Health and Social Care Bill Debate
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Lord Warner
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(12 years, 5 months ago)
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Lord Warner
Lord Warner
My Lords, we have come to Clause 20, which covers the Secretary of State’s mandate to the National Commissioning Board and the wide range of duties placed on the board. This gives us an opportunity to probe the Government’s intention vis-à-vis this board and their perspective on the relationship between the board and the Secretary of State. I find myself taking something of an ambivalent attitude to the board which, if I may say to the Minister, was a major reason for my being very unattracted to the idea of chairing it when I was approached. At the heart of that ambivalence is a wish to stop elected Ministers and their henchpersons—if I may use that term—at Richmond House interfering endlessly in the day-to-day management of the NHS. But against that there is also a serious disbelief that when anything goes significantly wrong in some part of the NHS, the Secretary of State will be able to say, “Nothing to do with me, guv. Talk to Malcolm Grant and David Nicholson”. I certainly do not see the Health Secretary of the day having the kind of detached relationship with the national Commissioning Board chair that Professor Malcolm Grant seems to envisage in his public utterances. Those remarks suggest that the new national Commissioning Board chair sees himself being left in political peace for two to three years once the mandate has been agreed with the Health Secretary. My experience both as a Minister and as a senior civil servant is that he is deluding himself if he thinks that that is going to happen, but I shall be happy to hear from the Minister what his views are on the relationship between the board and the Secretary of State.
The first of the amendments in this group, Amendment 96, suggests the placing of a numerical limit on the number of items in the annual mandate provided for in proposed new Section 13A(1). I was prompted to do this by some rumours emanating from the Whitehall gossip mill suggesting that Andrew Lansley saw the mandate as a booklet of indeterminate size along the lines of the operating framework, while David Nicholson saw it as a couple of sides of A4. We want to probe further what the Minister sees as the Government’s approach to the mandate. These rumours took me back to three happy years in the early 1990s when I chaired a health authority, at a time when it had 50-odd priorities that had to be accounted for annually at a session with the RHA chairman. In practice, the NHS had no priorities then because the shopping list was too long. However, everybody kidded themselves and felt rather good about life because they felt that they were being held to account for the delivery of a substantial number of worthy and desirable objectives.
Amendment 96 tries to place a limit—admittedly somewhat arbitrarily—on the scale of the marching orders that the Secretary of State can give each year to the national Commissioning Board. At the same time it tries to distinguish between what one might call must-do’s and “attempts to seriously do”-type items. It proposes five of each. As someone who has managed big public sector organisations, I have never attempted to give my managers more than five or six must-do’s in any one year, together with a few development items. We need to understand from the Minister the scale of the remit that will feature in this mandate and that will be given to the board. That is the setting in which I think we want to discuss this and I would certainly be grateful if the Minister could enlighten us on the scale of that mandate in terms of the number of priority areas that it is likely to contain. How will the mandate differ from the annual operating framework that has been used to guide the NHS in its priorities over recent years and which has itself got bigger and bigger as time has passed? How will the mandate be related to the resources given to the board and, indeed, the inflation factor allowed for in the resource assumptions underpinning that mandate? The latter is critical in any mandating process because healthcare inflation is typically greater than RPI or CPI, for a variety of reasons which we need not go into today. Keeping healthcare inflation nearer to CPI would be one way of driving NHS productivity. The mandate’s financial underpinning is a critical factor.
Amendment 98 is based on the idea of the Permanent Secretary’s letter to a Minister when, having tried everything else, a top civil servant is instructed for political reasons to do something which is, in his or her eyes, essentially against the public interest. We need some transparency in the relationship of the Health Secretary to the board when totally impracticable or unaffordable instructions are included in the mandate by an elected Minister. Amendment 98 tries to give the board a right to raise this formally with the Secretary of State when it thinks that what is being asked of it is totally impracticable, particularly in terms of the resources available.
Amendment 100 extends this transparency to any other persons consulted by the Secretary of State on the objectives and requirements in the mandate. I look forward to hearing the Minister’s account of how these new mechanisms will work and how they will be made more transparent than the Bill provides for at present. I beg to move.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, I hope that I can demonstrate to the Committee that the portrayal of what the Government intend through these provisions is a false one. We wish to create a transparent and accountable system in which every organisation understands its duties and responsibilities. Clause 20 sets out further provisions for the NHS Commissioning Board. It requires the Secretary of State to publish a mandate to the board setting out objectives and requirements as well as the board’s resource limits. The mandate is one of the key levers that Ministers will have in order to set a national health policy and influence the way in which taxpayers' money is spent on delivering NHS services. It lies at the heart of the Secretary of State’s continuing accountability for the health service.
In a moment, I shall cover the provisions concerning transparency prior to the publication of the mandate, but once the mandate has been published, the Bill requires the board to publish its business plan, setting out how it will deliver it. The Bill also requires it to report on what it has previously achieved in its annual report laid before Parliament. The Secretary of State must then publish an assessment of the board's performance. Taken together, that will provide what we believe is an unprecedented degree of transparency about what the NHS is asked to achieve and what is delivered.
The noble Lord, Lord Warner, suggested that, having issued the mandate, the Secretary of State would detach himself from the health service from that point on. That has never been our vision and it will not happen. I say to the noble Lord, Lord Hunt, in regard to his example of waiting times, that he will know that the board and all the commissioners will have to have regard to the NHS constitution, and within the NHS constitution is a standard which says that patients can expect to wait no longer than 18 weeks. That duty is in the Bill and we do not intend to change it. It is also open to the Secretary of State to stipulate conditions to be included in the NHS standard contract. Again, the noble Lord will know that within the NHS standard contract there is a stipulation about waiting times.
The Bill requires the Secretary of State to keep the board's performance against the mandate under review throughout the year, over and above his general duty to review the performance of all national bodies. I refer the noble Lord, Lord Owen, to Clause 49 of the Bill which sets out that duty.
