Queen's Speech

Lord Rea Excerpts

Thursday 3rd June 2010 Lords Chamber

[Lord Rea]

My Lords, like all other noble Lords I welcome the appointment of the noble Earl, Lord Howe, as Health Minister. I am only sorry that he did not get the top job. He certainly deserves it and he would have done it very well. I also welcome the noble Lord, Lord Hill. I am gratified to hear his support for professional independence.

The main problem facing the National Health Service is how to keep front-line services up and running, and improving, as the coalition has pledged, at a time of great financial stringency. This means that the health service needs to be scrutinised and monitored even more carefully to identify inefficient or wasteful methods of working. It is important that if any quangos or other health-related organisations are to be abolished, as has been mooted, public health, or the effective functioning of the National Health Service as a whole, is not impaired. For instance, were NICE to be wound up, a valuable evidence-based resource would be lost. Can the noble Earl give the House any information on the Government’s thinking here? There are those in the pharmaceutical and food industries who would like to see the end not only of NICE but also of the Food Standards Agency, which provides vital science-based public health guidance. I am sure that the noble Earl recognises the unique value of these two agencies, but can he reassure us that the Government will reject any pressure to close them or restrict their activities?

A good start in looking at where efficiency might be improved can be made by reading the final report of the House of Commons Health Select Committee of the previous Parliament entitled Commissioning. It will be the present Government’s duty to respond to it, which I guess will happen in a month or two, but I would be interested in any preliminary thoughts the noble Earl might have about this hard-hitting but constructive report. Some members of that Select Committee were, like Members on these Benches, the Liberal Democrats, all the health professions and the universities, strongly opposed to the creation in 1990 of the internal market, particularly without a pilot study. However, it is now here and has become even more entrenched under the last Government, which carried on much as Kenneth Clarke might have wished. This is without any objective evidence that the internal market is beneficial except in the creation of bureaucracy and opening the door to the private sector. According to the Centre for Health Economics at York University, the percentage of NHS expenditure on administration has risen from less than 5 per cent in 1990 to 13.5 per cent. The Department of Health is rather shy about revealing this figure, although I gather that it commissioned the research. That percentage rise means that at today’s costs we are spending £8.5 billion more than we would have had the administrative costs remained constant at 5 per cent.

The great majority of NHS expenditure is now channelled through primary care trusts. Acute hospital trusts receive the bulk of the funds disbursed, around 70 per cent or more. I would be grateful if the noble Earl could give me the latest data on the proportion. PCTs have little control over these powerful organisations which tend to lean on them to give them what they ask for. But of course they provide critical care for life-threatening conditions and are target-driven to reduce waiting lists. I do not say that in any derogatory way; it is a fact and it is necessary. It is therefore difficult for PCTs to decrease or stop funding hospital services, some of which may in fact have become redundant.

Paragraph 95 of the report states that,

“there is a seeming perennial imbalance of power between providers and commissioners”.

One solution to this would be for acute hospital trusts to have an entirely separate funding stream, as suggested in Volume II at Ev 135 of Commissioning by Professor Andrew Street, also of the York University health policy team. This would allow PCTs to concentrate on what is really their role, providing good-quality community-based care.

“World Class Commissioning” is a rather grand title. But consider the finding of the Select Committee at paragraph 108 of its report:

“Weaknesses, due in large part to PCTs’ lack of skills, notably poor analysis of data, lack of clinical knowledge and the poor quality of much PCT management”.

There are other highly critical paragraphs. It is worrying that the great increase in administrative costs since the introduction of the purchaser/provider split 20 years ago is largely spent on funding a system which has such major deficiencies.

Two findings in the report which seem crucial concern the lack of clinical knowledge by administrators and the involvement of clinicians in the commissioning process, and the lack of skill in gathering or analysing complex data to guide rational decision-making. If the current system of PCT commissioning is to be retained, more medical and nursing input is needed, as my noble friend Lord Darzi said on many occasions, and as have the royal medical colleges and several noble Lords who have taken part in the debate today. A more meaningful use of practice-based commissioning, which so far has achieved very little, would see GPs, as well as consultants, in an advisory role at the highest level—and therefore with clout—as part of PCT commissioning teams.

Information on population needs and hospital activity should be made more meaningful and be processed more expertly. The outcomes of referrals and procedures need to be measured and assessed, again as my noble friend Lord Darzi said repeatedly, and not merely counted as episodes of activities—referrals, discharges and so on. Payment by results, apart from creating difficulties in predicting the costs of care, is a misnomer; it does not relate to the quality of care received but only to easily counted processes.

To cut swathes of administrative staff—30 per cent has been suggested—without first ensuring that the quality of the commissioning process is improved will lead to less effective care and might well increase rather than decrease costs. Constantly to bring in consultants to do the job is expensive and weakens the National Health Service, which should instead build up its own expertise.

Apart from the major burden of carrying the costs of acute or foundation hospital trusts and community health service care, PCTs have to fund a number of uneconomic, and sometimes redundant, independent sector treatment centres which they were obliged to engage, as well as meeting the heavy recurrent costs of paying for PFI or LIFT projects, which were brought in as part of the prevailing gung-ho culture of “buy now, pay later, even if it costs more” that underlies our parlous economic situation.

Finally, I would like the noble Earl to explain how the stated coalition policy of allowing access to any chosen GP regardless of place of residence is going to work. This could result in a two-tier service with local residents not being able to get an appointment to see a popular GP with whom they might be registered. This would undermine the basis of good primary care in which a practice looks after a defined population.