NHS Funding Bill (Money Bill)

Lord Warner Excerpts

3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 26th February 2020 Lords Chamber

[Lord Warner (CB)]

My Lords, I found this Bill slightly bizarre. I have been around government for about 50 years and I have never seen a Government come to Parliament and ask it to direct two government departments to lay particular estimates four financial years ahead. That is a rather unusual practice, so I start from the same position of incredulity as the noble Lord, Lord Hunt of Kings Heath. We ex-Health Ministers tend to be a sceptical set of fellows.

The figures in the Bill have a spurious precision, given that they are based on a cash figure for 2024 that was agreed with NHS England only—nobody else—in the autumn of 2018. I will come back to the issue of inflation-proofing.

There are many legitimate questions that we ought to be able to ask as part of scrutinising this unusual Bill—questions of interest to patients, taxpayers and the NHS itself. But I am told by the clerks that, because the Speaker of the Commons has labelled this a money Bill, we cannot do this through amendments at Committee or other stages. All we can today is pose some questions drawing on the excellent briefing provided by the BMA, NHS Providers, Mind and others. I also support the gentle chiding of the Minister by the noble Baroness, Lady Penn. I hope that does not get her into trouble with her Front Bench.

First, the sums set out in the Bill are 2018 cash figures with no provision for inflation-proofing. Do the Government really think there will be no inflation over the next four years, or will our old friend “improved efficiency” be brought in at some point to balance the books? Perhaps the Minister could explain why the Bill includes no provision for inflation-proofing the cash figures?

Secondly, as the Minister acknowledged, the figures make no provision for capital expenditure. Where is the money for the Prime Minister’s 40 new hospitals or the 20 hospital upgrades promised last summer? When will the NHS capital budgets for these four years be made public? Why are they not set out in the Bill? Why are there no figures at all on capital in the Bill, or is there really no agreed capital budget for the NHS 10-year plan? In my experience, new hospitals usually have additional revenue costs, so can the Minister say whether the revenue figures in this Bill cover the extra revenue that will arise from the capital programmes for new and upgraded hospitals?

Thirdly, the Government’s immediate two predecessors had a poor track record on protecting capital expenditure, as the National Audit Office has pointed out. Between 2014-15 and 2018-19, £4.3 billion was transferred from the capital budget to revenue with the result that there is now a maintenance backlog of £6.5 billion. Will the Minister clarify whether the maintenance backlog, in whole or in part, is to be funded from the revenue figures in the Bill?

Fourthly, what is to happen to the so-called short-term loans that the department has made to NHS trusts in financial difficulty? The NAO has said that such loans stood at £10.9 billion at March 2019. If they had to pay back the loans, some of the trusts would be insolvent. Will trusts with loans be required to pay them back, in whole or in part, from the revenue funds in the Bill, or will the Government write off the loans or reschedule them over a longer period than that covered by the Bill? Will new loans be available to trusts which get into financial difficulty during the period covered by the Bill?

Fifthly, as the Minister acknowledged and others have mentioned, there is no provision in the Bill’s figures for public health—an area that has consistently had its funding cut over the past decade. Michael Marmot has repeatedly shown that austerity has halted rising longevity and that health inequalities have increased over the past decade in deprived areas, especially among women. When will we know the matching revenue figures for public health and whether they can be agreed on a multiyear basis?

Sixthly—there are not many more—can we be confident that a lot of this new NHS revenue money will not be spent on keeping elderly people unnecessarily longer in expensive acute hospitals because of a decade’s, and continuing, scandalous neglect of adult social care services by a succession of Governments? Over the period covered by this Bill, we know from work done by the Institute for Fiscal Studies that, on present plans, there is likely to be a real-terms gap in adult social care funding compared with service levels in 2010 of about £8 billion. Will the Government plug this historic gap alongside any new funding system for adult social care? If they do not, the NHS will continue to pick up some of the tab for underfunded social care from the extra revenue funding in this Bill. If the Minister cannot answer my questions today, I should be grateful if he wrote to me, because it would save me putting down Parliamentary Questions.

This Bill has more holes in it than a Swiss cheese, but I will resist the temptation to identify more. However, I want to ensure that there is government and NHS accountability for showing the spending increases for areas of service that have historically been neglected. I describe these as Cinderella services, such as mental health, community health, public health and children’s services. I would have liked to move amendments requiring Ministers to report to Parliament every six months on the spending and staffing progress in these historically neglected areas. Alas, that is not possible, but how will Parliament be kept informed of progress in these neglected areas? If we do not tackle them better than we have in the past, the NHS long-term plan simply will fail.

Finally, I want to raise the issue of whether the funding in this Bill will deliver the first part of the 10-year plan. In my time as a Health Minister, between 2003 and 2007, we were increasing NHS revenue spending by at least 6% a year to make good the historical neglect of the NHS in the 1990s. That rate of increase was pretty generous and could not be sustained, but if you neglect institutions such as the NHS for a long period and do not make good their historical neglect with a spurt of generosity, you will fail to put them back on an even keel. The figures in this Bill provide cash increases of little over 3% a year after a decade of neglect. This is almost certainly not enough to repair the damage and deliver the NHS sustainability set out in The Long-term Sustainability of the NHS and Adult Social Care, which others have mentioned, the report by a Select Committee of this House of which I was proud to be a member.