Amendments 96 and 153A, tabled respectively by the noble Lords, Lord Warner and Lord Hunt, would limit the number of objectives in the mandate and remove the ability to amend it in-year following an election. I do not yet know how many objectives the mandate will contain. That will emerge from the process of engagement and public consultation that we will undertake, but I am confident that, given that the NHS Commissioning Board will receive around £80 billion of funding, there will be many more than 10. Setting an arbitrary limit, as the amendment seeks to do, would undermine Ministers’ legitimate ability to set strategic policy for the NHS.
As a result, although I support the broad intention of the noble Lords, I think a better way of achieving the desired outcome is not to put crude limits on Ministers’ powers, but to ensure that they are used proportionately. That is what the autonomy duty in Clause 4 does. I hope that helps to explain to the noble Lords why we think that duty is so important.
The noble Lord asked whether the mandate would contain desirable as well as obligatory objectives for the Commissioning Board. That is not our intention. The Bill will require the board to seek to achieve all the objectives in the mandate and the board will then be legally required to comply with all the requirements set out in the mandate.
The noble Lord, Lord Hunt, asked me about the period—
Lord Warner
I would like to pursue the last point the Minister made. Is he saying that, after a lot of consultation, the Secretary of State may say, “I have 35 objectives for you, laid out in the mandate, and I claim that the justification for that is the consultation process that we have had. You, the national Commissioning Board, better get on with it, and we will look at what you have done at the end of 12 months to see whether you have delivered those 35 objectives”? Can the Minister give us some idea what failure would look like? Would it mean failure on 10 objectives, or five, or 15? Where does the point come when the chairman and the chief executive get fired because they have not delivered the objectives in the mandate?
Earl Howe
The noble Lord is taking us into a hypothetical realm. I understand why he is asking those questions, and I think the answer would depend on the degree and scale of the failure. I have just said that the Bill requires the board to seek to achieve all the objectives in the mandate. It would be up to the Secretary of State to judge whether it had used its best endeavours to do that. The performance of the board will be a matter of public record; it will be up to Parliament to take a view on that, as well.
Earl Howe
My Lords, I was just about to comment on the recommendation of the Delegated Powers and Regulatory Reform Committee that the requirements in the mandate should have the force of legislation, in an instrument subject to the negative procedure. The board will have to comply with the requirements in order to support delivery of the objectives in the mandate that it must seek to achieve. Parliament will therefore be able to scrutinise the requirements after the mandate is published. We will bring forward a government amendment at Report stage to achieve that recommendation of your Lordships’ committee.
That is not the same as opening up the actual objectives in the mandate—that is to say, the direction and the strategy that the Government of the day want to set for the NHS—and rightly so. If that were to happen, it would lead to unwelcome delay and uncertainty for the health service. The Delegated Powers Committee, which has great expertise in this area, did not suggest that any further parliamentary scrutiny of the mandate was necessary. I can reassure the Committee that if Parliament were to make a recommendation concerning the mandate after it is laid before Parliament, the Secretary of State would undoubtedly have to respond, just as Ministers do now as a matter of course.
Lord Warner
I have been cogitating what the Minister has been saying, in his normal, plausible way, about the consultation with everybody before the mandate is agreed by the Secretary of State. The trouble that I have with that, worthy though it is, is that it does not really deal with the point in my Amendment 98, and in some ways it makes the situation worse. My amendment is all about how the national Commissioning Board answers back and tells Parliament if it thinks that the final mandate is undeliverable. That is the purpose. If you have extensive public consultation, the point that my noble friend Lord Harris made earlier comes into play. I am sorry to have got a bit fixated about the figure of 35, but you end up with 35 propositions in the mandate, and the money available to the Secretary of State at that point is still the same as when he went out to public consultation. We run an even greater risk of having a very overloaded mandate, with lots of items in it which come out of the public consultation. The money has not changed. The board is expected to deliver a larger number of things with the same amount of money. That is why my Amendment 98 becomes even more important if the Minister is going down the path that he says that the Government are going down.
Earl Howe
Because it would get Parliament into the territory of micromanaging the health service, if it so chose. That is not the territory we would want to be in, any more than we wish the Secretary of State to micromanage the health service. That is the problem. The Secretary of State has to take responsibility for the objectives set for the health service. I think there is a general acceptance among those in the health service and indeed the public at large that the health service has to be judged on a different set of measures than it has been in the past—namely, on its outcomes and the cost effectiveness with which it approaches the use of the budget given to it.
We believe that undue political influence is undesirable. Parliament is capable of exercising that kind of interference every bit as much as a Secretary of State. We are saying, however, that Parliament has every right to scrutinise the Secretary of State’s proposals, to feed into those proposals, to be listened to and to be responded to. However, in our contention, it is undesirable for us to go beyond that because in the end, the health service has to know where it stands. If this is an endless process of Parliament second guessing the mandate and coming forward all the time with suggested changes, we will not have a workable system.
Lord Warner
My Lords, we have had a very interesting debate on Amendment 96. I cannot say that I have been convinced by the noble Earl’s argument that he will not have a large amount of clutter in this mandate as a result of this public consultation. The poor old NHS will have to make the best of it. I suspect that at some stage we will come back to this issue of placing some limit on the objectives and requirements. In the mean time, I beg leave to withdraw Amendment 96.
Lord Warner
Lord Warner
My Lords, I found the arguments used by the noble Earl on this particular amendment in this debate utterly unconvincing. We have a very serious risk, in the process he described, of a level of overload on the board which is unrealistic in relation to the resources available. I can just imagine the kind of negotiations that will take place between Richmond House and the board, wherever it is, up in Leeds, to try to ensure that the Secretary of State is not embarrassed. We need something along the lines of Amendment 98. The noble Earl has not been willing to take this away and consider it, and so I wish to test the opinion of the House.
