, across both services—that there needs to be an integrated service. It is clearly not satisfactory to delineate in the way that we have done historically. How we get there will obviously be difficult. We need the NHS and local government to take the lead and to come up with proposals. If we believe that those proposals will deliver what we want without creating upheaval, it is incumbent on us all to get behind them.

[Baroness Watkins of Tavistock (CB)]

I welcome this additional contribution to the health service. However, have there been overoptimistic algorithms on improving productivity? We know that staff are currently stretched, and to expect continued productivity increases before we invest in modern technology will result in more staff leaving, and that would not be rational.

[Lord O'Shaughnessy]

The noble Baroness makes an excellent point. We know that NHS staff do a wonderful job and work incredibly hard. In talking about productivity it is wrong to think of it only in terms of getting more out of the same people. The wage bill, I think, makes up around 40% of the total NHS spend, a great deal of which is on buildings, on items and on technology. We need to use more technology so that we can deliver the productivity gains that we need.