I fear that the Government are deluding themselves, the public and the NHS if they think that the funding proposed in this Bill is anything like adequate to fix the damage done to the NHS over the past decade.

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[Lord Bethell]

My Lords, I join those who have paid tribute to the work of my noble friend Lady Blackwood, my predecessor at the Dispatch Box, who made an invaluable contribution to the Department of Health and Social Care and is very sorely missed. I also thank the noble Baroness, Lady Thornton, for offering to join my campaign team. It is an offer that I am very happy to accept.

I was warned by the Chief Whip not to say that this was a vintage House of Lords debate and the House of Lords at its best, because it is hackneyed—but it is true. This has been a terrific debate, very highly informed and very challenging. There have been an enormous number of challenges in this debate—far too many for me to get through all of them—but I will try my best. Forgive me if I rattle through things a little.

I reassure the House that the NHS is the top priority of the British people, as a number of noble Lords have rightly pointed out, and of this Government. I know that there may be cynicism about the long-term plan that is being discussed today and about the Bill. The numbers that have been put forward in the Bill came from the NHS itself. The Bill enshrines those numbers in law. It is not a gimmick, and it is not Swiss cheese, as one noble Lord put it.

[Lord Warner]

I think most of us thought that these numbers came from NHS England, not the wider NHS. Can the Minister clarify that?

[Lord Bethell]

I am happy to accept that clarification. The noble Lord is exactly right: the numbers are from NHS England and they apply in that way.

To go back to Swiss cheese, the Bill is an ironclad guarantee to protect NHS funding. We are giving the NHS the certainty it needs to invest now for the long term. I thank the noble Lord, Lord Hunt, who put his finger on it. He spoke about the culture of short-termism and rightly mentioned—as did other noble Lords—the excellent report of the noble Lord, Lord Patel, on long-term sustainability. The natural human instinct to mitigate and to hedge when finances and money are uncertain has been remarked on in this debate. It is an entirely human instinct. The Government want to remove that uncertainty and to send a really clear signal to the system. We want to remove any sense of political risk about finance, so that decision-makers in the health system can make the best possible plans without looking over their shoulders to the finance director. They can instead be brave and make the best decisions possible and, in that way, implement the long-term plan in the most efficient way possible.

Where I have a difference of opinion with the noble Lord, Lord Hunt, is in his scepticism that reducing demand for hospital care is not possible. This Government believe that prevention is better than cure. That is why we are placing huge emphasis on community services, primary care and supporting people to live in the community, which reduces the number of people looking for acute care. We are investing in GPs and in urgent care centres to ensure that people are treated in the right place and at the right time.

I will talk first about the Bill in its essence. A number of Peers, including the noble Lord, Lord Hunt, have remarked that it is not enough money. I remind noble Lords that the plan comes from NHS England and that the Bill does not limit the amount of funding that we put into the NHS. Instead, it sets out a budget that must be at least what we have committed to. I reassure the noble Baroness, Lady Brinton, that this is not a cap. That is laid out clearly in Clause 1, which states:

“In making an allotment to the health service in England for each financial year specified in the table, the Secretary of State must allot an amount that is at least the amount specified in relation to that financial year.”


I will now tackle a few points of detail. The noble Baroness, Lady Thornton, asked about transfers from capital to revenue. We have said that such transfers were a short-term measure and are being phased out. Furthermore, the Treasury operates strict conditions on transferring between capital and revenue budgets. This is not a blanket ban. Sometimes technical adjustments between capital and revenue are needed for operational reasons, but these are a temporary measure.

The noble Lords, Lord Hunt and Lord Warner, asked about trust debt. We totally recognise that the stock of debt has grown and in recent years has become a significant financial challenge. We are working with NHS England and NHS Improvement to agree a framework of bringing provider debt down to an affordable level. We look to establish a new financing framework for 2020-21 that complements the NHS long-term plan.

The noble Baroness, Lady Finlay, was 100% right to raise the challenge of health inequality. We were all chastened by the Marmot review, which told uncomfortable truths. We completely accept the right to a long life. This Government are not ducking the challenge of health inequality. In fact, when we talk about levelling up, what could be a more vivid and valued form of levelling up than health equality? That is why we have put so much emphasis on laying down concrete commitments to these financial numbers and laying out, to the best of our ability, a long-term plan for the NHS.

The noble Lord, Lord Warner, asked a marathon six questions, which I will not be able to answer in their entirety. I will just tackle the question of cash not being index-linked and numbered. The NHS budget, like many other departmental settlements, is always set out in cash terms. This is essentially to deliver certainty. Experience has taught us that every time inflation goes up or down, budgets need to be reopened and confusion reigns. Furthermore, we as a House should remember that we are proposing a floor, not a ceiling; this is the kind of clear reassurance that has been asked for by the system.