Lord Warner
My Lords, I have added my name to Amendment 99 and to a number of other amendments tabled by the noble Lord, Lord Patel, and my noble friend Lord Harris. I do not want to speak for very long on this issue. I have some inhibition about speaking about this because I do not think that my own party’s record on patient representation was extremely startling. I had to take some of those measures through your Lordships’ House and usually did not get the better of the arguments with the noble Earl on these issues. I accept that the Government have started off pretty well on this issue and that they have a good brand—HealthWatch is quite a good brand. I am an athletics fan, however, and the Government are beginning to look like a 200-metre runner who has moved up to 400 metres but is now starting to run out of steam on this issue in the last 100 metres. What I think has happened is that the money has started to dominate the discussion.
I also recognise here a favourite Department of Health word—hosting. There are two phrases that used to worry me as a Health Minister: “the NHS family”, which was usually an excuse for doing something foolish; and “hosting”. The danger of hosting is that, for what seemed to be perfectly good reasons, you put one organisation in the maw of another organisation whose culture is fundamentally different from the needs of the organisation being hosted. The real danger here is that there is no obvious similarity between a regulator and a patient representative organisation.
I will give the noble Earl just one example where the Government would do well to pause and think. If you are the parent of someone with a learning disability who is in a home which has mistreated and abused them and the regulator has let you down, or you perceive that the regulator has let you down, you are not going to be very pleased to find that the regulator is the very same body that is hosting the national body representing patients. That is a real example, not a phoney example. I think that there could be many such cases—and we will have a debate on Dilnot and social care on Thursday. However, there are some serious problems in the funding and quality of some of our social care institutions. The regulator is going to have a tough time in these areas over the coming years. It is a mistake for HealthWatch England to be hosted, in effect, by the regulator. Given the size of the NHS budget, the Government are spoiling their ship for a ha’porth of tar, to use a corny phrase, by not finding the money to fund this body adequately, so that it can stand on its own two feet and be secure and independent, and so that it can be allowed to be seen to be secure and independent by the patients who will put their trust in it.
I shall end on the point made by the noble Lord, Lord Harris, about ring-fencing. I can give the noble Earl a good example of where the Government have tried to do the right thing. They tried to put some extra money into social care that would go down to local authorities to improve the volume and quality of social care, but they did not ring-fence it. It was the best part of £1 billion, out of the £2 billion increase in social care funding. We now have a lot of people who thought that that was a jolly good idea. However, as it was not ring-fenced, the Government will not get any credit for it. It has gone into local budgets, but we do not know where. If you talk to any director of adult social services they will tell you that one of the problems was that the money was not ring-fenced, so they cannot reassure the Government that the money has gone to the purposes for which the Government sent it down the conduit to the local authorities. There is a very real danger that the same will happen with the HealthWatch money that will go down to the local level. I strongly support these amendments.
Baroness Masham of Ilton
My Lords, I spoke on this subject at Second Reading, and I want to go back in history for a few minutes. I remember that when the community health councils were closed down, the noble Earl, Lord Howe, and I felt strongly that the health forums which were put in their place should be independent. If a local healthwatch organisation is linked too closely to its local authority, it will be difficult for it to be able to speak out if it finds that both health and social care facilities are not up to scratch. What happens if they disagree with the CQC? Patients often need help, so an independent body would be much better to help them with their problems. It is vital that HealthWatch is adequately funded to do a useful job, otherwise it will fail. Perhaps I may give an example concerning a rural area. What happens if there are not adequate funds for the payment of members’ travel expenses? That has been found with the local LINks. I hope that the Minister will give this serious consideration.
Baroness Northover
Then there were the patient forums of 2004. The noble Lord, Lord Warner, said that these were,
“the cornerstone of the arrangements we have put in place to create opportunities for patients and the public to influence health services”.—[Official Report, 5/7/04; col. 516.]
In 2007, we moved on to LINks. We have abandoned the commission that was at the centre—the noble Baroness, Lady Cumberlege, referred to this—because it was centralising, bureaucratic and absorbed money that was supposed to be devolved. I have the Health Select Committee report criticising that commission.
As others have said, there is a history of trying to move this forward and trying to ensure that there is better patient and public involvement. I welcome what various noble Lords have said about the improvements in the Bill. We are trying to learn from that history and move it on, although I hear what people say that we possibly have not got it as far as they people wish.
The Government are seeking a fundamental shift. The aim of HealthWatch England is to help orientate the NHS first and foremost around the patient. Healthwatch, at both local and national levels, aims to strengthen the ability of service users and other members of the public to shape and improve health and social care. The role that Healthwatch England will play is crucial. Its aim is to provide leadership, support and advice to local healthwatch organisations and to make them more effective. I looked at the LINks reports and although they are welcome, anyone can see that there is much more that can be done. They do not reflect the whole range of patient voices and the kind of responsiveness you might wish to see in the health service, which is why it is such a challenge.
HealthWatch England will also provide information and advice about the views of patients, the public and local healthwatch to the key players in the NHS and social care—the Secretary for State, the NHS Commissioning Board, Monitor, English local authorities and the Care Quality Commission. At present there is no statutory body with either of these roles. Therefore, I am sure we can all agree that this represents a step forward. As noble Lords have said, the HealthWatch England committee will be a committee of the CQC, with a chair who we intend will be a non-executive director of the CQC. Part of this debate has focused on whether this is the appropriate organisational form for HealthWatch England: whether, in this form, it can sufficiently and independently serve the interests of patients and the public and whether it will have the status it needs to achieve this. I have listened to these concerns and I fully agree that this area is too important to get wrong. We are interested in change that works and this Government believe that setting up HealthWatch England within the CQC is the best way to achieve this aim.
I shall explain the reasoning behind this. First, there are key synergies to exploit here. To be effective, HealthWatch England is going to need extensive capabilities which the commission that existed before clearly did not have. It will need clout, which clearly that commission did not have. Being part of the CQC will enable it to have both of these. HealthWatch England will be able to draw on the infrastructure and support from the CQC to deliver its work to a high standard. It will have easy access to the CQC’s information sources, which have been referred to, enabling it to develop a deeper understanding of how health and social care organisations are functioning or where there are problems where the views of people may have made a difference. Being part of one of the big national bodies will, we hope, give HealthWatch England a real profile, and one we feel would be hard to generate if it was a new, separate body—and there is the history that we know about. Operating from within the CQC should enable HealthWatch England to punch considerably above its weight.
Secondly, it will enable the voice of patients to have a real influence on the regulatory work of the CQC. Close working and communication between HealthWatch England and the CQC opens up the possibility of having the patient voice hardwired into the work of the commission. It is not just a matter of looking at HealthWatch England but seeking to ensure that it really has a positive effect.
Lord Warner
Can the Minister give the House any information that the department has on the name recognition of the Care Quality Commission which would deliver the kind of profile for HealthWatch that she is claiming for it?
Baroness Northover
The noble Lord, Lord Warner, is very concerned that HealthWatch itself is a name that is going to be far too easily recognised and obliterate his charity. This is HealthWatch. The fact that it is in that relationship with the CQC does not obviate that. I would turn it back to the noble Lord and ask him who might recognise any of those predecessor organisations over the past 10 years and whether there was ever wide recognition of those.
Lord Warner
That was not my question. The noble Baroness is arguing that HealthWatch would actually benefit from being hosted by or being part of the Care Quality Commission because it would be a powerful national body. I was asking the noble Baroness what the name recognition of that powerful national body was that would produce benefits for HealthWatch.
Baroness Northover
At the moment the CQC is relatively well known because its reports are in the press fairly frequently. The reports of the investigations that it has been undertaking have caused considerable concern. I cannot give the noble Lord a scientific response based upon polling as to the recognition of the CQC, but I would guess that it is somewhat higher than some of the organisations representing the patient voice that have been there before. When patients went into hospital and had concerns about various things, did those organisations spring to the forefront of their minds? Possibly not.
Lord Warner
“(2) In discharging its duty under this section the Board shall establish an independent panel to formulate minimum standards of—
(a) financial,(b) performance, and(c) asset,management information to be included in the audited accounts for all bodies to which this subsection applies.(3) Subsection (2) applies to all bodies commissioning or providing NHS services under annual contracts of at least £500,000.
(4) The independent panel shall be established—
(a) within 6 months of this Act receiving Royal Assent, and(b) jointly with Monitor on a basis agreed by the National Audit Office.(5) The standards formulated by the panel shall be kept under review by the Board and Monitor and, in doing so, they will pay particular regard to the extent to which the standards have ensured levels of public accountability similar to those required of bodies providing comparable services.”
Lord Warner
My Lords, I regard this amendment as one of the most important building blocks in the Bill, although I have to confess that I am not sure that it will attract the same enthusiasm from the Government or their Civil Service advisers. The amendment is based on my own experience as a Minister, especially when dealing with the financial meltdown of the NHS in 2005-06—which I have recorded for posterity in a book that I have written on the subject. Since I believe that the NHS is heading for another financial meltdown, Ministers, especially in the Treasury, might give some serious thought to the proposal in Amendment 102.
There is a very good book about the history of the Audit Commission called Follow the Money. I think that we should do a bit more following of the money so far as the NHS is concerned, and not simply rely on things like outcomes frameworks. At the core of this amendment is the rather simple idea that there should be a minimum set of standardised management accounts covering finance, performance and asset use, applying to all bodies providing NHS services that spend more than £500,000 a year. I have put that fairly arbitrary figure in the amendment so that bodies which are relatively modest spenders are not brought into these requirements. It is a matter for negotiation whether that amount is the right one to set. However, with the bigger, higher spending bodies, we need greater standardisation of management accounts because we need to know more than we know now. At present, we cannot easily compare the performance of similar bodies in terms of how they spend our money, how this expenditure relates to what they produce, the value for money they give and how well they use public assets.
It has often been forgotten, under successive Governments, that the NHS is, in effect, a major landowner and user of public buildings. The real estate footprint of the NHS is far too large for the buildings on it and the use that is made of them, and I will give a little data later in my remarks. There is, at present, little rigorous assessment of whether the NHS holds on to land unnecessarily, how much of its accommodation and equipment is used well or intensively, or how much of the buildings or land is left vacant. Work done in the London SHA, after my time as a Minister, shows how scandalously poorly the NHS uses land and buildings. There is no reason to believe that the situation is different in other parts of the country. I am happy to give the Minister and his boss chapter and verse outside this debate. However, in a nutshell, in non-foundation trust sites in London, only some 18 per cent of NHS land was built on; another 18 per cent was underutilised; and some 25 per cent of the buildings were functionally unsuitable for the purpose for which they were used. I have given you a snapshot of London two or three years ago, but it is probably not much different now.
Although we have a great deal of data on the performance of acute hospitals, much of it cannot be related to expenditure because service line accounting—in the jargon—is still not used in most hospitals, especially outside the foundation trust sector. However, acute hospitals are a positive treasure chest of performance data compared with community health services, mental health services and primary care, where any relationship between what they spend and what they deliver is more conspicuous by its absence. Any public company which tried to run its affairs with the same financial performance or asset data as the NHS does would be insolvent very quickly. We should take the opportunity of this Bill to do something about moving to some standardised management accounts for all but the smallest providers.
If this amendment is passed and this requirement is put into the Bill, it would improve commissioning, choice and competition. Without the data that would be produced by implementing the amendment, it is very difficult to secure effective commissioning, effective choice and effective competition. One simply would not have the data to compare on a standardised basis the performance of many of the bodies involved.
I recognise that some of your Lordships do not favour competition. It is certainly easy to resist competition in the NHS if it remains a largely data-free zone in terms of finance and performance. Good commissioning and patient choice become very difficult to deliver if one does not have that information on a standardised basis.