I reassure the noble Baroness, Lady Brinton, that additional spending on the NHS in England absolutely leads to an increase in funding for the devolved Administrations through the Barnett formula—£7 billion for the Scottish Government from 2019-20 to 2023-24; £4 billion for the Welsh Government; and £2.3 billion for the Northern Ireland Executive. We will undertake a spending review later this year and will publish multiyear Barnett-based block grants for the devolved Administrations shortly afterwards.

Many noble Lords asked about the capital budget and quite reasonably asked why the Bill is about only revenue, not capital. The Bill is very much about protecting the record revenue spending for NHS England. However, we all know and totally acknowledge the requirement for capital investment. The Government have already made significant commitments: 40 new hospitals, with £2.7 billion for the first six; a further £2 billion capital spending, including £850 million for the first 20 hospital upgrades; and so on. I reassure the noble Lord, Lord Warner, and others, that further decisions about NHS capital will be made at a fiscal event in the very near future.

I note the comments of the noble Baroness, Lady Tyler, about the mental health estate and the use of wards. I reassure the House, and the noble Baroness in particular, that her arguments have been heard loud and clear. The Government recognise that the mental health estate is not satisfactory and are looking at ways to modernise these out-of-date buildings and arrangements.

The noble Lord, Lord Young, made a plea for GP surgeries. This resonates with me personally. The patient experience of arriving at a GP surgery is essential. Time and again, from my own experience, from what I know of human nature and from what I hear from patients, it is an unhappy one. In particular, the role of the receptionist at the GP surgery is unfortunate. I feel enormously for front-line professionals who have to deal with triage and the awkward conversations that take place. Something must be done to rethink the way we present ourselves to patients and that initial interface through the receptionist: a patient-first modernisation will be important.

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[Lord Bethell]

My noble friend asks a question of such philosophical Whitehall subtlety that it is way beyond my pay grade to provide a clear, etymological answer to that. However, I reassure her that the matter is an enormous priority, and when I go back to the department I will lean on it hard to deliver this important publication.

The commentaries of my noble friend Lady Penn and the noble Baroness, Lady Tyler, on the visibility of spending on children’s mental health was important. The Government are 100% aligned on this. I noted the Minister of State from another place standing at the Bar, nodding with agreement while those words were being said. I know that a meeting has been agreed on this matter and a date is in the diary, I believe for next week, and I very much look forward to the outcome. I reassure the House that this question of visibility and publication is taken ex3tremely seriously.

The noble Baroness, Lady Tyler, asked about the mental health investment standard. CCGs are required to increase investment in mental health, as discussed earlier. All CCGs are on track to meet that standard, as the noble Baroness, Lady Hollins, rightly pointed out in 2019-20. I suggested in my previous speech that it would be premature to legislate for specific aspects in the Bill and capital will be considered in other fiscal events.

The noble Lord, Lord Bradley, spoke movingly about children’s mental health. I reassure the House that, in addition to increased mental health funding, we are implementing a progressive programme of transformational change for children and young people’s mental health services. This will include incentivising every school or college to identify and train a senior lead for mental health, creating new school and college-based mental health support teams, and piloting a four-week waiting time for children and young people’s specialised services.

The noble Lord, Lord Hunt, the noble Baroness, Lady Finlay, and others brought up the sensitive subject of adult social care. Fixing that long-term issue is one of the great challenges that this Government have taken to their shoulders. The reassurance I can give noble Lords is a political one. There are many complex questions to address, but our pledge as a Government has been clear: everybody will have safety and security, and nobody will be forced to sell their home to pay for care. Delivering on this promise will require an enormous amount of stakeholder engagement and political bridge-building, and we are embarking on that important process.

The noble Baroness, Lady Finlay, was quite right to say that social care workers are wrongly described as low skilled. I entirely agree with her sentiments; they are low paid but highly valued.

I am running out of time and have a few more points to make. I will jump to the conclusion and say that the Government take this Bill very seriously. The execution of the money involved in the Bill is also taken very seriously. There have been a number of exciting, important ideas about how that money should be spent from the noble Lords, Lord Willis and Lord Kakkar, among others.

We made our commitment in the manifesto and the Queen’s Speech to enshrine record NHS funding in law. We are delivering on that commitment and putting the NHS on a secure and stable footing for the future. The NHS belongs to us all, and this Government are backing that idea. I commend this Bill to the House.

[Lord Warner]

Before the Minister sits down, I have a question. I have been digesting his answer to me on inflation-proofing. Is he saying one way or the other whether these figures will be inflation-proofed annually, with the passage of time? Two-thirds of NHS costs are pay, and there will presumably be some pay increases. What is the Government’s position on inflation-proofing these figures?

[Lord Bethell]

It is the convention in the Treasury to express spending commitments in cash terms. That is the convention of government and how this Bill is expressed. It is not the commitment of government to uprate these figures necessarily according to inflation. They are adjusted for all the potential inflation that may happen. That said, if unexpected events happen or pressures are great, there is the opening and the capacity to increase spending if necessary.