I hope that the Government are prepared to give proper consideration to this longstanding problem. I do not regard this as a party-political issue; this is all about good governance and running the NHS more effectively on behalf of those who are funding it. I beg to move.
Baroness Williams of Crosby
My Lords, it would be very helpful if the Minister could say something about the proposals with regard to the accounts and financial statements made by CCGs, which will obviously depend a great deal on the guidance from the board.
I am concerned that a number of clinical commissioning groups without any great knowledge of how to deal with audit and financial problems will emerge. You could quite quickly see a commissioning group getting into difficulties, not because it was not performing well but because it had very little awareness of requirements relating to information on its conduct in relation to assets and finances that was needed to establish its standing as a proper clinical commissioning group. I am concerned because there is already some evidence of clinical commissioning groups seeming rather unclear about the accounting standards that they have to live by. It is important that the board makes very clear indeed what its expectations are and that it involves, as the amendment would require, the National Audit Office, which will become—and in some ways is already—a fundamental arbiter on the quality and standards of accounting practices.
I hope that the Government will consider the amendment carefully and that the Minister will let us know what the Government’s intentions are with regard to setting out the standards that they expect from clinical commissioning groups and that the board should lay down. The Bill is currently uncommunicative on the subject.
The whole process of procuring the pharmaceutical and other products that a commissioning group will need is always problematic. It is crucial that what is required is clearly set out, and that there is an indication under which we can compare one clinical commissioning group with another.
Baroness Cumberlege
My Lords, I should like to probe the amendment a little further because I think that it has a lot of merit, especially when one considers the PFI arrangements that have so destroyed the financial situation within the NHS.
I should like to ask the noble Lord, Lord Warner, about the accountability of the body. As I understand it, it is to be independent. I presume that he means independent in its membership as well as the way in which it works. I wonder where that accountability lies, whether there is a relationship with the business plan of the Commissioning Board and how the noble Lord sees the body working. Will the panel run for years and years, or will it exist just to set the standards at the beginning? Perhaps we could have a fuller picture.
Lord Warner
My Lords, I am seeking to set up something that would function in the early years of the national Commissioning Board. It would be independent in the sense that I did not want it to be dominated by NHS finance people. I want it to be a broader group of people than just those who have worked in the NHS. There is a tendency on the part of the NHS to think of itself as unique, special and different from other businesses, whereas it is a business which needs some business systems in it.
I am not someone who wants to keep bodies going in perpetuity. I am certainly open to negotiation on how long this one exists. I feel more strongly about the National Audit Office keeping an eye on this area. The national Commissioning Board needs some outside help to get this started, particularly in asset management, which is a long neglected area in the NHS, as I think the noble Baroness knows.
Some of the problems with PFI which she mentioned arise from the fact that the NHS has not had a track record of looking after its assets. It does not see them in the terms that a more commercial organisation would do. Many of the things that have gone wrong with PFI are not to do with there being anything inherently wrong with it, because it delivered a lot more hospitals more quickly and effectively than previous public procurement systems. What went wrong was the hubris in the NHS in many parts of the country about its ability to build a Taj Mahal district general hospital with some very dodgy income/revenue flows spread over time, most of the contracts being for 30 years. If one looks at the quality of some of the financial management in the NHS, it is not surprising that it could not do a very good job, even with some outside help, of getting a realistic idea of the revenue that it was likely to generate over 25 to 30 years to fund those projects.
Lord Owen
My Lords, I had not expected to intervene in this debate, but some of the things that I want to say may fit more naturally under this issue. The idea of having a standardised method of comparison right across the National Health Service is a very good one and it has merit if it comes initially from an independent group.
The Government have a special responsibility here, because, very soon after taking office, they encouraged the noble Lord, Lord Green, to look at all these areas, of which land and asset management was a very important part. We all know that this has not been coherently done in the past and that there are substantial land assets throughout the NHS.
As we go to smaller and more fragmented units, it is even more important that there is some structure which looks at land management across the board; otherwise it will be seen in a very narrow context. There may be a sale of some land asset which might quite appropriately have been offered to a neighbouring organisation, whether it is a commissioning group or a foundation hospital. The proposed body would cover all aspects, not just commissioning groups but foundation hospitals as well, and so I am very attracted to it.
The report of the noble Lord, Lord Green, said that not only did government not utilise the efficiencies of having an overall look at land management but also that it had no coherent way of achieving its procurement gains. Any large organisation looks across these areas and maximises the advantages that are available. Procurement has not been done very well in the National Health Service, so there is room for improvement whatever structure is implemented. In the past, regional health authorities had procurement functions and were able to negotiate substantially improved contracts because of the size of the procurement agency. I do not quite know what is going to happen in the procurement field. I therefore put the matter to the Minister so that he can perhaps indicate where he thinks it would be appropriate to raise the issue of procurement in future. Again, I say that the work needs to be done by independent people. That was the advantage of the Green report: he got his people from many different fields and focused on government as a whole. He did not look very closely at the NHS, but there is merit on both these questions of land and procurement in seeing whether we can achieve some economies of scale and in taking a fresh and independent look, which we have not had for some time.
Baroness Murphy
My Lords, I recognise the problem that has been described so ably by the noble Lord, Lord Warner, but I wonder whether he is not being a little pessimistic about the possibilities of the architecture providing the right framework to do what he wants to do. If we look at the role of the economic regulator, it must, as it has under the more restricted role of Monitor, include a very serious analysis of how financial management is happening in provider trusts, or foundation trusts, and has led to the growth of the service level management system, which for the first time has given people an idea about which services are making money, which are losing money, which are loss leaders and so on.
These are terrible terms when one is talking about human services and I do not like them. Nevertheless they are business terms and we understand what they mean in this context. They have also led to a much more fundamental understanding of the capital assets of each foundation trust. It has led to better use of capital assets at the moment, but that is largely because at a time of massive growth people do not look to make best use of their capital assets. At a time when money is shrinking or staying the same, as it will be over possibly the next 10 years or more, people will be looking to use their capital assets more effectively.
We must look to the economic regulator to encourage the sort of use of assets that we have so often wanted to encourage in the younger Monitor—to use those assets more effectively and to ensure that we can look across the totality of both community and acute hospital providers at how entrants into the system are using their assets. That would be possible under the new Monitor. I am not sure that we should set up another body to do that although I can see it might have a short term job to make sure that everybody is using the same monitoring mechanisms and is putting in the same sort of systems of financial accounting. With the new architecture we should be able to do that through Monitor.
Lord Warner
My Lords, I should like to respond briefly to the noble Baroness. There is nothing in the amendment that would stop this information being given to Monitor. If people want to amend the amendment in terms of Monitor as the customer for it, I do not feel strongly about that. I have put it under the national Commissioning Board because one of the things it will be doing is, I suspect, giving guidance to clinical commissioning groups on the nature of contracts. One of the requirements that can be used to drive change in this area is contractual requirements on people in terms of the standardisation of accounts. I saw the national Commissioning Board as likely to be able to deliver through this independent panel—which can be as short lived as one wants—the kind of changes that we need.
I want to emphasise to the House that the financial situation in the NHS is serious and will get really serious over the next few years. We need to improve very rapidly the quality of the financial management accounting systems in the NHS. That is a separate issue from the assets and procurement issue, to which the noble Lord, Lord Owen, has very ably drawn attention, because it is another long-standing problem. The standardisation of management accounts is an urgent issue for the NHS in the brave new world that it is going into, particularly with the large increase in the number of new organisations that are going to start for the first time to handle big sums of money without much clarity about how they are supposed to account for it.
Lord Walton of Detchant
My Lords, I believe it would be helpful to the Committee, even if one leaves aside the crucial role of Monitor with its new, major responsibilities, if the Minister could let us know what kind of administrative support, and in particular what kind of financial management support, Sir David Nicholson and his staff in the national Commissioning Board will have. Can he give us any information about that?
Lord Warner
I do not particularly want to intervene about GPs. I can understand to some extent what the noble Earl is saying about them. I am more concerned that the noble Earl has given us a lot of information about powers in the Bill for people to do things. I recognise only too well official defence in depth of the current status quo. I have had many a brief along those lines in my time, so I can see that.
What I am really interested in is how the Government are going to use those powers that they have taken in this Bill to deliver the kind of ideas that are actually in my amendment. I want to know what work is going on to produce the kind of comparative data that this amendment seeks to deliver to an unsuspecting world, from this variety of providers; not least because it is not just about accounting standards in financial terms, it is about the relationship of that expenditure to what is being delivered. That is why I have deliberately used the term “management accounts”, not just financial accounts. The public, and many of us, want to see the NHS showing how it has spent the money and what it has produced for that, and to see that on a standardised basis. I remain very sceptical whether the QUIP accounts deliver that. That is the issue that the NHS has to face up to. Unless we tackle that and can use the powers that the noble Earl has referred to in the Bill—and I am happy to come back on Report with a new amendment that relates to those powers—to deliver the comparative management account data, I do not think we are progressing matters very far from where we are now. I would very much welcome a more detailed discussion on this issue with the noble Earl, and with any other noble Lords, before the next part of this Bill, so that we can get to the bottom of this and help the Government use the powers that they are taking in a more constructive way.
Earl Howe
My Lords, I would be delighted to have that conversation. I did not in the least mean to suggest that the ideas the noble Lord has put forward are in any way irrelevant. Indeed, quite the opposite, I am aware that there is a lot of work going on at the moment in the very areas that he has highlighted. I would be happy to write to him about that, if that would help as a precursor to a meeting.
I will just cover a couple of the questions that have been asked. The noble Baroness, Lady Morgan, asked to what extent the Office for Budget Responsibility would be involved. The OBR has a very specific role in terms of producing economic information. We would not see a role for the OBR itself in analysing the impact of NHS spending, but this is an area that is always under close scrutiny across the Government, in the Department of Health and beyond. I am leaving the possibility slightly open, if I may.
The noble Lord, Lord Walton, asked whether Sir David Nicholson would have sufficient financial expertise alongside him on the board. Sir David Nicholson has said in Developing the NHS Commissioning Board, published earlier this year, that the board will have a finance director as part of its leadership team. That is all I can tell him at the moment. However, it is clear that the board will have a major task in ensuring that sufficient financial control is maintained over the health service as a whole. If it fails to do so—as the noble Lord, Lord Warner, rightly reminded us—we are all in trouble.
The noble Lord, Lord Hunt, asked how we can achieve comparable performance measurement of CCGs. The board will be required to publish an assessment of CCG performance annually, including their financial functions. It must also publish a summary report of the performance of all CCGs.
The amendment is well intended; I have no difficulty with that. However, in practice, as framed, it would be onerous and cut across established government responsibilities. I know the noble Lord, Lord Warner, thinks I am just defending the status quo, but I am trying to say that I am not sure his formula would add much value, particularly as the underlying purpose of the amendment is already achieved under existing arrangements. For those reasons, I hope he will feel comfortable—for the time being—in withdrawing it.
Lord Warner
My Lords, this has been a very interesting debate. It was never my intention to assume that the way in which this amendment was framed was the last word on the subject. It is helpful to know that there are provisions in the Bill that can be used or adapted for the purposes that I was seeking to produce. I still remain concerned that we need to use the powers that the Government are taking in a very speedy and effective way to link finance with performance data on a standardised basis. We need to get on with that. It needs to be in place by the time the SHAs disappear. The SHAs have been holding some of this stuff together. Once they go, we will need better systems than we have now to monitor performance and money. As the noble Baroness, Lady Young, has said, we need that matter to be in the public arena as well; it is not just for the closed world of the NHS. I hope that we can have some useful dialogue on this before Report to see whether we can secure amendments to the existing arrangements that will improve things.
Lord Warner
“( ) In discharging this duty, the Board must annually agree with Monitor new currencies for pricing under the national tariff that incentivise more efficient integrated clinical care pathways for patients, especially those with long-term conditions, and that minimise the use of in-patient hospital services.”
Lord Warner
My Lords, I apologise as I seem to have a series of amendments to this part of the Bill with my name on them. Amendment 103 is the first amendment in this group in my name and that of the noble Lord, Lord Patel, and the noble Baroness, Lady Murphy. It brings us to the first of what I suspect will be a number of debates on the complex and difficult issue of a national tariff and the need to use that tariff to ensure the most appropriate forms of care and care pathways for patients.
This is a time for confessions. The current tariff system, which I am afraid I was deeply involved in implementing to scale seven years ago, was designed for a different era when there was considerable financial growth and we were trying to drive acute hospitals to increase capacity to dramatically reduce waiting times for treatment. Those long waiting times, which had been a feature of the NHS for a long period, were the part of the NHS that led to the most complaints being made. They were the issue to which any Government needed to pay attention. The tariff was one of the ways of helping to progress that. The other was, of course, the much maligned targets, which we need not go into at this point.
In some ways, the current tariff has been too successful. It has helped to create overcapacity in in-patient hospital provision and has propped up poor and unsustainable hospital provision in some parts of the country. The current tariff does not promote well co-ordinated, integrated care for people with long-term conditions, which is the bulk of the NHS’s workload, given our demographic profile and some of our lifestyle choices. A significant proportion of services, particularly mental health and community services, are simply not covered by the national tariff and are often still dealt with on the basis of block grants. In 2012-13, the plan is to focus mainly on developing currencies rather than mandatory tariffs. This means that the majority of non-acute services will remain outside the national tariff. What is more worrying is the fact that the continuation of an acute hospital-dominated tariff based on episodes of care without any counterbalance risks these hospital trusts sucking in a disproportionately large amount of our NHS budget, which is shrinking in real terms. This is not a jibe at the Government except to say that they should stop pretending that the NHS can continue with real-terms growth and deliver the Nicholson challenge, as should any political party, including my own.
Tariff-setting is a technically complex business. There are plans to expand it into fields such as mental health where there is no international track record of success in doing that. There are no quick fixes, particularly if there are insufficient people working on a new tariff system. Tariff-setting relies totally on a good understanding of costs, an area where the NHS does not have great strengths, as I think we have just discussed. The current reference cost system has considerable shortcomings and excludes independent sector providers. Most of the rhetoric on price competition is just that—rhetoric—because reliable data to make price competition work effectively within the NHS are usually absent, so we are having a row about something that we probably could not deliver anyway.
The best that this Bill can do is to try to set a direction for future tariff design. The elements of that design should be fourfold. First, it should enable integrated care, not just within the NHS but across the health/social care boundary. This almost certainly means moving away from the tariff based on episodes of care to a year-of-care approach for long-term conditions, or a bundling of the services across care pathways. Secondly, a future tariff system should not be based on average cost, as now, but on best practice for particular conditions. Thirdly, the currencies in a new national tariff should cover the full range of services, not just acute care, which needs to diminish its dominance of the tariff. Fourthly, it should cover unavoidable costs and avoid windfall profits to providers. Unless we start designing a tariff system around those ideas, we will not progress towards a new NHS.
It will take at least three or four years at best to complete a national tariff covering a full range of services. However, I believe that we should set a clear direction of travel for the national Commissioning Board in the Bill. Given the responsibility of commissioners for demand management, it is right that if we are to have a national Commissioning Board it should set the currencies for a new tariff system. That is why Amendment 103 seeks to place the duty on the board to progress this work and to create some momentum by securing annual increments of progress. We can discuss later whether the board should also price the currencies rather than Monitor, but that is a subject for a debate on another day.
In the mean time, I wish to speak in support of Amendment 290 in my name and others in this group of amendments. This amendment would enable whoever is setting the prices in the tariff—currently Monitor in the Bill—to pay incentives to providers to integrate the delivery of health and social care services to individuals. It seems to me that we use the word “integration” without realising that it probably requires someone to do a bit more work than they are doing now to integrate the services, and that has a cost. This should be recognised in setting the tariff for the future so that service providers can be encouraged to take on the difficult job of integration without losing money in doing so. I hope that the Minister will see merit in these amendments and, indeed, others in the group, which move in a similar direction to mine. We need to set the agenda for the board in taking this difficult area of tariff work forward. I beg to move.
Lord Patel
My Lords, my name is added to Amendment 103 and other amendments in the group. Amendment 197E, which is a new amendment relating to commissioning, also stands in my name. Some of the points that I will make are similar to those made by the noble Lord, Lord Warner, but I have a slightly different way of looking at tariffs. I see them more from a clinical or patient care pathway point of view than that of integrating services. It is true that tackling the financial physiology of the NHS is critical to enabling the more influential and focused commissioning of integrated care. The payment by results tariff was designed by the previous Government to support the introduction of choice and competition, and specifically to create incentives for providers to increase elective activity to bring down waiting times for treatment and reward them for work undertaken. As the noble Lord, Lord Warner, has just said, that has been a bonanza for some of the acute trusts.
The tariff has played its part in that process with the consequence that access to planned care has improved significantly. Progress in elective care has enabled—or should enable—attention to turn to other priorities, such as providing high-quality care for people with long-term conditions where continuity and co-ordination are key objectives alongside access. This includes shifting unplanned care from secondary to primary care settings, where this will help deliver improvements in efficiency.
As currently designed and operated, payment by results does not appear to be well suited to support the implementation of these priorities, and there is a need to develop incentives that will facilitate integrated care for people with long-term conditions and for other services where this approach is likely to bring benefits. Experience in the United States offers valuable learning in this regard, but it is not the only place, particularly in the development of new forms of payment that go beyond fee for service and case-based reimbursement.
The idea behind episode-based payments—something that my noble friend Lord Warner also referred to—is to remove incentives to deliver increasing volumes of care by bundling together payments for a range of services relating to a particular episode of treatment. One example from the United States is the ProvenCare programme of the Geisinger health system under which a global fee covers the entire cost of cardiac care from pre-admission and surgery to follow-up for up to 90 days after surgery. Episode-based payments are designed in part to improve the quality of care by placing the responsibility on providers for avoiding and correcting errors. You do not get paid if you make a mistake and it takes the patient longer to recover. This encourages care to be done right the first time, and hence offers a more co-ordinated and positive experience for patients.
Capitation payments on the other hand go much further than episode-based payments in potentially covering all the costs of care for a defined population over a certain time period—a year, for example. Integrated healthcare systems such as Kaiser Permanente in California have pioneered the use of capitation funding—or pre-paid group practice as it was originally known—as a way of creating incentives to support prevention and primary care and to avoid the inappropriate use of specialist care. Kaiser Permanente sees acute care as a cost centre, but it sees community care and primary care, particularly for long-term conditions, as where the costs should be maintained and the quality driven. It monitors the performance of the providers of that care more intensively on a one-to-one basis than it does for acute care.
Although capitation funding has a long history, there has been renewed interest in it. In the NHS, various options could be pursued. These include combining payments to cover an episode of care or a care pathway, taking forward the idea of the year of care that has been tested in three national pilots for diabetes—I say this to the noble Baroness, Lady Young—and exploring how it might support integrated care; contracting with local clinical networks of primary and secondary care clinicians or foundation trusts to deliver integrated care for a specific population—some of the foundation trusts are experimenting with this and are quite innovative; and, lastly, accelerating work on personal health budgets to enable patients to commission care packages for themselves, with support from carers and families.
In practice, it is likely that all these options, and others, will have to play a part, and a period of active experimentation and evaluation is now needed to work through the consequences. All healthcare systems use a mix of payment systems related to the service that is provided, such as episodic or long-term, and where care is provided, such as primary or secondary care. The NHS is no exception and attention is needed for the way in which financial incentives can be developed to support integrated care where it will bring benefits to patients. The prospect of four years in which the NHS budget will only increase in line with inflation underlines the urgency associated with this work and the need to focus on improving the quality of care and not simply incentivising extra activity at a time when resources are not available to do this. As my noble friend Lord Warner said, it will require tariff flexibility, even tariff bonuses for providing care quicker and of a higher quality. What is needed is system leadership and innovation, which we expect the NHS Commission to deliver boldly, in tariffs for integrated care, with the explicit promotion of systems of integrated care.
Baroness Williams of Crosby
I think the answer to that had probably better come from the department rather than from me, but I am consistently surprised by the failure, not of this Government but of Governments of the United Kingdom for a long time, to say what the real achievements of the NHS have been and to recognise that outside this country it is widely regarded as perhaps one of the most outstanding health services in the world. It is worth saying that from time to time because we have 1.2 million people employed in the NHS and they deserve a great deal of the credit for having maintained a high standard in the face of very considerable financial pressures, even in the past. We have always had among the lowest expenditures per patient in the 11 highly industrialised countries, with only a couple of countries—Australia and New Zealand —spending less than we do.
There are two points to this argument. First, we are in a much better place to integrate care than we seem to think we are because we have already clearly established relations of trust between doctors and patients, and between hospitals and doctors, to an extent that other countries clearly regard as enviable. Secondly, one has to ask why we suppose that competition is a better way to deal with healthcare than are integration and collaboration. There is one area where competition is clearly crucial, and I accept that. It is in innovation and in trying out new ideas. None of us would in any way be opposed to that happening. However, I would like to put it on the record that if we are going to move in the direction of collaboration and integration, we have a very strong base on which to do it and we have the makings of something very impressive and important. The makings of that appear to be stronger in this country than in most others.
Lord Warner
I would not normally have interrupted the noble Baroness, but this canard that somehow integration is incompatible with competition has to be challenged. I refer the noble Baroness to the King’s Fund’s work on integration and its citing of Kaiser Permanente operating in a competitive market and doing very successful integration. I would also refer her to the peer-reviewed article by Zack Cooper of the LSE in a recent edition of the Economic Journal, which makes it absolutely clear that competition under the previous Government both improved patient outcomes and reduced deaths.
Baroness Williams of Crosby
I have actually gone in to the story of Kaiser Permanente very carefully. It is not surprising that if you choose the very best example in another country you can make a favourable comparison. I am talking about the outcomes for a whole population rather than a particular part of a population. I have said already that there are certainly areas where competition can play a very important part—I referred to innovation and new ideas—but I am simply putting on the record that if you look at the comparison between the health services of the 11 most advanced, richest and most industrialised countries in the world, the combination of integration and competition that we have here appears to have rather better outcomes than in those countries that rely much more heavily on competition such as the United States.
Earl Howe
Yes, I will. To address the point that I began just now, the board’s duty to promote integration specifically requires it to exercise its functions to ensure that services are provided in an integrated way where it considers that this would reduce inequality in outcomes. Those words are very important. That is mirrored by Monitor’s duty to enable integration.
I completely understand the intentions behind the amendments in this group. We have had a very helpful debate. We believe that the duties in the Bill, coupled with the wider levers in the system to promote integration, address the points that have been made. In the light of what I have said, I hope that the noble Lord will withdraw his amendment, although I am sure that this is a theme to which we shall return.
Lord Warner
My Lords, this has been a very helpful debate. I do not wish to keep noble Lords from their supper. I just want to log with the noble Lord the thought that, ultimately, if we look at history, changing the tariff has been a long, arduous job. I ask him to think some more about whether we should give a little more of a push to the work of the board in setting currencies than we have so far. Monitor cannot get on with pricing until those currencies are settled. That is the potential blockage in the system. On that basis, I beg leave to withdraw my amendment.